On the evening of August 22, Lifan Auto announced a semi-annual report with a net loss of over 900 million yuan (~US$127 million), and also carried out a series of personnel adjustments. The data shows that the company’s revenue in the first half of the year was 5.178 billion yuan, down 13.39% year-on-year; net loss was 947 million yuan, compared with a profit of 125 million yuan in the same period last year.
Lifan said in the announcement that there are three main reasons for the decline in performance. First, the external market environment changes affect the company’s production and sales, resulting in a sharp decline in its production and sales, and reduced gross profit. Second, due to the difficult financing environment, the company’s funds are tight, to maintain production, operating and maintaining the company’s credit, the company actively raises funds through multiple channels, resulting in an increase in financing costs and an increase in the amount of losses. Finally, the relocation of the company’s passenger car base affects the production plan and the availability of some equipment is reduced, resulting in asset impairment.
To this end, Lifan decided to adjust the focus of business development, in which the priority of the motorcycle business will be improved, and the passenger car and new energy business will be adjusted, which can be seen from the personnel changes.
Chen Wei is a staunch promoter and implementer of Lifan’s new energy strategy. Ma Ke has been responsible for the company’s passenger car business. They all resigned as their previous positions, and Yang Bo, who was nominated for the new position, has been responsible for the motorcycle sector, Lifan’s next business focus will gradually shift. Lifan is a private enterprise that started out as motorcycle business. Until now, it is still one of Lifan’s most important businesses. Although Lifan has been working in the automotive industry for more than 10 years, it has not had a good market performance in recent years. The industry commented that Lifan has always used “two wheels” to transfuse blood for “four wheels”.
Today, Lifan’s performance in the traditional fuel vehicle or new energy segment can not be satisfactory. Perhaps the financial report on the evening of August 22 and the personnel adjustment on the night were the performance of the current transformation bottleneck. As for how Lifan will adjust next, we will continue to pay attention.