As the new energy sector opens a brand new track, it erases the glories of the past while leaving new possibilities for future players. Thus, more and more individuals are joining the fray, attempting to secure a foothold in a fiercely competitive market.
However, not all newcomers can weather the storms and advance smoothly. Unbeknownst to many, the Chinese automotive market has gradually shed its initial immaturity and disorder, undergoing a transformation during the industrial shift and consumer evolution, revealing the true colors of companies that seek shortcuts to success.
During a recent stroll, I casually discovered a YuHao Auto store in a shopping mall, showcasing two vehicles but devoid of any sales personnel. The thick layer of dust on the cars clearly indicated that this store had long been neglected. Coupled with recent news regarding YuHao Auto, all signs point to a grim reality: it may be on the brink of bankruptcy.
Recently, it has been reported that YuHao Auto, an emerging domestic electric vehicle brand, is facing unprecedented operational difficulties, with rumors suggesting an impending announcement of bankruptcy. A person claiming to be from YuHao Auto's R&D department revealed that personnel turnover in the chassis development department has been rapid, leaving only a handful of employees still on duty.
The Automotive Industry is Tough
In response to this situation, YuHao Auto stated, “The company is undergoing a strategic adjustment and is currently in a reorganization phase. It is expected that once the adjustments are complete, all business operations will return to normal. As a brand under Dayun Group, YuHao Auto has strong backing and will not capsize easily. Currently, senior and middle management are all maintaining their positions.”
On the other hand, insiders within YuHao Auto disclosed to reporters that the company is experiencing tight finances, actively seeking local financial support and new funding.
Many may not be familiar with YuHao Auto, but when it comes to Dayun Group, everyone is likely well aware. YuHao Auto is a subsidiary brand of Dayun Group, which was founded in 1987 and originated as Shanxi Tongda (Group) Co., Ltd. It started out in the motorcycle business and once gained nationwide popularity with the slogan “Speeding across the world, Dayun Motorcycles,” achieving an annual production exceeding 1.5 million motorcycles at its peak.
However, as many regions in China began banning motorcycles, Dayun Group needed to find new points for profit growth. From 2004 to 2010, Dayun Group entered the heavy-duty and light-duty truck markets and gradually became one of the representatives of private heavy-duty trucks in China. With the rise of new energy, more commercial vehicle enterprises started their transformation from commercial to passenger vehicles, riding this wave.
In September 2020, Dayun Automotive Co., Ltd. officially launched its new energy vehicles. Two months later, Dayun New Energy introduced two new models: the small electric SUV Yuelong and the medium-sized electric MPV Yuanzhi M1. However, the market performance of these two models was disappointing. According to retail data, in the first nine months of this year, Yuelong and Yuanzhi M1 achieved sales of 9,428 and 6,205 units, respectively.
To make a more significant mark in the passenger vehicle market, YuHao Auto officially debuted as a new brand at the Chengdu Auto Show in August 2022, concurrently unveiling four new models: YuHao Y6, YuHao Y7, YuHao H8, and YuHao H9. The last brand that managed to launch multiple new models immediately upon debut was Evergrande Auto, aiming to become a world-class brand.
YuHao Auto carries the new hope of Dayun Group's transition from commercial vehicles to passenger vehicles, targeting the high-end luxury electric vehicle market. The four models currently on sale are all larger and more expensive, quite different from the average consumer's expectations. In the first three quarters of this year, YuHao Auto's cumulative sales totaled 5,584 units, averaging fewer than 700 units sold per month, showing a significant gap compared to leading brands in the industry.
Furthermore, contrasting sharply with Evergrande Auto's previously substantial advertising efforts, YuHao Auto's marketing investment has been relatively low-key. Besides a limited number of outdoor advertisements at high-speed rail stations and airports, there has been little other promotion. This is why many consumers only learned about the existence of YuHao Auto upon seeing its store in the mall.
Industry Restructuring Accelerates
As the development of the new energy era enters its later stages, a shadow looms over the entire market, ready to weed out participants disregarding the rules of the game.
Recently, Evergrande Auto has already been filed for bankruptcy liquidation. Financial reports indicate that in the first half of this year, the company posted revenues of 38.38 million yuan, a 75.17% decline from 154 million yuan in the same period last year, primarily due to a drastic drop in the sales of Hengchi 5. The net loss for the first half of the year was 20.256 billion yuan, significantly widening compared to the previous year's loss of 6.873 billion yuan.
Although there has been no official statement yet, failure seems to be a foregone conclusion. As of June 30, 2024, Evergrande Auto had total assets of 16.369 billion yuan and total liabilities of 74.35 billion yuan. Looking back on Evergrande Auto's previous claim that the Hengchi 5 received over 37,000 orders in less than 15 days and its ambition to become the most powerful new energy vehicle group, these statements now appear almost laughable.
Now, with the news of YuHao Auto breaking, people seem accustomed to this process of survival of the fittest within the industry. Yet we must acknowledge that as names like WM Motor, Reading, Tianji, and Aiways have been inscribed on the market's tombstone one by one, all that remains are the dross discarded during the industry's rapid advancement and the disillusionment of consumers.
In reality, YuHao Auto is not the first new automotive force facing development difficulties this year. Just after the Spring Festival in 2024, while various companies were announcing a “prosperous start,” reports surfaced that HiPhi had announced a six-month halt to production during an internal meeting. Subsequently, news of delayed salaries and substantial pay cuts spread rapidly.
During the founder Ding Lei's active self-rescue efforts, HiPhi has also repeatedly caught the media's attention. Employees from HiPhi have expressed their struggles in live streams, garnering sympathy and public attention; meanwhile, rumors of acquisitions have frequently circulated, suggesting that automotive giants like Changan and FAW might lend a hand to help HiPhi restart.
Moreover, there have also been reports that HiPhi signed a “Comprehensive Strategic Cooperation Agreement” with iAuto Group Inc, with iAuto promising to provide the initial round of funding for HiPhi's restructuring, aiming to complete the transaction before the financial report is released in the first half of 2024. However, HiPhi did not resume production and ultimately ended up on the path to pre-reorganization.
As a result, HiPhi became the first car company to “exit the chat” in 2024, but everyone understands it won’t be the last. Now that YuHao Auto has also appeared on this list, everyone is curious about whose name will be engraved next.
In the current Chinese automotive market, as a new wave of industrial change accelerates the differentiation and restructuring of market patterns, the pressure of the era transition is far beyond people’s imagination. A brand that seemed to be launching new cars just months ago can quickly find itself halting production. Consequently, any sudden change could be a precursor to a rapid deterioration.
However, it’s often said that the internet has no memory, and how could the fast-evolving Chinese automotive market, driven by the Internet, be any different? As long as “electronic pickled vegetables” continue to emerge, whether it’s HiPhi or YuHao, they will gradually be forgotten, regardless of whether they “die thoroughly” or not. Just like WM Motor, Aiways, and others, few will care about their follow-up developments any longer.
Meanwhile, the demise of these brands seems not to have raised any alarm bells, with new players eagerly waiting in the wings. For instance, ZhiMi Technology, which focuses on the smart appliance industry, has recently revealed plans to enter the automotive sector. But one thing is certain: no matter the intentions with which these newcomers enter the field, the market will ultimately deliver the most appropriate judgment based on their capabilities.
(The original title was “YuHao Stops Operations, Who is Next?”)