- 2024-11-07
- News
Huawei's Foray into Luxury Cars: A Market Disruptor?
After gazing upward, the domestic million-yuan class models are set to emerge. The brand's continuous ascent is an inevitable path for Chinese automobiles, but the journey ahead is far from smooth.
A year ago, the launch of the Huawei Mate 60 smartphone ignited the new vehicle, AITO M7; a year later, the Huawei Mate 70 smartphone debuts, and this time it's the ZUNJIE S800 that awaits the spotlight—Huawei's new million-yuan luxury car in collaboration with JAC Motors. On November 26th, the Huawei Mate brand ceremony took place in Shenzhen, where the MAEXTRO ZUNJIE brand was officially unveiled. The first model is the large sedan ZUNJIE S800, with a pre-sale price of 1 to 1.5 million yuan, benchmarking against the Maybach S-Class. Specific details of the model have not been disclosed.
ZUNJIE is the latest addition to Huawei's "Jie" series, with Huawei currently collaborating with four major automakers to create four brands: AITO AITO (with Seres), LEXEED ZHIJIE (with Chery), STELATO XIANGJIE (with BAIC), and MAEXTRO ZUNJIE (with JAC). The four "Jie" brands cover the SUV, sedan, executive sedan, and large sedan markets, together forming Huawei's matrix in the field of smart automobiles.
Sales of AITO Wenjie M7 and M9 have been impressive, marking a significant milestone in Huawei Smart Selection's journey towards premiumization as the market has granted it interim recognition. According to Huawei's channel partners, building on the success of the M7 and M9, Zunjie holds considerable promise in disrupting the luxury vehicle market, valued at over one million dollars. However, it's important to note that the audience for million-dollar luxury vehicles is inherently limited. Firstly, this demographic tends to place great emphasis on brand prestige. Secondly, the integration of intelligent driving technology may not be as warmly received as initially anticipated, which is an issue that Zunjie needs to address. Furthermore, channel partners have revealed that Zunjie, as a luxury vehicle in the million-dollar range, will not be displayed alongside other Huawei-affiliated brands such as Wenjie, Zhijie, and Xiangjie. Instead, it will have dedicated experience centers. Zunjie is also actively recruiting sales professionals from brands like Porsche and Bentley, demonstrating Huawei's unwavering determination to make a strong impression with its Zunjie offerings.
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After the confirmation of the "ZUNJIE" name, the stock price of JAC Motors (600418. SH) has recently been on an upward trend. Since July, the cumulative increase has approached 300%, and the market value once broke through 100 billion yuan in mid-November. However, it has since retreated, and as of the closing on November 26th, JAC Motors' stock price was at 37.19 yuan, down 4.42%.
Two Challenges for the Domestic Electric Luxury Car Market
As a domestic million-yuan electric vehicle, ZUNJIE is easily associated with BYD's Yangwang brand.In the era of fuel vehicles, the luxury car market was essentially monopolized by foreign brands. In the new energy era, traditional luxury brands from Germany, the United States, and Japan have not been able to continue their dominance, with the sales of their luxury electric vehicle models remaining low. This is a good opportunity for domestic new energy vehicle brands to aim high.Let's take a look at the domestic electric luxury car market.In the past two years, brands such as AITO, Li Auto, NIO, and Xiaomi have continued to target the mid-to-high-end new energy luxury car market, successively launching models with prices exceeding 500,000 yuan, such as the AITO M9, over 800,000 yuan for the Xiaomi SU7 Ultra, and the pre-sale price of 800,000 yuan for the NIO ET9.The threshold of 1 million yuan has also been broken. Before ZUNJIE, BYD launched China's first million-yuan luxury new energy brand, Yangwang, in 2023, with the first product being the off-road vehicle Yangwang U8, priced at 1.098 million yuan. According to the 2024 top three-quarters of million-yuan luxury car sales list released by Yiche, Yangwang U8 sold a total of 6,458 units in the first nine months of 2024, ranking tenth on the list, and is the only domestic independent brand on the list.Just looking at sales, Yangwang U8 is far from the sales of luxury brands such as Land Rover, Porsche, and Mercedes-Benz, with nearly 30,000 units sold for Land Rover's Range Rover and Defender in the first nine months, which is nearly 4.4 times the sales of Yangwang U8.If divided by energy form, Yangwang U8 is the domestic million-yuan new energy car sales champion, with sales significantly leading Porsche Cayenne E-Hybrid, Porsche Taycan, Mercedes-Benz S-Class plug-in hybrid, Lotus EMEYA, and other models.
The market size for million-dollar luxury cars is not large, but the fluctuations are quite significant. Reviewing the monthly sales after the launch of Yangwang U8, the situation is not optimistic. In December 2023 and January 2024, the sales of Yangwang U8 for two months were 1,593 units and 1,652 units, respectively, followed by a clear contraction trend. Starting from May, sales have been declining monthly, with only 294 units sold in September, a significant drop from the historical monthly sales peak of 1,652 units.BYD's data shows that from January to October 2024, the Yangwang brand sold a total of 6,841 units, including 6,801 units of the off-road vehicle U8 and 40 units of the pure electric supercar U9. The third model, Yangwang U7, began pre-sale in November 2024, also positioned as a new energy large sedan like ZUNJIE S800, with a price also in the million-yuan range. Entering the million-yuan luxury car club is not easy for new brands, and Yangwang U8 has already shown a trend of declining sales momentum. Industry analysis believes that new brands mainly face two impacts: one is their brand appeal, and the other is the impact of traditional luxury car price reductions. On social media, most Yangwang U8 owners and prospective owners are quite optimistic about the product power of U8 itself, but some consumers have expressed that, compared to international million-yuan luxury cars, Yangwang's brand height is still somewhat insufficient. Many traditional ultra-luxury brands are continuously reducing prices. For example, the Bentley Bentayga hasbeen reduced by several hundred thousand yuan, the Rolls-Royce Cullinan has been reduced by millions of yuan, and the BMW X7 has dropped to over 700,000 yuan... These overseas ultra-luxury large and mid-size SUVs have also taken away market share from Yangwang U8.
"The rise of Chinese brands has led to a steady loss of market share for global automakers in China, and international brands have gradually lost competitiveness in the relatively low-end market, and can only turn to niche and relatively high-end markets." The head of UBS's China automotive industry research stated that the Chinese brand market share continues to increase, and they have a clear lead in intelligence and software aspects.
Yangwang fired the first shot for China to compete for a say in the million-yuan luxury car market, and now ZUNJIE is here to take over.
The Sales Trends of the First Three "Jie" Differ, JAC's Will is Key
Why can ZUNJIE, built with the addition of Hongmeng Zhixing, sell for a million? At the press conference on November 26th, Yu Chengdong, Huawei's rotating chairman, chairman of the Terminal BG, and chairman of the Smart Car Solution BU, did not disclose more details about the S800, only announcing a few basic data: length 5480 mm, width 2000 mm, height 1536 mm, and wheelbase 3370 mm.The market has high expectations for ZUNJIE: firstly, there is a lack of domestic car brands in the luxury car market, and secondly, the achievements of the released AITO, ZHIJIE, and XIANGJIE are evident.
Guosheng Securities research report believes that considering Huawei's leading effect in industries such as autonomous driving, smart cockpit, and smart safety, in the context of intensified competition among OEMs, Huawei's partners are expected to enhance product power, and related companies in the industry chain are expected to benefit from the ecological advantages, benefiting from the development of domestic smart cars and forming a first-mover advantage. Before this, JAC Motors had become increasingly marginalized in the new energy field. As one of the earliest companies involved in the promotion of new energy vehicles, JAC Motors was "at its peak from the start." According to the data from the Passenger Car Association, in 2012, the domestic electric vehicle sales were 8,500 units, with JAC selling 1,422 units, accounting for nearly 17% of the market. Until 2019, JAC's scale in the new energy personal user field was still leading. However, with the intensification of market competition and changes in the automotive industry, the sales of JAC's new energy vehicles began to decline year-on-year. Faced with difficulties, JAC Motors began to try to cooperate with high-quality companies. As early as 2016, JAC Motors successively cooperated with NIO and Volkswagen, but both were not very successful. Cooperating with NIO cost billions of yuan to transform the factory; cooperating with Volkswagen to create the Thinkway brand, which is now "untraceable."Since 2017, JAC Motors has been loss-making for five consecutive years, with a total loss of more than 6 billion yuan. The latest financial report shows that in the first three quarters of 2024, JAC Motors' operating income reached about 32.206 billion yuan, a decrease of 5.06% compared to the same period last year, and the net profit attributable to the parent company was about 625 million yuan, with a net profit of -231 million yuan after deducting non-recurring gains and losses.In 2019, JAC and Huawei signed a cooperation framework agreement and an MDC platform cooperation agreement, and their cooperation further deepened with the signing of the "Smart New Energy Vehicle Cooperation Agreement" in December 2023, indicating JAC's determination to enter the new energy vehicle field.JAC Motors has advantages in advanced manufacturing, while Huawei has successful experience in creating high-end products in the user field and can empower from multiple aspects such as product definition, publicity and marketing, and sales channels.
Both parties play to their strengths to add more increments to the Hongmeng Zhixing camp and will also promote JAC Motors to enter the mid-to-high-end new energy field. Therefore, Huawei's partnership with JAC to launch ZUNJIE is expected to help JAC Motors achieve a breakthrough in passenger car development. Once ZUNJIE replicates the sales of AITO in the top luxury market, JAC Motors' passenger car business is expected to change significantly, and the company's performance is also expected to achieve revenue growth and turn a profit . With the launch of ZUNJIE, Huawei's Hongmeng Zhixing ecosystem is gradually becoming complete. From AITO to ZHIJIE, XIANGJIE, and ZUNJIE, from feeling the way to "high-order intelligence," "high-end enjoyment," and "luxury nobility," we can see Huawei's layout in the mid-to-high-end market. In Gong Min's view, Chinese car brands together account for about 20% of the global car production and sales, and 60% of the global electric vehicle production and sales, but the corresponding market value only accounts for about 10% of the global car company market value, and there is a clear mismatch. Therefore, there are still many opportunities for Chinese car brands in the development of new energy vehicles. Looking back at the sales situation of the three "Jie" previously sold by Huawei, the best-selling model of Hongmeng Zhixing is still the AITO M7, and the AITO M9 is not far behind. According to public data from the automotive platform, as of October 2024, Hongmeng Zhixing's entire range of models has delivered 500,000 units in 32 months, setting the fastest delivery record in the industry, surpassing Li Auto's 46 months to deliver 500,000 units. Among them, M7 has broken through 300,000 cumulative orders, and M9 has broken through 160,000 orders.
XIANGJIE S9 was launched in August 2024, targeting luxury fuel sedans such as the BMW 5 Series, Audi A6L, and Mercedes-Benz E-Class, with prices ranging from 399,800 to 449,800 yuan. The sales in September and October were 2,163 units and 1,982 units, respectively, totaling 4,145 units, winning first place in sales of pure electric sedans over 400,000 yuan for two consecutive months. The situation of ZHIJIE is not as optimistic as expected. Positioned in the 200,000-300,000 yuan range, the ZHIJIE S7 was officially launched in November 2023. The sales in the first three months after the launch were not over a thousand, and then it was refreshed in less than half a year, launching the 2024 ZHIJIE S7 in April 2024. Although it reached a monthly sales volume of 5,000 in May, it did not continue, and as of October, the annual sales volume in 2024 was 28,819 units, lower than its benchmark competitor Tesla Model 3's sales volume of 126,833 units. As a new "Jie" of Hongmeng Zhixing, how the pre-sale performance of ZUNJIE will be, the market will soon answer.
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