Text | Online Travel, Author | Zhou Xiongfei
I’ve been very busy lately.
Recently, Hengchi, a brand owned by Evergrande Automobile, posted a message on its official Weibo and "authorized agent recruitment".In its recruitment details page, it not only shows the operation model of the future vehicle sales channel, but also stipulates the conditions for joining, such as agreeing with the development model of Hengchi and the registered capital shall not be less than 5 million yuan.
In addition, Hengchi also calibrated the store construction standards for franchise, such as exhibition hall area and headroom details, and listed the franchise process, which shows that Hengchi has made a very detailed description of the agent’s franchise.
At the same time as the authorized agent joining, there are also offline experience activities for Hengchi 5 models.
According to the official introduction of Hengchi, during the "May Day" period, its offline experience stores in Guangzhou and Tianjin held experience activities for Hengchi 5 models. In fact, since the end of March this year, there have been some news in the industry about the landing of Hengchi 5 offline experience stores.
As early as mid-January this year, Hengchi officially announced that the first car of Hengchi 5 was officially rolled off the production line from the factory, 12 days earlier than the original schedule.It is worth noting that the Hengchi 5 appeared in the MIIT new car declaration catalogue in November last year.
From the launch of the first car of Hengchi 5, to the holding of offline experience activities, and now to the opening of the agent franchise, this series of actions seems to announce that Hengchi 5 has entered the countdown stage of mass production.But the industry is full of doubts about whether Hengchi can achieve this goal.
Hengda has embarked on the road of new energy vehicle manufacturing since it acquired car companies in 2019, and launched nine models at the Shanghai Auto Show in 2021, which once detonated the entire auto show.But then not only did none of these models actually go into mass production, but Evergrande itself was also embroiled in a storm of shutdowns and debt.
By January this year, the models that could achieve mass production had changed from the original 9 models to the Hengchi 5 model, but to achieve mass production, it was necessary to have sufficient cash flow to ensure stable production capacity.According to the performance data released by Evergrande Automobile at the end of August last year, it has accumulated a loss of 18.83 billion yuan as of the first half of 2021, and the loss is in the trend of expanding year after year.
It is precisely because there is no money that Evergrande will choose a different franchise system from the "Wei Xiaoli" direct sales model in the establishment of sales channels.However, in the industry’s opinion, although Hengda’s channel joining threshold is low, there should not be many agents willing to join due to the well-known predicament that Hengda is currently in.
Today, although Evergrande seems to be on the right track step by step, it is still mired in a fog of uncertainty.
Evergrande Auto is one step closer to selling cars on the market.
On the last day of the "May Day" holiday, an investment page about "authorized agent recruitment" appeared on Hengchi’s official Weibo.In this investment promotion introduction, Hengchi provides a detailed list of sales models, store construction standards, investment promotion policies, qualification requirements, and franchise processes.
In terms of sales model, Hengchi said it would adopt a model of order-based sales and asset-light operations.Order-based selling, in short, is to arrange factories to produce according to the order volume, and then deliver the produced products to consumers. This approach can reduce the pressure on inventory compared with the mainstream warehouse sales in the industry, which are made first and then sold to the market. In order to achieve the purpose of asset-light operation.
Asset-light operations are also reflected in the establishment of a sales center.According to the requirements given by Hengchi, its sales center needs to be established in the automotive business district, with an exhibition hall area of 200-300 square meters, an exhibition area of more than 150 square meters, and a clearance height of 3.5 meters.
Looking at this store construction standard alone, it seems to be very demanding, but in the industry it is the opposite.
"The’car business district ‘required by Hengchi to build a store is not the shopping mall business district laid out by new forces such as NIO and Xiaopeng, but an area such as the car city in the suburbs of the city. In the car city, the general 4S store will start with 2,000 square meters, compared to Hengchi’s 200-300 square meter sales center, which is too small."Liu Bin, domestic regional sales manager of the Mercedes-Benz brand, explained to Connected Travel.
Perhaps this is why Hengchi will position the sales center as "small and refined". According to Hengchi’s plan, such a sales center will support services such as sales and test drives. This also means that the completed Hengchi sales center will be more functionally biased towards the stores currently established by "Wei Xiaoli".
Similar to the store construction standards, the agent qualification requirements listed by Hengchi also have higher restrictions in the eyes of the outside world, but in fact the threshold is also very low.According to Liu Bin, although Hengchi requires the registered capital to reach 5 million yuan, it does not require the actual payment of 5 million yuan, which is a lower threshold for joining.
According to the latest "Company Law" and related regulations, at present, only the total registered capital of a company needs to be registered, and it is not mandatory to submit a capital verification report, which means that there is no need to pay all the total registered capital at the beginning.
In comparison, other automakers have higher requirements for authorized franchisees.
Taking XPeng Motors as an example, as one of the new forces in domestic car manufacturing, although the layout of sales channels is mainly direct sales like NIO and Ideal, it has also opened up some franchise channels on this basis.
According to its official website,To become an agent of Xiaopeng, it must have no less than 3 4S stores, mid-to-high-end brands are preferred, and the annual revenue of the automotive business sector needs to reach more than 100 million yuan, and the asset-liability ratio is less than 70% "red line".
In Liu Bin’s opinion, if according to the standard of Hengchi, the investment of a sales center will be very small, based on the agent’s ready-made 4S store, plus hundreds of thousands of renovations, the overall cost will be about 100-2 million yuan.
For the average luxury brand 4S store, the cost of decoration and equipment alone will reach tens of millions of yuan, which is completely different from Hengchi’s playing style.
In terms of the joining process, Hengchi has also made some simplification.
In comparison with Hengchi and Xiaopeng’s joining process, although both parties have as many as five steps in the process, including submitting an application, qualification evaluation, signing a store construction agreement, store construction, and store acceptance.But in terms of details, Xiaopeng needs to ask the agent to pay a security deposit in the process of signing the store construction agreement, but Hengchi does not have this requirement.
According to Liu Bin, generally speaking, the brand will charge a deposit for the agent when joining, such as Xiaopeng’s deposit of about 800,000 yuan, which is a means for the brand to restrain the agent.For Hengchi, it may be to shorten the agent joining process and time, to save this link first, but this does not mean that Hengchi will not charge a security deposit later.
In addition, in terms of joining application, Hengchi and Xiaopeng also have differences. By looking at the application forms of both parties, we found that Xiaopeng’s application form is a document file. In addition to the basic information such as the applicant’s name and company name, it also needs to fill in the company’s equity structure and its own advantages. As a whole, it is more formal and detailed.
In contrast, Hengchi’s application form is not a formal document, but a simple Mini Program.In terms of content, you only need to fill in the applicant’s name, company name, current operating brand, and other basic information, which is much simpler than the Xiaopeng application.
From the lower standards for building a store, to the omission of the franchise process, to the simplification of the franchise application,In the industry, Hengda Automobile is likely to further reduce the threshold for agents to authorize franchise and shorten the franchise process, in order to attract more agents to join and accelerate the layout of sales channels.
And all this preparation is also for the purpose of better selling the car in the future.
The production time of Hengchi 5 is getting closer and closer.
According to a recent announcement by Evergrande Automobile,The Hengchi 5 will go into mass production on June 22 this year.Hengda Motor President Liu Yongzhuo also said in March this year that the work of Hengchi 5 is progressing smoothly and is making final preparations for the launch of Hengchi 5 for mass production.
The reason why Hengda Automobile officials are confident to announce such news is also because Hengchi 5 has had a series of positive developments.
In mid-October last year, Hengda held a strategic partner conference at its Tianjin production base. At the meeting, Liu Yongzhuo said that Hengda Automobile started a three-month car-building battle to ensure that the first production car "Hengchi 5" was rolled off the production line early next year.
In order to ensure the smooth rollout of Hengchi 5, Hengda Automobile had mobilized core R & D teams from Shanghai, Guangzhou and Shenzhen to support Hengda Automobile’s Tianjin production base. The Tianjin factory, which had previously defaulted on payments from suppliers, also resumed production at that time and accelerated the progress.
Facts have proved that Hengchi 5 went offline as scheduled this year.On January 12 this year, Hengchi issued a notice on its official Weibo, announcing that the first production model of the Hengchi brand, Hengchi 5, had been rolled off the production line at the Tianjin factory, 12 days earlier than originally planned.
A month later, in the 353rd batch of car declaration information released by MIIT, the name of Hengchi 5 appeared in the public information. It should be noted that this is the second time this model has appeared in the public list.
As early as last November, Hengchi 5 had appeared in the MIIT 350 batch of vehicle product announcements. According to the information given at the time, the model was manufactured by Hengda New Energy Automobile (Tianjin) Co., Ltd.
According to Hengda Automobile’s model planning, Hengchi 5 length, width and height are 4725mm, 1925mm and 1688mm respectively, and the wheelbase is 2780mm. From the size point of view, Hengchi 5 belongs to the compact SUV model like Xiaopeng G3 and Weimar EX5; the price will be below 200,000 yuan, and the standard Audi Q3, BMW X1 and other models.
From the appearance perspective, the Hengchi 5 features a streamlined body and a hidden door handle, which is in line with the mainstream design style in the industry as a whole.
The body of Hengchi 5 is equipped with a drive motor from United Electronics, with a peak power of 150kW and a rated power of 60kW; the electronic appliances have chosen a full-domain control architecture jointly developed with Bosch; and the power battery is equipped with a lithium iron phosphate battery from Ningde era.
In terms of power performance, Hengchi 5 accelerates from zero to 100 kilometers for 7-8 seconds, with a maximum speed of 180km/h, and a CLTC cruising range of 602 kilometers. According to First Electric Network, Hengchi 5 will also be equipped with the H-SMART OS Hengchi intelligent network system jointly built with Tencent. Based on this system, the model can achieve L2 + level automatic driving assistance.
In the industry’s opinion, Hengchi 5’s entry into the MIIT public list means that Hengchi 5 has passed the review of relevant departments and is eligible for listing and sales.After all, the publication of vehicle products into MIIT is a necessary review process before the product is launched.
During this year’s "May Day" period, just as Hengchi started recruiting agents, it also held static experience sessions of Hengchi 5 in Guangzhou and Tianjin Experience Centers. This was also the first time that Hengchi 5 production cars were offline to the public.
Although the experience activity of Hengchi 5 was officially opened during the "May Day" period,However, according to Wired Travel, the Hengchi Experience Center in Guangzhou was launched in March this year, and its location is also located in the business district of Guangzhou. The Hengchi 5 exhibition car was also installed in the store at that time.
From the visits and reports of many media, it can be seen that the Hengchi 5 exhibition car on display in Guangzhou and Tianjin Hengchi Experience Center and the model data announced by MIIT have not changed much, and belong to the final form before mass production and listing.
Now, whether it is Hengchi’s 5 first cars offline and offline experience, or the opening of the agent franchise model,In the eyes of the outside world, it is a phenomenon that Hengda Automobile and Hengchi are on the right track of car manufacturing.Therefore, many people began to reflect on the future of Hengda Automobile.
It is undeniable that Hengda Automobile is currently riddled with holes.
On March 21 this year, Hengda Motor issued a suspension notice, saying that at the request of the company, its shares were temporarily suspended from trading at 9 am that day.
Regarding the reason for the suspension, Evergrande Automobile said in the "inside information" announcement issued later,Due to the significant changes in the operation of the company’s real estate sector since the second half of last year, a large number of additional audit procedures have been added for this year, coupled with the related impact of the COVID-19 pandemic, according to the company’s current information, the company cannot complete the audit procedures on schedule.
Evergrande also said that due to the unfinished audit work, it was unable to submit the audited performance data as of December 31, 2021 by March 31 this year in accordance with the listing rules.This also means that due to Hengda’s failure to submit last year’s performance data on time, it was forced to implement a suspension.
According to Tiger Securities data, Connected Travel has indeed seen Hengda Automobile Hong Kong stock has been suspended, and its share price and market value have also stayed at HK $3.2/share and HK $34.70 billion.
By looking at the stock price and market value performance of Hengda Automobile since its listing in 2008, we found that it reached its highest value in February 2021, when its share price reached HK $69/share and its market value reached HK $60.83 billion.
In contrast, the current share price of Hengda Automobile has fallen by 95.3%, and the market value has even evaporated 26.13 billion Hong Kong dollars.
Although Hengda Automobile has not handed over the annual performance data, but at the end of August last year, it announced the performance data of last year’s mid-term. According to the data, Hengda Automobile’s revenue in the first half of the year was 6.92 billion yuan, an increase of 53.5% year-on-year.
In terms of net loss, Hengda Automobile recorded 4.79 billion yuan, down 110.51% year-on-year. Such losses began in 2018, and the net losses in 2018-2020 were 1.428 billion yuan, 4.947 billion yuan and 7.665 billion yuan respectively.It can be seen that its losses are expanding year by year, and as of the first half of 2021, Hengda Automobile has accumulated losses of 18.83 billion yuan.
According to Wind data, Hengda Automobile’s cash and cash equivalents in 2018-2020 were 1.60 billion yuan, 9.90 billion yuan and 10.50 billion yuan respectively. Although its cash reserves were still growing slightly as of December 31, 2020, its total liabilities also increased significantly in these years. From 2018 to 2020, its total liabilities were 22.80 billion yuan, 94.70 billion yuan and 155.90 billion yuan respectively.
Based on the above performance data, Hengda Automobile is currently mired in debt and insufficient funds.Due to this, Hengda Automobile announced in August last year that it would sell some of its projects and assets in order to repay its debt.
At present, there is no news of selling assets for money, and Hengda Automobile, which is short of money, wants to establish sales channels to sell cars. In Liu Bin’s opinion, Hengda Automobile can only choose to invest less in the franchise model to establish a sales network in order to achieve this goal.
But Liu Bin also believes that although Hengda Auto offers a relatively low threshold for agents to join, it is easy for general agents to join, but it is very likely that not many agents will choose to join the Hengda Auto brand. After all, to sell cars to make money, the premise is that the cars sold must be competitive.
However, for Hengchi 5, it is difficult to have this strength.
First of all, from the appearance point of view, the design of Hengchi 5 belongs to the standard, and there are not many bright spots; in terms of interior decoration, from the current public information, although it has a triple-screen design, it is different from the two-screen design of NIO and Tesla, but this design has long appeared on models such as Ideal ONE and Zero Run C11, which is not uncommon.
In terms of cruising range, Hengchi 5 can achieve 602 kilometers, although it has exceeded the industry’s passing line, but if this level of cruising is compared to the track of new energy compact SUVs, it does not have much advantage.Because the Nezha U and GAC AION Y, both compact SUVs, also have a maximum cruising range of more than 600 kilometers, and the cruising range of Xiaopeng G3, Zero Run C11 and other models has also reached about 550 kilometers, which is not much different from Hengchi 5.
As the intelligent aspect that is currently valued by consumers, according to public information, Hengchi 5 only has L2-level automatic assisted driving capabilities. In contrast, the higher-level urban road automatic assisted driving capabilities of car companies such as Xiaopeng and Great Wall have also been unveiled to the outside world.
In addition to the lack of advantages of the model itself, Hengchi’s brand power and financial capacity have also become important factors restricting the launch of Hengchi 5.
"Based on the current situation of Hengda Automobile’s insufficient capital reserves and declining performance, it is still unknown whether it can support the mass production of Hengchi 5 in the future. Even if mass production can be achieved in the end, Hengchi’s brand power will be exhausted with the occurrence of previous layoffs, asset sales and other events, not to mention that there are still many consumers who do not know this brand."Zhang Xiang, a distinguished expert from China Bolian Think Tank, told Connected Travel.
From this perspective, although Hengda Automobile has currently launched an agent franchise model, Hengchi 5 is also experiencing offline appearances, but under the influence of factors such as the lack of bright spots, insufficient capital reserves, and weak brand power, Hengda Automobile wants to use Hengchi 5 to launch a mass production turnaround.
Even so, for Hengda Automobile, in the context of the current new energy vehicle industry trend, car manufacturing is already an extremely important "life-saving straw", which must be grasped.
(Liu Bin is a pseudonym in the article.)
Reporters He Hongyuan and Chen Sha report