What are the future growth potentials of the three major companies' 2017 net profit?

In the micro-growth environment where the passenger car market was less than 3% in 2017, the self-owned brand car companies also showed a polarization trend. Specifically, the first camp of its own brands, represented by Geely, has achieved coveted performance in sales and profits; at the same time, the autonomous second camp represented by Jianghuai Automobile, in terms of 2017 net profit However, there has been a dramatic decline in qualifying.

According to the annual performance report of each company in 2017, the author found that Great Wall Motor, Jianghuai, and Jiangling Motors had a decline of more than 40% in net profit. Then, in 2017, what are the main causes of the above-mentioned corporate net profit margins and their future growth potential?

Great Wall Motor: Large investment in new product research and development, turning to new energy sources for future development

According to the 2017 annual pre-reduction announcement issued by Great Wall Motor Co., Ltd., the net profit of the company's performance was 5.035 billion yuan, which was 52.28% less than the same period of 2016.

For the 2017 annual net profit, the official explanation given by Great Wall Motors is that in 2017, the company's sales promotion for existing products will be greater, and the advertising expenses for the media, television, and other media will increase significantly; in addition, in order to continue, To enhance the competitiveness of SUV products, Great Wall Motor increased investment in R&D of new products, resulting in increased R&D expenditures.

In short, in 2017, the growth of the passenger car market slowed down and the SUV market was fiercely competitive. In this case, Great Wall Motor had to increase the sales promotion of existing products in advertising and promotion in the terminal market. In addition, the high-end brands WEY's two models VV7 and VV5 have been listed, although in the end market has achieved good sales, but at this stage, because of the previous high investment in production R & D, WEY brand to achieve profitable time .

In terms of sales volume, annual sales of Great Wall Motors totaled 1.07 million units in 2017, a slight drop of 0.4% year-on-year. For the sales target of 1.25 million units in 2017, Great Wall Motors has only completed 85.6% of the annual target. This year, Great Wall Motors, with a more pragmatic and prudent attitude, will target 1.16 million annual sales targets, which is 8% higher than the total sales volume in 2017.

In fact, in terms of sales volume, in 2017, Great Wall Motor’s Haval and WEY's performance in the segment market is still remarkable. According to the data, in 2017, the annual sales of the Harvard brand reached 851,900 units, accounting for 80% of the total sales of Great Wall Motor; and 2017, the cumulative sales of WEY reached 86,400 units, and the two models of VV7 and VV5 continued to have monthly sales exceeding 10,000 yuan. Significant.

With the start of the Spring Festival in 2018, Great Wall Motor’s news of BMW’s domestic MINI was handed over. This provided Great Wall Motor with a reliable technical partner and brand endorsement for the deployment of new energy products. At the same time, 2018 will also be WEY's first year in the new energy field. According to public information, in 2018, the WEY brand will build a dual-drive product model of new energy and traditional power. Its first plug-in hybrid SUV model P8 will be available in the first quarter.

In the face of the 2017 "profits" of profit, Great Wall Motor Chairman Wei Jianjun and President Wang Fengying were each sentenced to punish them with a yearly salary of 3 million yuan and a yearly salary of 2 million yuan. However, in 2018, as Great Wall Motor's layout in the new energy sector is improved, it is expected to achieve sales and profit, or not far away.

JAC: Overweight new energy and commercial vehicles, or reverse the status quo

In 2017, JAC has been tagged as “bad student” by the media and public opinion on more than one occasion.

At the end of January 2018, JAC Motors announced the company’s 2017 annual earnings reduction announcement. According to the announcement, the net profit of Jianghuai Auto's shareholders of listed companies in 2017 is expected to decrease by 677 million yuan, a decrease of 58% year-on-year. In response, Jianghuai Automobile summarized the reasons as follows:

1. New Energy Vehicle Subsidy Recession: Affected by the subsidy of new energy vehicles, the subsidy income of Jianghuai Automobile New Energy Passenger Vehicle was 1.556 billion yuan, a year-on-year decrease of 6.6%, and the subsidy for a single new energy passenger vehicle dropped by about 40%;

2. The sales of passenger cars have fallen sharply, especially the company's main sales pillar SUV products, which decreased by 154,200 units year-on-year in 2017;

3. The price of raw materials rose sharply and the company's R&D investment remained high.

In the eyes of the outside world, the huge decline in sales of passenger cars is the main reason for the sharp decline in net profits of Jianghuai Automobile. According to the official sales data released by JAC, in 2017, sales of JAC passenger vehicles were only 222,200, and 55.55% of the annual sales target of 400,000 vehicles was completed. Among them, the cumulative sales volume of SUV products was 122,300, a year-on-year decrease of 55.96%.

However, it is worth noting that Jianghuai New Energy Vehicles maintained a good increase in the sales of fuel vehicles. In 2017, the total sales volume of JAC's new energy passenger vehicles was 28,200, an increase of 54% year-on-year. Under the existing new energy product layout, in 2018, Jianghuai Automobile will continue to invest in new energy products.

It is reported that this year, JAC will launch a total of five new energy vehicles including the iEVA50, iEV6ES, iEV7S (300km version), iEV7 long-range version, and iEVA60. In order to meet the 2018 subsidy standard for new energy vehicles, new models will be introduced. Both mileage and battery technology have improved. At the same time, its new energy products jointly produced with Volkswagen will also be available this year.

At the same time as the passenger vehicle industry is frustrated, in 2017, JAC Motors will continue to flourish in its specialty commercial vehicle market. Commercial vehicles such as JAC heavy trucks and JAC light trucks have maintained a leading position in the domestic market while achieving a good growth rate in international markets such as Central and South America.

In November last year, JAC signed a memorandum of understanding with the Volkswagen Group and the Volkswagen Group (China). Both parties plan to jointly develop and sell multi-purpose vehicles (including but not limited to pickups, MPVs, and electric commercial vehicles). Based on this cooperation, Jianghuai Automobile is expected to rely on the public's technology and brand endorsement in the field of commercial vehicles in the future, with new breakthroughs.

Jiangling Motors: It is the key to inspire its own brand passenger car business

According to the 2017 annual results report released by Jiangling Motors, the company’s net profit attributable to shareholders of the listed company for 2017 was RMB 690 million, down 47.65% year-on-year. According to the “Announcement of Supplementary Results for 2017 Annual Express” subsequently issued by Jiangling Motors, it attributed the sharp fall in profits to the fact that in 2017, the company increased investment in R&D management costs and promotion costs.

Although the decline in net profit of Jiangling Motors in 2017 was not small, from a sales perspective, it showed a positive growth trend that should not be underestimated. According to statistics, in 2017, Jiangling Motors sold a total of 310,000 vehicles, an increase of 10.32% year-on-year. From the perspective of its sales structure, it mainly benefits from the company's superior performance in the light commercial vehicle sector.

Last year, Jiangling Motors' JMC brand trucks, pickups and light buses all achieved a good market share. However, in contrast, the total sales volume of the Shengsheng brand passenger car in 2017 was only 29,000 vehicles, a year-on-year decrease of 21.94%.

As Jiangling’s own-brand passenger car, Yusheng owns two models, the Yusheng S350 and the Yusheng S330. Both models entered the SUV market at different prices and positions, but since the company entered the market, the two models have been sold. It didn't make much progress.

The industry believes that with the upgrading of domestic consumption structure and the slowdown in the growth of the SUV market, the Shengsheng brand, which only relies on SUV products, has little chance of success. The author believes that while maintaining its leading position in commercial vehicles, Jiangling Motors should also increase product investment in the areas of new energy and Yusheng brand passenger vehicles, and use positive R&D and high-quality products to activate its own brands. The car's market potential has led it to become a new growth section of Jiangling Motors.

It is worth mentioning that Jiangling Motors stated in its 2017 annual performance report that the company's heavy truck and passenger vehicle business is in the incubation and development stage and is expected to become the company's new growth point in the future.