21st Century Business Herald reporter Zuo Maoxuan reports from Beijing
The ideal car, which has been making great progress all the way, took a sharp turn in March this year. Not only did the sales not meet expectations, but also faced a storm of online public opinion.
On March 22nd, Li Xiang, CEO of Ideal Automobile, released a letter to all employees reflecting on the two major problems encountered since the launch of Ideal MEGA in early March: misjudgment of pure electric strategy and excessive desire to focus on sales.
After strategic reflection, a new round of adjustments for Ideal Automobile is gradually being implemented.
On the afternoon of April 3rd, Ideal Automobile issued an internal announcement for all employees, announcing the launch of the Matrix Organization 2.0 upgrade and the adjustment of organizational structures in multiple departments. This is the largest internal adjustment after the upgrade of the matrix organization launched by Ideal Automobile at the end of 2022.
On April 18th, the Ideal L6 was launched in a low-key manner.
On April 22nd, Ideal Automobile announced a price reduction of 18000-30000 yuan for all products except for the L6, marking the first official price reduction made by Ideal Automobile since its establishment.
How can the architecture adjustment of an ideal car improve efficiency? Why did Ideal Cars lower their prices? What impact will price reduction bring, and how should Ideal respond?
On April 25th, at the Beijing Auto Show, media outlets including 21st Century Business Herald interviewed Liu Jie, the President of Ideal Automotive Product Line.
21st Century Business Herald: Recently, Ideal Automobile made a significant price reduction. Does this price reduction adhere to the principle of gross profit margin? How was the price reduction considered?
Liu Jie: Firstly, since March, we have seen an issue where our market forecast for this year is too optimistic. The actual market performance is significantly lower than our forecast, and it has been for several consecutive months. In February, everyone may still have certain expectations, whether they can return to their original judgment of the market they are concerned about after the Spring Festival. But after March, we found that our judgment was indeed overly optimistic. The passenger car market with a price of over 300000 yuan decreased by 12% year-on-year in the first quarter of this year, which may have been unimaginable in the previous trend of upgrading China's automotive consumption.
Secondly, if we compare the first quarter of this year with the first quarter of last year, especially for the main models of traditional gasoline luxury brands, the terminal transaction price has decreased by 10-15 points.
Both of these things have led us to readjust our expectations. Originally, our judgment was too optimistic, and we were also too optimistic about our projected growth. Therefore, we must first return to healthy growth.
In addition, due to the overall decrease in consumer prices, this is why we believe we need to be prepared for this year's market to be relatively challenging. This is also why we announced a new price adjustment on April 22nd. This is the trend we have seen for several consecutive months, and from now on, everyone may return their judgment of this year's market to a more rational and conservative state.
21st Century: From the perspective of an ideal car, what are the transmitted impacts of this current price reduction on the industry and supply chain?
Liu Jie: We haven't transmitted it yet, that's what we need to bear ourselves. This price reduction will definitely have an impact on our gross profit margin, but it is something we must bear.
On the other hand, we believe that while providing value to users, we also need to improve our business efficiency. This business efficiency is not simply about passing costs to partners, but more importantly, it depends on whether we have redundancy and waste, whether we truly invest resources in the most important and valuable things for users, and whether we have done many things that can be done or not due to our own desires and insecurity. In a relatively challenging market, we believe that in order to survive and be able to survive, the most important thing is to focus and invest our resources in the most core things.
Our internal letter discussed how to focus on improving operational efficiency and how to invest core resources in the most valuable things, rather than doing a bunch of optional things. This is also a question that we are constantly examining and reflecting on internally.
21st Century: What are the specific measures for improving internal efficiency?
Liu Jie: As we are still gradually progressing, I will briefly discuss a few aspects regarding efficiency.
Firstly, efficiency improvement involves reducing internal operations. After the 1.0 process change, people will find that if the process is set too finely, it will result in a lot of information transmission and transportation, which means there will be a lot of invalid time and meetings. Therefore, we are doing our best to halve the meetings now. I think Steve Jobs said something particularly well, which is that some managers spend too much time on processes, but too little time on content. This essentially refers to valuable things, and we should spend more time on valuable content rather than just managing processes.
Secondly, the process should focus on the core key nodes. Is the process effective? Of course, it is very effective. Ideal was still an enterprise that sold around 10000 units in a stable month the year before last. Last year, we underwent a process change in the 1.0 stage. Of course, we increased it a bit at the end of last year, but there was no problem with the stable monthly sales of 30000 units for the L9, L8, and L7 cars. This is the value that the process brought us last year. But we will find the second problem, which is that the most crucial aspect of the process should be to grasp the key nodes, rather than every detail of the process point, as this will exhaust the entire army.
Thirdly, for some projects that can be done or not, we definitely choose not to do them now and invest resources in more important things. For example, the next generation of products, truly futuristic technologies; For example, investment in user services, including the construction of overcharged networks; For example, with over 700000 car owners now, we will still invest heavily in the construction of the service system.
21st Century: The Ideal L6 is a very important model for Ideal, but the launch event is very low-key, without holding offline press conferences or even recording. In such a crowded market, everyone is competing for traffic. Why did Ideal choose to handle it low-key?
Liu Jie: The value transmission of the Ideal L6 product and the final user's purchase actually exceeded our expectations.
The first issue is the transmission of product value. The Ideal L6 did not have an offline launch event because after the Ideal MEGA launch event, many car owners told us that the launch format of the Ideal L7 back then was actually more conducive to them understanding the true value of the product. The launch event of the Ideal L6 is much better at conveying product value than when one person speaks on stage offline. If we were to speak on stage, it would be impossible to talk about the user experience in the car and showcase what was inside. Therefore, we decided to hold this press conference in a way that best conveys the value of the product.
Secondly, in terms of content, the content of this L6 launch event is different from the 24 models of MEGA and L series. But if you look at the launch event of Ideal ONE, you will find that this is how we originally conveyed product value, rather than simply listing functions, configurations, and performance. Every detail of the Ideal L6 is communicated to consumers, conveying its value.
The third is the mode of dissemination. Prior to this, on the evening of the release of one of our products, there would be hundreds of articles published because we usually gather media to experience it before the launch event. Whether it is a test drive or a static experience, the venue and route chosen for all media experiences are the same. On the other hand, if we treat the media as our users, it actually does not meet their needs because it will generate a large amount of homogeneous content. Every media outlet hopes to generate their own opinions and content about the product through their own understanding, rather than blindly following the same path. Our previous communication methods have caused such problems.
Everyone may feel that the explosive power of this L6 press conference is not as strong, but this time we have returned to the way we treated the media and users before.
If we were led by the insecurity of so-called traffic competition in the past, we would definitely overlook the value of media and the value of media to users. This is quite difficult because it requires trade-offs. You may not look so hot that night, but it was a choice we made ourselves.
We hope that when facing so-called traffic competition and traffic convolution, the way to face it is not to further accelerate competition and convolution.
How can a new car making force compete with a mobile phone company for traffic? We still need to be ourselves, how valuable to the media and how valuable to the users. I believe that as long as we persist in doing these things, as long as we can control our insecurity and desires, it will definitely produce value. In the end, we will also see that both the content and product power of the Ideal L6 have truly been transmitted to 200000 to 300000 household users. This is a relatively happy place.
21st Century: There is a certain contradiction between sales and the tone of luxury brands. How does Ideal view the definition of "luxury"?
Liu Jie: I think luxury is essentially our requirement for ourselves. It is about the quality and performance of products, and the quality of products that need to be on par with excellent luxury brands.
Secondly, because the ideal price range is here. From the perspective of market segmentation, products priced above 300000 yuan will be considered luxurious. Before the launch of L6, it was ideal to have products priced above 300000 yuan. In fact, BBA also had products priced between 200000 and 300000 yuan, and consumer perception was still differentiated by price range.
Thirdly, how do we think about brands? We believe that the most important thing for a brand is to first answer who we are. For us, it is the mission of the brand, it is the family. Home is more important to us than luxury. If you let me choose today, whether the ideal represents family or luxury, I think luxury is just a natural decision in our price range, but for us, the family is more important, so I don't want to be conflicted with you about whether the ideal is luxurious enough. If it can become the first choice for household users, it will be good enough for us, and we will be satisfied enough. That's what we want to do.