The "Evergrande" in the car circle has not been confirmed yet, but Great Wall is really anxious

In recent days, the "Evergrande Warning" of the Great Wall CEO Wei Jianjun has been in full swing.

In an interview with Sina Finance CEO Deng Qingxu, Wei Jianjun said:

"Evergrande in the automobile industry now exists, but it's just not exploded." As soon as the news came out, there were many discussions:

There is also Evergrande in the automobile industry? who is he!

01 Become the "three elements" of Evergrande

According to Wei Jianjun, the reason why there is Evergrande in the Chinese car circle is that many pure electric car companies have suffered serious losses and cannot form a commercial closed loop at all.

At the same time, the original shareholders and capital are also slowly withdrawing their investment, and car companies are currently just selling with their teeth.

This is just like Evergrande back then. The money for buying a house was borrowed from banks. Evergrande's leverage was very high and its expansion was very fast.

During 2019, Evergrande's projects were almost all first-tier to fourth- and fifth-tier cities across the country.

However, due to the small increase in housing prices and insufficient market demand, many "leveraged houses" cannot be sold, resulting in a broken capital chain and a storm.

From this perspective, if there is Evergrande in the automotive circle, it should also meet the following characteristics:

1: High debt, large-scale expansion.

Normal car companies are making profits - expanding production - and making profits.

But Evergrande-style car companies may be making money - relying on borrowing to expand production sales to seize market share.

2: Large-scale and long-term payment for suppliers.

Evergrande was dug up by the market before the storm and owed many suppliers' project funds. At that time, Evergrande's solution was to issue "Evergrande Acceptance Bills", that is, to write an IOU.

But later, the supplier found that Evergrande's acceptance cycle was getting longer and longer, until it was far away.

Therefore, if there is Evergrande in the car circle, then car companies that have a long owed supplier project payment period should also be worthy of vigilance.

3: There are reports of financial fraud.

In fact, as early as 2012, before the Evergrande storm, Citron, an American research firm, issued a report pointing out Evergrande's financial fraud problem.

But at that time, Boss Xu launched a powerful naval army and legal system to suppress this matter, and many official media were also talking to Evergrande.

The result actually made Citron banned from entering the Chinese market for a full five years.

From this we can see that the short-selling reports of well-known foreign research institutions are not groundless.

So are there any foreign institutions now saying which car company's finances are suspected of fraud?

You might as well search, there is a answer.

02 There are also differences between the car circle and the real estate market

Although Wei Jianjun did not name who is Evergrande in the car circle, from his other perspectives, it seems that this Evergrande is meaningful.

For example, he said that atmospheric pressure fuel tanks are an incident in the whole society. Two years have passed. Users are watching, industries are watching, and people are watching.

In addition, he also said that some companies do not abide by the competition of business rules, forcing suppliers to lower prices indefinitely, and owing suppliers payments for nearly a year, resulting in suppliers being unable to survive.

Official manufacturers are also cutting corners, reducing the product from the original 220,000 to 120,000 or 130,000. The quality is not guaranteed and the old car owner is back-stolen.

The descriptions of these words are obviously biased.

According to the current financial report data released by major automakers, there is one debt ratio exceeding 90% in the fiscal year 2024, and most of the rest are between 60% and 80%.

But unlike the real estate market, few major mainstream car companies in China rarely have insolvency.

Although some car companies have debts of more than 100 billion yuan, and the maximum is nearly 700 billion yuan, it should be noted that automobile companies have a lot of debts, which are interest-free liabilities (no interest, no fear of profit-making profits).

The proportion of interest-bearing liabilities is generally less than 20%.

The proportion of interest-bearing liabilities in BYD is a very low proportion in the industry. (Only about 4%, the industry average is 15%) Some car companies have had a lot of debt and losses in the past, but sales have increased sharply in recent years, and losses have shrunk significantly.

For example, Xiaopeng's sales increased by 330% year-on-year last year, and remained best-selling in the first four months of this year. Where is

BYD?

Sales in 2024 increased by 41% year-on-year, with global sales reaching 4.27 million vehicles, continuing to win the global new energy vehicle sales championship.

The sales growth rate is 3 times that of Geely and 4 times that of Great Wall.

When the company is in short supply, it is necessary to expand production capacity, increase investment and channels, and these will increase the debt-to-asset ratio.

In addition, in April this year, BYD's new registered sales of electric vehicles in Europe reached 7,231, an increase of 169% year-on-year, surpassing Tesla for the first time.

The growth potential energy is still continuing. What Wuxiangjun is worried about here is that it is a company that has been listed and is losing money since its listing.

Their debt ratio last year was as high as 87%, an increase of 12 points from the previous year, and the losses were increasing year by year.

Although its CEO said "confidence is to achieve profitability in the fourth quarter of 2025."

, we feel that judging from the sales volume in the first quarter, this goal may not be achieved.

03 Wei Jianjun was also quite panicked

Interestingly, although Wei Jianjun took the lead in proposing the "Evergrande Theory", saying that some car companies have too long payments due to upstream suppliers.

But compared with the payment cycles of major mainstream car companies arrears from suppliers, Great Wall itself is not excellent.

Even longer than the company Wei Jianjun himself mentioned.

In fact, there are also many hidden concerns about the development of the Great Wall in recent years.

Last year, Great Wall did not follow the low price strategy. In the first three quarters of 2024, Great Wall Motor's revenue was 142.25 billion yuan and its net profit was 10.43 billion yuan, a year-on-year increase of 108.7%; its net profit attributable to shareholders after deducting non-operating items was 8.37 billion yuan, a year-on-year increase of nearly 120%, setting the best profit in Great Wall Motor's history.

Although sales are not the highest, their ability to make money ranks among the top.

But in the first quarter of this year, Great Wall's sales were 257,000 vehicles, a year-on-year decrease of 6%, and sales of Haval, Ora and Tank fell across the board.

' net profit was 1.751 billion yuan, a year-on-year decrease of 45.6%.

The reason is that the opponent is too curled.

In March this year, the new energy penetration rate of the domestic passenger car market has soared to 51%, but most of Great Wall's volume-based models are still hybrid and oil vehicles. The market share of the tram sector is not large.

Follow the overall environment of the Chinese automobile market, the challenge of Great Wall is the shrinking of the traditional fuel vehicle base and the slow transformation of new energy.

From this we can see that Wei Jianjun must also lead the speed of transformation and do not let his inherent thinking limit his progress.

As Wei Jianjun himself said: "The car manufacturing thing is not a 100-meter sprint, but a marathon."

Great Wall has created a lot of glory in the past, and has left behind classic models such as tanks and Haval. However, in the face of new changes in the market, Great Wall itself should learn more from its competitors and look down on its peers less.

Only by respecting the rules can one truly achieve its own acceleration in the wave of electrification.