Yu Chengdong asks the industry, "Resurrecting from the dead"

A 100,000-word article: The Resurgence of Huawei's Wanjie

Author: Chai Xuchen Editor: Zhang Xiaoling

After gaining fame in the battle last year, Huawei's Wanjie seemed to have lost its momentum in the first eight months of this year. Just when people thought that this brand was fading away, Yu Chengdong turned the tide by launching a new car and a press conference, selling 50,000 units in one fell swoop, bringing Wanjie back to life and restoring its former glory.

On October 6th, Wanjie released a poster announcing that the daily orders for the new M7 had exceeded 7,000 units. The day before, it was 3,500 units, and within two days, it exceeded 10,000 units. In less than a month since its first sale, the orders for this car have already exceeded 50,000 units.

This achievement is comparable to the sales of many new players in two or three months, or even half a year. Obviously, the new M7, which stole the limelight from the car market in September and October, has become a hit. Perhaps even Yu Chengdong did not expect such a strong market response. He excitedly said, "We have created a miracle!" It is not easy to make a comeback from the brink of failure.

It can be said that the popularity of the new M7 is a redemption for past failures. The number of orders not only surpasses the entire Wanjie brand for the whole year, but also exceeds the 40,000 orders for the popular competitor Ideal L7 in September.

Wanjie has risen from the mud and returned to the center stage of new energy vehicles. As for how far Yu Chengdong can take this brand and Huawei's smart selection car model, perhaps he already has the answer when he was appointed as the Chairman of Huawei's Automotive Business Unit at the end of September.

Rebirth

Looking back at the first eight months of this year, Wanjie's sales have been lackluster, hovering around 3,000 to 5,000 units. Even the launch of the upgraded intelligent driving version M5 in April did not create much of a stir. The total sales in the first eight months were only 33,000 units.

Among them, the old M7 model had a monthly sales low of only 432 units, almost disappearing from the market.

This is particularly noticeable when compared to the consecutive "breaking two" and "breaking three" monthly sales of new players like We Xiaoli. Compared to the glorious moment of selling 76,000 units a year ago, it is even more lackluster.

Regarding the significant fluctuations in Wanjie's sales, Yu Chengdong admitted in an internal communication meeting in July that due to lack of experience and insufficient knowledge, they took some detours and needed to optimize the user experience in retail, service, and delivery.

Yu Chengdong recognized the market reality and, together with Sailisu, invested 500 million yuan to address various shortcomings of the old model, such as quality and safety issues and the lack of intelligent driving. They also strengthened the HarmonyOS ecosystem and simultaneously added a 5-seat model with higher market demand.

According to Zhang Kangkang, an analyst at the Qingyan Huake New Energy Research Institute, Huawei's Wanjie has started to pay attention to the "car-making" itself, such as the concept of occupancy rate and DATS electronic control technology, which correspond to vehicle technology and three-electric technology, respectively. This is a re-understanding and adjustment of user needs after conducting thorough market research.

More importantly, after experiencing a turbulent first half of the year, the new M7 not only underwent a major upgrade but also reduced its price by 40,000 to 50,000 yuan, with a price range of 249,800 to 329,800 yuan. And before October 7th, there is an additional 33,000 yuan in equity benefits. This is equivalent to entering the territory of popular products such as Tesla Model S, NIO ES6, Model Y, and BYD Tang, and it has more advantages in terms of space and price, putting direct pressure on competitors.

In addition, the popularity of Huawei Mate 60/Mate X5 series has soared, which has also brought a flow of customers to Dolphin Research. Guojin Securities stated that this has to some extent driven the increase in Dolphin Research's in-store traffic and order volume.

The new M7 has become a hot seller in such a strong manner, exceeding the expectations of both the market and Huawei internally. After the new car was released, the stock price of Sailis rose from 43.4 yuan/share on September 12th to 55.7 yuan/share on September 28th, an increase of nearly 30%.

In view of this, Yu Chengdong has entrusted the new M7 with the task of accounting for more than 30% of this year's sales. Insiders at Huawei bluntly stated that the new M7 is its biggest bet in the second half of the year and will determine the direction of Dolphin Research this year.

Dolphin Research has obtained the "resurrection card" gathered by consumers. If it can continue to perform well, it may surpass NIO, Xiaopeng, Jidu, and even challenge Tesla in terms of monthly deliveries at the end of the year.

Happiness seems to come suddenly, but the key to Dolphin Research's rebirth lies in how quickly Sailis can match its production capacity.

Challenge

While the new M7 has received 50,000 pre-orders, it also tests the production capacity and delivery capabilities. As the contract manufacturer for Huawei Dolphin Research, Sailis has a great responsibility.

On the day of the new M7 launch, Yu Chengdong mentioned that the new Phoenix factory built for the Dolphin Research brand, together with the Liangjiang Smart Factory, will have an annual production capacity of 300,000 vehicles. Among them, the M5 is mainly produced by the Liangjiang factory, while the M7 is mainly produced and delivered by the Phoenix factory with an annual capacity of 150,000 vehicles.

In order to fulfill tens of thousands of orders, Sailis has started to accelerate production.

A document obtained by Wall Street News from Sailis' "Supply Chain Supply Assurance Department" shows that the first phase of capacity construction for the new M7 was completed on October 5th, with a capacity of 450 vehicles per day. According to market demand, Sailis' second factory (Phoenix factory) will start production of the M7 on November 1st with a planned capacity of 750 vehicles per day. Sailis has requested supply chain companies to ensure supply according to this plan.

Based on this calculation, the maximum production capacity of the new M7 will release 13,900 units in October and climb to 22,500 units after November. This means that for the remaining three months of this year, they will have to handle the accumulated order volume of one month. Orders from late October to December may have to be scheduled for delivery after the new year.

This also means that the delivery cycle of the new M7 will be extended.

Salespeople at Dolphin Research revealed that currently, the new M7 orders placed have slight differences in production time depending on the version and configuration, but they all require 8-10 weeks. "If you place an order a few days later, it may have to be scheduled for production until early next year."

Insiders close to Sailis also admitted to Wall Street News that "there are many orders for the new M7, and the delivery pressure is very high. Both production capacity and supply chain are under pressure, and it may be difficult to fulfill the orders for the rest of this year."

Although there are very few cases of cancellations by pre-order customers, if the product delivery cycle is too long, it will inevitably affect subsequent market sales. A salesperson from Tesla revealed that some stores have started to reimburse (for purchasing Dolphin Research) deposits in order to "attract" Dolphin Research users to buy Tesla models. And besides how to digest this "happy trouble", Yu Chengdong also has to face another question from the market: can the popularity of the new M7 continue?

Currently, the market competition for new energy vehicles is still fierce and brutal, with price being the most powerful weapon.

During the National Day holiday, NIO offered up to 30,000 yuan in car purchase discounts; Xiaopeng also launched the upgraded G9, with the price of the new G9 dropping from over 300,000 yuan to over 260,000 yuan, and it received more than 15,000 orders in just half a month; Lantu's sales volume in September exceeded 5,000 units after a price reduction of 60,000 yuan for the upgraded model; in addition, the Model Y quietly received an update during the holiday, with increased production without an increase in price.

"In the car industry, it's either bleeding prices or shedding tears over sales volume." In the eyes of industry insiders, price wars have become the survival rule in the automotive industry. Only by achieving sales volume can companies survive and have cash flow.

With the 33,000 yuan pre-order discount for the new M7 ending on October 7th, and the Mate series returning to normal popularity, whether the sales frenzy of the new M7 can be sustained remains to be seen.

What can be certain is that the resurgence of the Wanjie brand is a battle that Yu Chengdong and Huawei must win in the automotive field.

In the second half of the year, he still has two trump cards in his hand: the flagship SUV M9 and the sedan ZhiJie S7. In addition, Yu Chengdong's Intelligent Select Car business is also bound with partners such as Chery, JAC, and BAIC, and the car-making legion continues to expand, covering sedan, SUV, MPV, and other categories. His ambition is to create an automotive legion with a monthly sales volume of 100,000 units and occupy a place in the market.

At the same time, with an annual investment intensity of 1 billion US dollars, as a supplement to the former mobile phone business, Huawei's Automotive Business Unit is also under pressure to turn a profit.

The breakout of the new M7 is a springboard for Yu Chengdong's "car-making dream". Wanjie, which has "come back to life" from the ICU, must deliver steadily and seize this hard-earned popularity.

Yu Chengdong, who once set a goal of selling 300,000 units per year for Wanjie and dreamed of becoming the number one in the automotive industry, still has his determination. Can he lead Wanjie to conquer the automotive field for Huawei again, just like he did in the mobile phone market?