After experiencing a rather "brutal" year in 2023, Great Wall Motor has delivered an impressive "report card" for the first quarter of this year. Behind the significant fluctuations in performance lies a critical juncture for Great Wall Motor in the transition to new energy vehicles and the "generational change" of its leadership.

Great Wall Motor, in the midst of a transformation dilemma, can now breathe a sigh of relief.

On the evening of April 24th, Great Wall Motor announced its financial report for the first quarter of 2024. The data shows that in the first quarter of this year, Great Wall Motor achieved a total operating revenue of 42.86 billion yuan, a year-on-year increase of 47.6%; the net profit attributable to the parent company was 3.228 billion yuan, a significant year-on-year increase of 1752.55%, and the non-IFRS net profit was 2.024 billion yuan, also a substantial year-on-year increase of 1032.88%; the gross margin was 20.04%, up 3.97 percentage points from the same period last year.

The surge in net profit directly boosted the company's stock price. Data indicates that Great Wall Motor opened with a daily limit up and then maintained high volatility. By the end of the trading day, Great Wall Motor's stock price soared by 7.43%, closing at 26.59 yuan per share, with a total market value of 227.2 billion yuan.

In fact, Great Wall Motor has just gone through a relatively weak year. Due to the continuous acceleration of the new energy transition in the domestic automotive market, the competition for market share among major car manufacturers has become increasingly fierce. This resulted in very limited sales growth for Great Wall Motor in the domestic market in 2023, and it failed to achieve its annual sales target of 1.6 million units.

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The more than seventeenfold year-on-year increase in net profit is also influenced by the low base in the first quarter of 2023. For Great Wall Motor, it is riding a roller coaster of performance and has arrived at a critical juncture for generational change.

Performance "Roller Coaster"

After experiencing a significant year-on-year plunge in net profit in the first quarter of 2023, Great Wall Motor has delivered an impressive first-quarter performance for 2024.

The data shows that Great Wall Motor's net profit for the first quarter of this year increased by 1752.55% year-on-year, reaching 3.228 billion yuan. In response, Great Wall Motor stated that the main reason was the company's growth in sales scale and optimization of the sales structure, which led to a significant increase in performance indicators such as operating income and net profit attributable to the parent company compared to the same period last year.

Public information shows that Great Wall Motor is a global intelligent technology company, with its business scope mainly including the design, research and development, production, sales, and service of automobiles and spare parts. The company currently has five major brands: Haval, Tank, Weipai, Ora, and Great Wall Cannon (pickup), among which the Haval brand is the mainstay of sales.Looking at sales figures, Great Wall Motor saw a year-on-year increase of 25.11% in new car sales in the first quarter, reaching 275,300 units. Among them, new energy vehicles (NEVs) grew by 112.82%, achieving sales of 59,200 units.

By synthesizing profit and sales data, it can be calculated that Great Wall Motor's net profit per vehicle in the first quarter was 11,700 yuan, and the net profit attributable to the parent company per vehicle, after deducting non-recurring items, was 7,400 yuan, representing sequential growth of 112.1% and 162.7%, respectively.

Breaking it down, in the first quarter, Great Wall Motor's Haval brand sold 157,889 units, a year-on-year increase of 25.53%, accounting for 57.3% of total sales; WEY brand sold 9,608 units, a year-on-year increase of 182.34%; Tank brand sold 49,184 units, a year-on-year increase of 103.16%; Ora and Great Wall pickup trucks sold 15,029 and 43,495 units, respectively, with year-on-year declines of 15.41% and 10.9%.

In fact, the surge in profits in the first quarter of this year is highlighted by the poor performance of Great Wall Motor in the same period last year. Data shows that the company's net profit in the first quarter of 2022 was 1.6 billion yuan, but in the first quarter of 2023, Great Wall Motor's net profit attributable to the parent company was only 174 million yuan, a decline of 89.34%. In addition, the company's revenue also declined by 13.63% year-on-year, to 29.039 billion yuan.

At that time, Great Wall Motor, which saw a significant drop in net profit, explained that it was mainly due to the product structure adjustment period still ongoing during the reporting period, and the increased investment in the construction and R&D of new energy brands based on the new product launch rhythm of 2023.

It is worth noting that in the first quarter of last year, the retail sales of passenger cars nationwide declined by 13.4%, and Great Wall Motor also declined by 22.41% year-on-year, selling only 220,000 units.

"Generation Change" Moment

In fact, behind the roller coaster performance of Great Wall Motor, the company is facing two major generational challenges.

With the advent of the new energy vehicle wave, major fuel car giants are seeking transformation, including Great Wall Motor. However, in the process of transitioning to new energy vehicles, the results achieved by Great Wall Motor have not been ideal.

It is reported that in the past year of 2023, Great Wall Motor not only launched a brand-new Hi4-T hybrid technology for new energy, but also introduced nearly 10 new energy models one after another, which seems to have not made breakthrough progress.Data indicates that in 2023, Great Wall Motor's (GWM) new energy vehicle (NEV) sales reached 262,000 units, marking a year-on-year increase of 98.74%. However, this accounted for only 21.3% of the total sales volume of 1.23 million units. Notably, the penetration rate of NEVs in 2023 was 31.6%, with GWM lagging behind the industry average by ten percentage points.

Simultaneously, GWM is facing the challenge of leadership transition. At the end of 2021, GWM's founder, Wei Jianjun, decided to bring his daughter, Wei Wei, who was in her twenties, into the company's decision-making layer to capture the young consumer demographic.

It is reported that Wei Wei graduated from Tsinghua University with a Bachelor's degree in Materials Science and Engineering and a Bachelor's degree in Law. She later pursued a Master's degree in International Economics and Business at Columbia University in the United States. To ensure a smooth succession for his daughter, Wei Jianjun also had her gain experience in various departments of GWM, including research and development, finance, and procurement.

However, the company has since been embroiled in multiple public opinion controversies. In March 2021, GWM invited Yang Li to endorse its Tank 300 model, coinciding with a controversial statement made by Yang Li. The Tank 300, endorsed by her, ultimately failed to make a splash. Subsequently, several models launched by the company did not meet market expectations.

During her tenure of over a year, GWM's market value shrank by nearly 70%, leaving only 200 billion yuan, equivalent to losing hundreds of millions of yuan per day on average. Ultimately, Wei Jianjun had to return.

Wei Jianjun Accelerates the Breakthrough

Wei Jianjun, who has made a comeback, is leading the company to break through from multiple aspects, choosing to adjust the company's organizational structure and marketing strategy.

It is known that GWM has introduced an organizational structure model consisting of front-end, middle-end, and back-end platforms, with a focus on elevating the importance of the middle-end role. Specifically, the company has added eight middle-end platforms, including new media live broadcast operations and product management. The results of this work will be reported to Chairman Wei Jianjun by GWM's Chief Growth Officer, Li Ruifeng.

Furthermore, GWM has clearly stated that the company will continue to delve into the fields of new energy and intelligence, focusing on real user scenarios, accelerating global development, and enhancing the global influence of the GWM brand. At the same time, it will continue to adhere to a long-term strategy and transform into a global intelligent technology company.

It is worth mentioning that on April 15th, Wei Jianjun personally participated in GWM's live broadcast of the full-scenario NOA test, seemingly intending to closely connect with consumers, similar to Lei Jun, to promote car sales.Furthermore, Great Wall Motor has set its sights on overseas markets. On April 9th, the Passenger Car Association released data showing that the cumulative retail volume of passenger cars in the first quarter of this year reached 4.829 million units, a year-on-year increase of 13.1%.

Among them, the export volume of passenger cars in the first quarter of this year reached 1.063 million units, a year-on-year increase of 36%; the export volume in March even reached 406,000 units, a year-on-year increase of 39%, and a month-on-month increase of 36%.

Great Wall Motor's export volume far exceeds the overall industry level. Data shows that in the first quarter of this year, Great Wall Motor's overseas sales reached 92,800 units, a year-on-year increase of 78.51%, with sales accounting for 33.7%, a year-on-year increase of 10.1 percentage points.

It is worth noting that Wei Jianjun continues to increase investment in R&D. In the first quarter of 2024, Great Wall Motor's R&D expenditure was 1.96 billion yuan, a year-on-year increase of 27.73%, aiming to build its own "moat" with more patents.

In fact, 2024 is the first year of "bloody" competition among new energy vehicle companies. As an old-established car company, Great Wall Motor still needs to accelerate breakthroughs in all aspects if it wants to break through the encirclement.