Great Wall Motors, once a dominant force in the Chinese SUV market with its Haval H6 model, is experiencing significant challenges as it faces intense price competition and declining sales figures. The H6 was celebrated for its comfort, luxury, and spaciousness, leading it to be dubbed a "National Car." For over 100 months, the H6 ruled the sales charts, often preferred over pricier competitors like the Honda CRV. However, recent statistics reveal that the H6's standing has faltered, with its sales dropping out of the top 15 SUV rankings in the first seven months of 2023.
Publicly traded and operating under a state-owned enterprise framework, Great Wall Motors manages an array of brands, including Haval, Ora, Tank, and Great Wall Pickups. The company has encountered fierce price competition within China's auto market, significantly affecting its profitability. By 2023, Great Wall reported a net profit of 7 billion yuan, reflecting a 15% decline year-over-year. The negative trend continued into 2024, where profits plunged an additional 7.8% in the third quarter.
Sales figures convey a stark contrast to its competitors. In October, Great Wall sold 117,000 vehicles, marking an 11% drop from the previous year. From January to October, the total sales reached only 970,000 units, a decrease of 2.5% year-over-year, complicating their ambitious target of selling 1.9 million vehicles for 2024. Disturbingly, brands like Gili, Changan, and BYD collectively surpassed the 2 million units mark, exhibiting a widening gap between them and Great Wall.
All of Great Wall’s brands, including Haval and Ora, are witnessing considerable sales declines. Notably, Ora’s sales dipped by 40%, while Haval and Great Wall pickups observed decreases of 15% and 14.7%, respectively. Amid domestic sales struggles, Great Wall Motors has intensified efforts for international expansion; in 2022, roughly 20% of its revenue was generated from international markets, which increased to 40% by the first half of 2024.
This downturn in performance has adversely impacted employee morale. Numerous reports of layoffs, job transfers, and salary reductions indicate a troubling internal environment. Great Wall's workforce decreased by over 5,400 employees in 2023 and the first half of 2024. Former employees are pursuing legal action for these layoffs, and individual arbitration has become a prevalent means of seeking recourse.
In addition to declining sales, Great Wall is facing legal and reputational challenges. The company was placed on a blacklist by the Southern Power Grid following a breach of trust related to the delivery of the Tank 500 vehicles, hindering its ability to bid on contracts for two years. Great Wall's attempts to sue online influencers for alleged defamation were unsuccessful, as courts ruled in favor of the defendants due to the brand's expectation to tolerate non-malicious criticism.
Moreover, the company is increasingly scrutinized regarding vehicle safety and quality. A tragic incident involving a Haval Cannon pickup resulted in the death of a 27-year-old owner after a malfunctioning rooftop tent led to a fatal accident. This has raised alarms about the safety mechanisms in Great Wall's vehicles, reducing consumer confidence.
The automotive market in China is embroiled in a price war that has not spared Great Wall Motors. Despite a 15% increase in sales earlier in the year, net profits fell by the same percentage. Chairman Wei Jianjun indicated a need to adjust product structures to mitigate losses. Companies in this environment face declining profits per vehicle, with the average dropping from 20,000 yuan in previous years to just 11,000 yuan in 2023.
Wei noted that the repercussions of this price war may last six to seven years, leading to brand instability and a shakeout of weaker players in the industry. Reflecting on the current state, WEEI, an industry critic, emphasized the necessity for ethical practices in the face of growing competition and unethical behavior common in such cutthroat market dynamics.
The trajectory of Great Wall Motors presents a cautionary tale of how competitive pressures in the automotive market can catalyze a rapid downfall. The company’s struggles to maintain profitability amidst declining sales, coupled with negative publicity and internal strife, suggest that without significant strategic changes, Great Wall could continue to lose its place in a rapidly evolving market. The ongoing price war poses additional risks, as the firm wrestles with its identity in a landscape that is more challenging than ever. Time will tell if Great Wall Motors can reclaim its stance without compromising on value, quality, or ethical practices.
Part 1/9:
The Decline of Great Wall Motors and Its Haval H6
Great Wall Motors, once a dominant force in the Chinese SUV market with its Haval H6 model, is experiencing significant challenges as it faces intense price competition and declining sales figures. The H6 was celebrated for its comfort, luxury, and spaciousness, leading it to be dubbed a "National Car." For over 100 months, the H6 ruled the sales charts, often preferred over pricier competitors like the Honda CRV. However, recent statistics reveal that the H6's standing has faltered, with its sales dropping out of the top 15 SUV rankings in the first seven months of 2023.
Worsening Sales Performance
Part 2/9:
Publicly traded and operating under a state-owned enterprise framework, Great Wall Motors manages an array of brands, including Haval, Ora, Tank, and Great Wall Pickups. The company has encountered fierce price competition within China's auto market, significantly affecting its profitability. By 2023, Great Wall reported a net profit of 7 billion yuan, reflecting a 15% decline year-over-year. The negative trend continued into 2024, where profits plunged an additional 7.8% in the third quarter.
Part 3/9:
Sales figures convey a stark contrast to its competitors. In October, Great Wall sold 117,000 vehicles, marking an 11% drop from the previous year. From January to October, the total sales reached only 970,000 units, a decrease of 2.5% year-over-year, complicating their ambitious target of selling 1.9 million vehicles for 2024. Disturbingly, brands like Gili, Changan, and BYD collectively surpassed the 2 million units mark, exhibiting a widening gap between them and Great Wall.
Brand Performance and Employee Relations
Part 4/9:
All of Great Wall’s brands, including Haval and Ora, are witnessing considerable sales declines. Notably, Ora’s sales dipped by 40%, while Haval and Great Wall pickups observed decreases of 15% and 14.7%, respectively. Amid domestic sales struggles, Great Wall Motors has intensified efforts for international expansion; in 2022, roughly 20% of its revenue was generated from international markets, which increased to 40% by the first half of 2024.
Part 5/9:
This downturn in performance has adversely impacted employee morale. Numerous reports of layoffs, job transfers, and salary reductions indicate a troubling internal environment. Great Wall's workforce decreased by over 5,400 employees in 2023 and the first half of 2024. Former employees are pursuing legal action for these layoffs, and individual arbitration has become a prevalent means of seeking recourse.
Legal Challenges and Quality Concerns
Part 6/9:
In addition to declining sales, Great Wall is facing legal and reputational challenges. The company was placed on a blacklist by the Southern Power Grid following a breach of trust related to the delivery of the Tank 500 vehicles, hindering its ability to bid on contracts for two years. Great Wall's attempts to sue online influencers for alleged defamation were unsuccessful, as courts ruled in favor of the defendants due to the brand's expectation to tolerate non-malicious criticism.
Part 7/9:
Moreover, the company is increasingly scrutinized regarding vehicle safety and quality. A tragic incident involving a Haval Cannon pickup resulted in the death of a 27-year-old owner after a malfunctioning rooftop tent led to a fatal accident. This has raised alarms about the safety mechanisms in Great Wall's vehicles, reducing consumer confidence.
Navigating the Price War
Part 8/9:
The automotive market in China is embroiled in a price war that has not spared Great Wall Motors. Despite a 15% increase in sales earlier in the year, net profits fell by the same percentage. Chairman Wei Jianjun indicated a need to adjust product structures to mitigate losses. Companies in this environment face declining profits per vehicle, with the average dropping from 20,000 yuan in previous years to just 11,000 yuan in 2023.
Wei noted that the repercussions of this price war may last six to seven years, leading to brand instability and a shakeout of weaker players in the industry. Reflecting on the current state, WEEI, an industry critic, emphasized the necessity for ethical practices in the face of growing competition and unethical behavior common in such cutthroat market dynamics.
Part 9/9:
Conclusion
The trajectory of Great Wall Motors presents a cautionary tale of how competitive pressures in the automotive market can catalyze a rapid downfall. The company’s struggles to maintain profitability amidst declining sales, coupled with negative publicity and internal strife, suggest that without significant strategic changes, Great Wall could continue to lose its place in a rapidly evolving market. The ongoing price war poses additional risks, as the firm wrestles with its identity in a landscape that is more challenging than ever. Time will tell if Great Wall Motors can reclaim its stance without compromising on value, quality, or ethical practices.