"I speak internally within the company that we need to give up our illusions. Firstly, we need to give up our illusions about the intensity of market competition, which must be very brutal. Secondly, we also need to give up our illusions about our willingness to trade price for quantity. Making decisions based on price for quantity is easy, but it actually cannot achieve our strategic goals." Li Bin, founder, chairman, and CEO of NIO, said at a media communication meeting on December 14th.
To cope with the increasingly fierce competition next year, he summarized that NIO's strategy is to increase sales volume by enhancing its sales and service system capabilities on the basis of increasing gross profit margin.
For the upcoming year of 2024, Li Bin admitted that he only has one expectation, which is to "sell cars well".
Starting from the second quarter of next year, maintain monthly sales of over 20000 vehicles
During the more than three hour long communication meeting, Li Bin repeatedly emphasized NIO's top priority in increasing sales. He also joked that he hoped the outside world would not use "long termism" to "numb" NIO. "You can say that NIO is a company that pursues short-term execution, and it is not a problem to say that our vision is short-sighted. In this way, we will be encouraged. We are a company that values execution efficiency."
In terms of sales, NIO's performance this year did not meet market expectations. NIO delivered a total of 16000 new cars in November, a year-on-year increase of 12.6%; In the first 11 months of this year, NIO delivered a total of 142000 new cars, a year-on-year increase of 33.1%. This growth rate is not particularly fast for a new car making force.
In July of this year, NIO's sales exceeded 20000 units for the first time, but then showed signs of fatigue, with monthly sales hovering around 15000 units for a long time.
Regarding next year's sales forecast, Li Bin revealed that it is expected to remain stable above the baseline of monthly sales of 20000 vehicles after the first quarter of next year.
This sales expectation is mainly related to the seasonal fluctuations in the market in the first quarter, and on the other hand, it is mainly due to the establishment of NIO's sales system, which will be basically mature in the second quarter of next year.
At a recent financial report conference call, Li Bin introduced that NIO currently has around 5700 sales consultants, of which over 3000 are newly hired. It will take some time to develop sales capabilities, and it will take about 6 months for a salesperson to mature.
Accompanying the sales system adjustment is actually NIO's large-scale organizational restructuring this year. Li Bin revealed that the organizational adjustment of the company has come to an end and will not take any actions in the future, but will continue to optimize the organization and management.
In November, NIO just underwent a large-scale organizational adjustment. Li Bin issued a letter to all employees mentioning that NIO will carry out adjustments related to organizational and resource investment directions, including reducing positions by about 10% and accelerating resource efficiency. In the future, projects that do not improve NIO's financial performance within three years will be postponed and reduced to ensure the company's long-term competitiveness.
It is worth noting that in this adjustment, NIO has transformed its previous "five-year strategic plan" at the company's strategic level into a "two-year business plan", indicating that it is breaking away from "long-term oriented" and focusing on the present.
The second brand focuses on the "home market" and only offers three types of cars
The second brand targeting the mass market may become a trump card in driving sales for NIO.
Li Bin introduced that the brand positioning of NIO's second brand is "home market", which will be equipped with "large spaces, refrigerators, and color televisions". He believes that the home market is easier to define compared to the high-end market where the NIO brand is located. He debunked the rumor that the second brand is definitely not called "Alps", "Alps" is just an internal code, and the real name has already been registered, which is "very down-to-earth".
He also revealed that NIO will not launch many car models for the home market. "The second brand has only three cars in its lifecycle, so make sure to do the three cars well." He said that the competition in the market of 200000 to 300000 yuan will indeed become increasingly fierce, and the second brand will not be released in a hurry. "Wait until everyone is exhausted" before launching.
It is reported that the battery swapping network of the second brand will be shared with other car brands, and in terms of sales channels, the second brand will be separated from the NIO brand, with stores not sharing, but some service networks will also be shared.
For the second brand, Li Bin has high hopes, "There is an opportunity for the household market to produce a single model with monthly sales of 50000 to 60000 vehicles, and Model Y has confirmed this."
In addition, Li Bin also revealed some information about the third brand. Currently, the research and development of the third brand is progressing well and trial production is already underway.
Among the new forces in car manufacturing, NIO is the only car company to announce three sub brands, which has also made "selling big cakes" a label on NIO.
Li Bin also elaborated on his understanding of this plan: NIO hopes to use three brands to cover users with different consumer needs. The NIO brand focuses on business, while also combining home use and personalization, and can gain high market share and gross profit in the high-end market, supporting the company's development; The second brand should serve more users and firmly tap into the home car market.
The logic behind it is also very clear, which is the cost savings and scale advantages brought by "software reuse" in the era of intelligence. "The autonomous driving team, intelligent cabin team, digital system team, and battery team are all the same, and the underlying developers are all shared. Therefore, we can do this without adding too many people, and we can promote the second brand and the third brand."
The NIO brand is about to launch a million yuan new car on this year's NIO Day. Li Bin explained that the executive flagship model has long been the cornerstone of the BBA (Mercedes Benz, BMW, Audi) brand, such as the Mercedes S-Class, BMW 7 Series, etc. NIO's upcoming new car is aimed at entering the market of executive flagship models.
In addition, regarding the highly publicized issue of "NIO obtaining independent production qualifications", Li Bin responded that this has no impact on business and product planning, only the tail label has changed from JAC NIO to NIO, which will be more conducive to promotion. At the same time, he emphasized that NIO's use of its own factory for production would result in a 10% decrease in "manufacturing costs" itself, rather than a 10% decrease in "vehicle costs". The reduction in manufacturing costs will not be reflected in car prices, but will have a slight increase in gross profit margin.
Regarding the relationship with Jianghuai Automobile, he stated that NIO still has a lot of in-depth cooperation with Jianghuai. "At present, the cooperation with Jianghuai is still proceeding according to the agreement and complying with national regulations."