Following Ideal and NIO, on the evening of March 19th, Xiaopeng Motors released its 2023 transcript, which has been a difficult year for Xiaopeng Motors. The financial report shows that in 2023, Xiaopeng Automobile's losses expanded by nearly 10.4 billion yuan, and its gross profit margin dropped to single digits, ranking last among "Weixiaoli" in terms of gross profit margin. At the same time, 2023 is the year of adjustment for Xiaopeng Motors. After welcoming Wang Fengying, the former "Iron Lady" at Great Wall Motors, Xiaopeng Motors CEO He Xiaopeng began to take action internally. However, in 2023, the competition in the automotive market was fierce, and Xiaopeng Automobile's monthly sales ranking has never returned to its peak period. At the same time, the gross profit margin of the entire vehicle business has also declined to negative. Faced with a difficult situation, Xiaopeng Motors has transformed its channel model on one hand, and on the other hand, hopes are pinned on the launch of a new brand.
Expanding losses and turning the gross profit margin of the entire vehicle into negative
In 2023, "Weixiaoli" reached a watershed, and Ideal Automobile successfully "landed" and crossed the profit line, while the once best-selling Xiaopeng Automobile reached a low level.
According to the financial report, Xiaopeng Automobile's revenue in 2023 was 30.68 billion yuan, a year-on-year increase of 14.2%. Among them, the revenue of the automotive sector was 28.01 billion yuan, a year-on-year increase of 12.8%. From the annual delivery situation, the delivery volume of Xiaopeng Motors in 2023 was 142000 units, a year-on-year increase of 16.7%.
From the perspective of marketing and delivery volume, Xiaopeng Motors is on an upward trend in 2023, but its business is not optimistic. According to the financial report, Xiaopeng Motors suffered a net loss of 10.38 billion yuan in 2023 and 9.14 billion yuan in 2022, further expanding its losses. While losses continue to expand, the gross profit margin of Xiaopeng Motors also continues to decline. The financial report shows that the gross profit margin of Xiaopeng Motors in 2023 was 1.5%, far lower than the 11.5% in 2022. Although the overall gross profit margin is positive, Xiaopeng Automobile's overall gross profit margin has dropped to -1.6%.
Regarding this, Xiaopeng Motors stated that "the main reasons are the increase in promotions, the expiration of subsidies for new energy vehicles, and losses in inventory provisions and procurement commitments related to G3i and existing vehicle upgrades, which have a negative impact on the gross profit margin of automobiles for this fiscal year of 2.4 percentage points. If the formation reasons such as G3i are excluded, the gross profit margin of automobiles is 0.8%." Although the gross profit margin of Xiaopeng Motors is still positive after excluding vehicle upgrades, it is still far lower than the 9.4% gross profit margin of automobiles in 2022.
The gross profit level is regarded as one of the key assessment points for automotive companies' ability to generate profits. Li Xiang, CEO of Ideal Automobile, once stated that the level of gross profit is very important for the development of new energy vehicle companies. A gross profit margin of over 20% is necessary to ensure long-term healthy development, otherwise it is impossible to continue investing in research and development, delivery, and other long-term investments. At present, Xiaopeng Automobile is the only car company in Weixiaoli with a negative gross profit margin.
In addition, Xiaopeng Motors has also provided guidance for the first quarter of this year. The financial report shows that the delivery guidelines for Xiaopeng Motors in the first quarter of this year were 21000 to 22500 vehicles, a year-on-year increase of 15.2% to 23.4%. However, the monthly sales of Xiaopeng Motors did not exceed 10000 units in January and February this year, with a cumulative sales volume of only 12000 units. To meet the guidance data, Xiaopeng Motors needs to sell over 8200 units in March this year.
Reduce burden and promote new self rescue?
The transcript has been released, and He Xiaopeng is well aware that "2023 is not easy, and the market competition will become more intense in 2024.".
During the financial report conference call, He Xiaopeng stated that "from 2024 to 2027, China will enter the phase out of intelligent electric vehicles, and this year is the first year for the Chinese automotive industry to enter 'high-intensity competition'." In response to market competition, Xiaopeng Motors has begun structural adjustments.
Among them, adjusting the channel model becomes a crucial step. He Xiaopeng stated that in 2023, Xiaopeng Motors will eliminate over 130 stores and introduce 160 car dealerships. According to the financial report, as of the end of 2023, Xiaopeng Automobile's physical sales network had a total of 500 stores, covering 181 cities.
For channel planning, Xiaopeng Motors will further introduce a dealer cooperation model. He Xiaopeng stated that an innovative dealer cooperation model will be launched starting from the second quarter of this year, by establishing channel inventory for about half a month, accelerating terminal delivery speed and fully activating dealer enthusiasm. "In 2024, while cultivating new stores, we will further expand sales channel coverage and accelerate channel sinking to third - and fourth tier cities. Xiaopeng Motors' stores will increase to 600 by the third quarter of this year."
In the era of gasoline vehicles, authorized dealers were the main force in the car market sales. But in the era of new energy vehicles, the sales model is shifting towards direct sales and stores are located in major commercial districts. Yan Jinghui, a member of the Expert Committee of the China Association of Automobile Manufacturers, stated that in the early stages of the development of new energy vehicles, opening direct stores in commercial districts can help car companies quickly expand their visibility and establish brand power. However, as the store expands, it will also increase the financial pressure on car companies. In addition, the current coverage of directly operated stores by car companies is limited and cannot cover various regions like the dealers in the "nerve endings" of car companies.
While cutting corners on channels, Xiaopeng Motors will also continue to explore model prices through new brands. He Xiaopeng revealed that "a new brand will be officially launched at the Beijing Auto Show in April this year, entering the 100000 to 150000 yuan automotive market. The first model will be launched and delivered in the third quarter of this year." In August 2023, Didi Chuxing and Xiaopeng Motors jointly announced a strategic cooperation, in which Didi will sell assets and research and development capabilities related to the smart electric vehicle project to Xiaopeng. Xiaopeng Motors will build an A-level intelligent electric vehicle based on this, with the project code "MONA". At that time, the cooperation announcement showed that Xiaopeng Auto had made it clear that "MONA" would be a 150000 yuan level full autonomous vehicle. In addition, according to Xiaopeng Automobile's plan, the next three years will enter a major product cycle of launching more than 10 new models. Cui Dongshu, Secretary General of the Joint Conference on Passenger Car Market Information, stated that the 150000 yuan market is a high-volume market, and for car companies, achieving large-scale sales is necessary to further approach profitability.