In China, a little-known electric vehicle manufacturer leaves Tesla in the dust Automotive industry news

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Since last July, a little-known carmaker in southwest China has dominated the world’s largest electric car market, selling to larger players and even Tesla Inc. almost every month with a small bare-bones EV vehicle starting at just $ 4,500.

The Hongguang Mini is the establishment of SAIC-GM-Wuling Automobile Co., a joint venture between SAIC Motor Corp. and Guangxi Automobile Group Co., two state-backed automakers, and US giant General Motors Co.

Headquartered in Liuzhou City, known for its limestone mountains and river snail soup, the company – which has sold about 270,000 cars in nine months, making it the best-selling vehicle in China – has even greater ambitions for the future. . The goal is for annual sales of 1.2 million vehicles next year, almost equal to the number of electric vehicles produced by Chinese vehicle manufacturers in 2020 combined.

It’s an eyebrow-raising goal, but even before the Hongguang Mini, Wuling had a history of winning production in a market that defines the new era of driving. Established in 2002, the Sino-American JV built its business selling microvans: reliable workhorses with sliding doors that earned the nickname “bread box cart” in Mandarin and were the passenger vehicle best-selling in China in 2017. Millions of them use the country’s roads, used by contractors and delivery drivers.

Buyers of these gas-powered gray vans are almost exclusively male, making the Wuling pivot to Hongguang Mini, which has a top speed of 100 kilometers per hour and 12-inch wheels, more extraordinary. Shortly after its debut last July, the carmaker realized that the vehicle was gaining traction among young women, a phenomenon in which it leaned with an approach that doubles conventional wisdom about how they are sold. the cars.

“The mindset of our company is to produce everything people need,” Wuling’s head of branding and marketing, Zhang Yiqin, said in an interview. “We keep our tabs close to our users. Barriers to the adoption of electric cars can only be removed when consumers consider it comfortable to use them. “

To this end, Zhang has formed her team with employees who understand Hongguang Mini’s customer base, which is now around two-thirds female. At 35, he jokes that he is the oldest statesman in the group with an average age of about 27 years. Slogans like “Young and Eager” are spread across the walls of Wuling’s headquarters in Liuzhou, a city that embraces electric vehicles next to the company with 30% of all electric vehicle sales last year, the rate highest in China, according to WAYS Information Technology.

According to Zhang, Wuling’s success with the Hongguang Mini was driven by a marketing campaign run almost entirely online. His team often communicates with consumers directly through various social media platforms, and it was the request of a more nuanced customer that made the company reach the latest version of Hongguang Mini: the Macaron . It comes in avocado green, lemon yellow and white peach pink, with an optional solid-colored ceiling to contrast, to mimic the vanilla butter cream that akin to French meringue confections of the same name.

It’s also how they landed at one of the car’s key selling points, in addition to its lowest price: Hongguang Mini drivers are able to customize their vehicles in a way that’s not possible anywhere else.

The “panels” can be used to transform the car’s panels and body. Some have the Nike swoosh, some have galaxies similar to outer space galaxies, and others have Hello Kitty and Doraemon cartoon characters. The original Hongguang Mini features about 20 different basic colors, which can be changed, and buyers can also customize the interior.

Zorah Zhang (unrelated) is a typical customer. The 23-year-old is a fan of Hayao Miyazaki, the Japanese animator who directed My Neighbor Totoro, a fantasy film with a character named The Catbus, a smiling feline with leather-covered seats.

He looked for his Hongguang Mini to look like it, spending about 15,000 yuan ($ 2,300) to cover the inside of the car with brown velvet and cover the roof with lights that glow at night.

“Many of my friends have the Mini, you see them everywhere in Liuzhou,” said Zhang, who lives with his parents (they drive a BMW sedan). “I love things that reflect my character. I may change the look of the car again if I like other things. ”

As frivolous as it may seem to turn a wheel set into a fashion accessory, there is a very real market to take advantage of.

Outside Liuzhou, VE penetration in China is still around 6% and competition is fierce. Tesla may be the name that resonates most, especially in larger cities like Beijing and Shanghai, where its first Gigafactory is located, but there are a lot of newer local entrances from Nio Inc. at Xpeng Inc., Li Auto Inc. and WM Motor. piling up.

At the same time, other home-grown players like BYD Co., a vehicle manufacturer backed by Warren Buffett, are increasing their electric vehicle game and international giants like Volkswagen AG are launching billions of dollars in new electric formations.

With consumers in China overwhelmed by the choice when adding vehicles combined with fossil fuels, automakers must give drivers what they want to survive, said Jochen Siebert, CEO of JSC Automotive Consulting in Singapore.

“SAIC-GM-Wuling has to come up with new ideas all the time to attract consumers,” Siebert said. The Hongguang Mini is “a kind of accessory, which means it’s a fashion item that can go out of fashion sooner or later.”

For now, it’s a strategy that pays dividends for Wuling. The company, which owns 50.1% of Shanghai-based SAIC, 44% of GM’s unit in China and 5.9% of Guangxi Automobile, sold a total of 1.6 million vehicles. last year. Although it was down about 4% from 2019 amid the pandemic, Wuling’s new energy vehicle sales nearly tripled to 174,000 units.

For GM, which doubles in electrification and autonomous driving under CEO Mary Barra, the Hongguang Mini seems to have been a blessing. The vehicle maker earned $ 9.9 billion in revenue from its Chinese automobile joint ventures in first-quarter results last month, up from $ 4.3 billion in the first three months of 2020. GM, which has several associations in China, does not break those of Wuling income in its financial results.

Although commitment to customers has distinguished Hongguang Mini, cost has been the main driver of its box office sales in a country where many find the price of the sticker of a Tesla Model 3, which is sold by the equivalent to $ 39,300, out of reach. The basic Hongguang Mini starts at $ 4,500 and even the new Macaron sells for less than $ 6,000.

Wuling has been able to produce affordable cars thanks in part to its good supply chain management, perfected with popular microvans. Many of Wuling’s suppliers have also established manufacturing bases in Liuzhou, which has helped further limit costs. It’s a model replicated by vehicle companies from other cities and provinces across China, flattering to Wuling, but also challenging as it lowers the price of rivals ’cars.

Multinational carmakers are also looking at the compact EV space, with Daimler AG ready to manufacture an electric version of the Smart (for many, the consummate small car) in China with its own venture partner.

The global semiconductor shortage also weighs on Wuling, with the Hongguang Mini, despite being a basic EV, which still requires more than 100 chips. Hongguang Mini production has been hit by shortages, and Macaron production is expected to fall by about 15% in May, according to Zhang.

The strong sales target for 2022 is the cornerstone of Wuling’s plan to maintain its market-leading momentum. After launching a Hongguang Mini convertible at the Shanghai Motor Show in April, it aims to launch an improvement to the vehicle’s mid-cycle later this year and is working on a two-seater EV aimed at younger men , said Zhang.

At a Wuling dealership in downtown Liuzhou, user experience manager Li Zhengguang says there is a four-person team focused solely on new media. They communicate with potential customers using Douyin, such as TikTok is known in China, and Little Red Book, a popular social shopping platform trusted by young women, who share photos and videos. Li, who sold engagement rings with diamonds, says there is not much difference between jewelry and cars. Create a craving for a fresh product and buyers will come, he says.

Launching the Hongguang Mini not as a cheap car, but as a coveted accessory in China brand-conscious, is great, said Siebert of JSC Automotive.

“It has become a hallmark of SAIC-GM-Wuling in the last 20 years to always surprise the market and themselves,” he said. “They have done very well because they focus on the right things. In quality, when they mainly manufactured microvans and now in marketing ”.

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