Wuling Motors' H1 Returns to Profitability with Enhanced Performance in Its New Energy Vehicle Business
This makes it possible for the company to enhance its industry competitiveness and brand influence further, boost the high-quality development of business and improve profitability.
Wuling Motors has been repeatedly ranked among the top 100 global auto parts suppliers. Internally, the company has implemented lean concepts to improve its management, such as enhancing production efficiency, improving product quality, reducing costs, and achieving technological breakthroughs, with the goal of promoting sustainable and healthy development. Externally, the company has expanded its market and entered emerging industries. In addition to its core business advantages, Wuling Motors has devoted itself to technological innovation by strengthening, supplementing, extending and stabilizing the chain and through continuous research and development, so as to build strength in the fields of medium and high-end passenger vehicles and new energy vehicles. Additionally, seizing the opportunities provided by China's strategic initiatives such as the Regional Comprehensive Economic Partnership (RCEP) and the "dual carbon" goal, the company further enriches its product portfolio and expands its "going global" strategy. This makes it possible for the company to enhance its industry competitiveness and brand influence further, boost the high-quality development of business and improve profitability.
Significant Improvement in H1's Gross Profit Margin Marks the Accelerated Development of the New Energy Vehicle Business
In the first half of 2023, Wuling Motors faced challenging market conditions including decreased demand in the industry, intensified competition, and tight supply chains. However, the company has implemented multiple measures to achieve steady growth in performance. Regarding the "increase in profits" of H1, the company mentioned in its Interim Report that the positive impact of cost control due to the restructuring of the new energy vehicle business and cost reduction in three areas led to a decrease in expenses during the period.
The company's gross profit for the reporting period was RMB 411 million, representing a 10.3% increase compared to the same period last year. In its Interim Report, the company stated that apart from the favorable factors such as the decrease in raw material prices such as steel and the start of mass production of new products with higher gross margins, the increase in gross profits was also attributable to fine cost control and comprehensive budget management, which led to cost reduction and efficiency improvement. The gross profit margin of H1 was 8.1%, an increase of about 220 basis points compared to the same period last year when it was 5.9%.
Amid the rapid development of the global automotive industry chain and the backdrop of the "new four modernizations" in the automotive sector, Wuling Motors seized the opportunity of the new energy transformation to accelerate the development of the new energy vehicle industry, making significant achievements. It successfully developed the core parts of new energy vehicles, such as electric drive axles, motor and electronic control systems, hybrid power systems, and methanol engines.
With the rapid development of new energy vehicles, customers' needs for NVH (noise, vibration, and harshness) experience are being upgraded. In response to such a condition, Wuling Motors significantly shortened the overall execution cycle including conceptualization and demonstration, project approval and equipment commissioning. Its core products achieved a substantial upgrade in vehicles' NVH from 70dB to 58dB. The company has developed the first two-in-one coaxial axle commercially mass-produced nationwide, and the production and sales of new energy vehicle axles exceeded one million sets.
Wuling New Energy, a joint venture of Wuling Motors in its new energy business, has achieved remarkable success in overseas markets. Taking new energy commercial vehicles as an example, the company has continuously explored the new energy logistics market and officially launched the "Linxys" brand during the period. The first hybrid small truck, namely Linxys Gold Truck, was officially launched. After its entry into the North American market, the new energy logistics vehicle from Guangxi entered the Japanese market within the year for the first time. The first batch of new energy pure-electric logistics vehicles was officially delivered to FEST, successfully entering the European market. At present, it has formed an export model with the three major developed markets of the United States, Japan, and Europe, achieving simultaneous development in these three markets.
Wuling Motors strives for the "new" to inject endogenous power into the company. While strengthening technological research and development and promoting innovation, Wuling Motors has never stopped in the development of new products and the exploration of new fields. In the second half of the year, Wuling Motors' multiple technological achievements have been transformed for commercial use, with several frame models going into production and sales for the first time. The new production line for stamping modules has also been put into operation smoothly. Wuling sightseeing cars and golf carts have been dispatched to the United States, the Hong Kong Special Administrative Region, and Canada. The new market of clean synthetic fuel (E-fuels) has been officially opened, and more good news has followed.
Wuling Motors has also seen prominent performance in the fields of medium and high-end passenger vehicles and new energy vehicles. The new rear axle products installed in GWM's high-end plug-in hybrid off-road SUV boast high transmission efficiency, good NVH level, and excellent off-road performance. It is expected that the monthly demand for the products will quickly increase to several thousand units. The E10 road maintenance vehicle of Wuling New Energy, which has been officially rolled off the production line, adopts an industrial high-pressure reciprocating water pump that can spray water continuously for about 60 minutes. The first LJ4M20 series methanol engine has effectively solved two major problems, including the engine cold start at a low temperature and corrosion of engine components by methanol. Ten new-generation mobile energy storage and charging vehicles are undergoing trial operations in parking lots and highway service areas in various regions nationwide.
The Combination of Advantages and Opportunities Empowers Automotive Enterprises to Create a New "High-Quality, Green, and Low-Carbon" Vision
In fact, Wuling Motors has long aimed at the core business of the entire new energy vehicle industry chain.
In terms of production, Wuling Motors has strategically transformed from a single production point in Liuzhou, China, into a cross-provincial production group with factories in Guangxi, Shandong, Chongqing, and Hubei. This is beneficial for the company to continue tapping into regional markets. Forging ahead, Wuling Motors has also developed a supporting market for high-end parts. The Atkinson engine with a high thermal efficiency and hybrid powertrain achieved mass production and surpassed sales expectations for the entire year, which has enabled the company to successfully transform and upgrade from traditional fuel-powered vehicles to new energy vehicles with hybrid power.
As an industrial city with a strong automobile manufacturing background, Liuzhou has attracted lithium battery enterprises and formed a good industrial cluster, undoubtedly providing a "fertile ground" for Wuling Motors' growth. Engines with high thermal efficiency such as 1.5T and H16 independently developed by Wuling Motors were born here, allowing the company to take a big step towards the strategic goal of energy technology development.
Wuling Motors is also known for its manufacturing advantages in the commercial vehicle field. Its commercial vehicle division is equipped with a comprehensive automotive equipment line, covering production processes such as welding, painting, and equipping. It has solidified its future development potential through diverse product lines. Currently, Wuling Motors has developed various types of commercial vehicles, including refitted vehicles, special vehicles, and off-road vehicles. It can produce sightseeing vehicles, golf carts, refrigerated vehicles, police cars, fire trucks, electric delivery vehicles and other vehicles according to market demand. Its customers range from government departments, public institutions, and small and medium-sized private enterprises to individual customers, and its products are mainly sold in local markets across China and overseas markets.
Last year, Wuling Motors also invested in Wuling New Energy. With the advancement of business, the acceleration of mass production of new energy components, and the emergence of scale benefits, the development dividends of Wuling Motors in the field of new energy vehicles may be further released, making it an expected new growth point for the company's performance. It is reported that the Linxys brand of Wuling New Energy will focus on the market of new energy commercial vehicles in the future, gradually releasing hybrid and pure electric models, and developing a full range of micro, medium, and large vehicles, as well as micro and small trucks and terminal logistics vehicles.
Industrial manufacturing and technological strength provide strong support for Wuling Motors' future growth. With the support of industry trends, favorable policies, and forward-looking business layouts, Wuling Motors has entered a period of development opportunities and seen enormous potential in performance.
On the one hand, as China intensifies its support for the development of clean energy and renewable energy, and fully implements the "dual carbon" goal, Wuling Motors, which closely focuses on business in promising sectors such as new energy and energy storage, will benefit. At the same time, with the development opportunities brought by the RCEP and the Chinese auto brands entering international markets, Wuling Motors's products are expected to accelerate their expansion to overseas markets. On the other hand, the global automotive industry chain has developed rapidly in recent years. Against the backdrop of a new wave of automotive development and consumer upgrades, the penetration rate of domestic new energy vehicles is rapidly increasing and medium and high-end passenger vehicles are favored by consumers.
In recent years, various policies related to the development of the new energy vehicle industry, such as the Regulations on New Energy Vehicle Manufacturing Enterprises and Product Access Management and the Planning for the Development of the Energy-Saving and New Energy Automobile Industry (2012-2020) and the China New Energy Vehicle Industry Development Plan (2021-2035), have been continuously introduced. Specific measures such as the reduction of vehicle purchase taxes for new energy vehicles, the construction of a high-quality charging infrastructure system, and support for selling new energy vehicles in rural areas have further accelerated the development of the new energy vehicle industry.
Data shows that in the past decade, the sales of new energy vehicles in China have continued to soar, from 13,000 vehicles in 2012 to 6.887 million vehicles in 2022, an increase of over 500 times, and the production and sales have ranked first in the world for eight consecutive years. Exports of new energy vehicles have also grown strongly. According to data from the China Association of Automobile Manufacturers, in the first half of this year, China exported 534,000 new energy vehicles, a year-on-year increase of 160%. This far exceeds the overall level of automobile exports.
The future prospects of the industry are still promising. According to a research report from Chuancai Securities, China's new energy vehicle industry has entered a period of fast growth, with sales in both domestic and international markets growing rapidly. The trend of automotive electrification and intelligence will remain unchanged, and the relevant industrial chain will continue to develop rapidly.
Entering a new stage of comprehensive transformation towards new energy, Wuling Motors, with its technological strength as the core competitiveness, adopts a mindset of "change-seeking" to overcome obstacles and seize industry development opportunities to deploy its business. Committed to establishing a dual funding chain of self-financing and market-based financing, it will continue to leverage its advantages to pursue high-quality development in the future.
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