Why does Lantu draw a “blueprint”?

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Text / Homer

Source: Bullet Finance View (ID: zidancaiguan)

“For us, only when we have a blueprint in our hearts can we continue to devote our love and be an example.” This is a sentence written by Lu Fang, the CEO of Lantu Auto, on the first anniversary of the launch of Lantu’s first model, the Lantu FREE.

In August 2022, two years have passed since the brand release of Lantu Auto, and one year has passed since the mass production and delivery of the first model. According to the launch time of the Lantu project, today is the fourth year of Lantu, but there is still a long way to go before the “example” of the industry.

For the Chinese people’s century-old dream of building a car, in the face of the world’s century-old car brand, today’s Lantu is just a “baby in swaddling.” Looking back at the one-year delivery of Lantu’s first model, after experiencing weak sales and management scheduling, how should Lantu’s “blueprint” be realized?

1

desire to stand on their own

Recently, according to the disclosure of the Lantu capital increase project of the Shanghai United Assets and Equity Exchange, Lantu intends to seek public financing. Regarding the specific use of the raised funds, the disclosure stated that it will “support the company’s strategic layout, enhance the competitiveness of the company, and pay attention to the development of the company’s main business”. As for the amount of capital increase and the proportion of shares, the follow-up formal disclosure is mainly based.

Although the capital increase needs to be officially disclosed after the approval of Dongfeng Motor Group, from this behavior, Lantu’s willingness to increase capital is inseparable, but the final fundraising plan has not yet been finalized.

This may be related to the current tepid market status of Lantu. The slightly weak sales data also makes Lantu have no “confidence” to open the asking price. Therefore, the wind of willingness to raise funds is released first, and then closed-door negotiations with interested institutional investors until the final plan is finalized.

Tianyancha data shows that Lantu’s registered capital is 2.610 billion yuan, of which Dongfeng Motor Group subscribes for 2.340 billion yuan, with a shareholding ratio of about 89.66%; Wuhan Woya Enterprise subscribes for 270 million yuan, with a shareholding ratio of about 10.34%. The major shareholder Dongfeng is a Hong Kong-listed company under the State-owned Assets Supervision and Administration Commission, while Wuhan Woya Enterprise is a Lantu employee stock ownership platform composed of 8 partner companies and a total of nearly 300 natural person shareholders.

From the perspective of Lantu’s shareholding structure, the brand has been prepared for the “self-reliance” in the future since the establishment of the brand. At the beginning of its establishment, Lantu did not introduce the participation of third-party capital. Most of them wanted to use the power of Dongfeng to do a good job in the beginning of the new Lantu brand, so as to give investment institutions a good price in the capital market in the future.

Zhiji Auto, a subsidiary of SAIC Motor, which is also state-owned, introduced Alibaba and Zhangjiang Hi-Tech as its founding shareholders in the early days of its establishment. In the subsequent A round of financing on August 1, 2022, a number of external capitals such as Bank of Communications Capital, ICBC Investment, and the National Green Development Fund were introduced, with a post-financing valuation of nearly 30 billion yuan.

In addition, GAC Aian (formerly GAC New Energy), a wholly-owned subsidiary of GAC Group, introduced Kechuang Guofa with a 6.58% stake in the pre-IPO fundraising (Pre-IPO) on March 21, 2022. , China Chengtong and China Southern Power Grid have accumulated external capital of 2.566 billion yuan, and the post-financing valuation has reached 39 billion yuan.

In contrast to the three, Lantu Auto did not adopt the “1+2” ​​model of SAIC Holding, Zhangjiang Hi-Tech and Alibaba’s shareholding, nor did it adopt the form of GAC Aian’s wholly-owned holding by GAC Group. Instead, a relatively compromised “1+1” model is adopted, that is, Dongfeng Motor Group holds shares, and Lantu employees hold shares.

In this way, it can not only stabilize the control of Dongfeng, but also stimulate the enthusiasm of the Lantu team. An old Lantu employee revealed to ‘Bullet Finance View’ that Lantu is an independent entrepreneurial team and has its own dominance in the business development of the enterprise, which is completely different from that of Dongfeng, a large central enterprise, and the team is an independent entrepreneurial team. Mainly the young post-80s and 90s.

Speaking of which, Lantu’s management team underwent a major adjustment in July this year: Chief Executive Officer (CEO) Lu Fang no longer served as Chief Technology Officer (CTO), and was taken over by Wang Junjun, Deputy Director of the Technology Center of Dongfeng; Party committee member and secretary of the party committee Qin Jie and temporary party committee member, member of the Disciplinary Committee, secretary of the Disciplinary Committee Liu Mingjiao, and two new assistant general managers Gong Xuesong and Shao Mingfeng.

It is reported that this change is the biggest personnel adjustment of Lantu since its establishment, and the new leadership team is also a veteran of the Dongfeng Department.

In fact, the purpose of high-level changes and new coaches is to “win the battle” in the increasingly competitive new energy vehicle market, but for Lantu, which has always been under the wing of Dongfeng, “a sub-brand of Dongfeng” can How high it reaches in the market ultimately depends on whether consumers are willing to pay for it.

2

Sales are lower than expected

On December 31, 2021, Lantu, through the “Friends of Time 2022” New Year’s Eve speech, “kicked” the New Year’s bell with the people of the whole country. Then, on the first day of 2022, Lantu officially announced the delivery data of 3,330 units in December 2021. Lantu became the fastest new brand of electric vehicles to deliver over 3,000 units in a single month, and claims to be self-developed. Since the start of delivery in August 2021, Lantu FREE has delivered a total of 6,791 units, with an average transaction price of 338,000 yuan per unit.

In order to cooperate with this New Year’s Eve event, Lantu also released a promise that “if you place an order before January 10, 2022, you can mention the car before the Spring Festival (February 1)”. On January 21, 2022, Lantu announced with a high profile that the 10,000th Lantu FREE officially rolled off the production line. Combining the cumulative production of 7,602 units in the previous year and the sales data of 6,791 units, it can be seen that Lantu expects to deliver at least 3,000 units in the first month of the new year.

However, to everyone’s surprise, Lantu sold only 1,553 new cars in January 2022. Judging from this New Year’s Eve marketing campaign alone, the market performance of Lantu’s consumer side is far less than expected.

Regarding the lower-than-expected sales volume, there have been rumors in the industry that in order to ensure the sales data of Lantu, Dongfeng also asked management and employees to buy Lantu. The practice of management taking the lead or even “forcing” employees to buy their own products is also common in the industry. For example, a BYD park once publicly informed car owners that “non-BYD vehicles are not allowed to enter.”

A person close to Lantu denied the statement that “Lantu forces executives to buy a car” to ‘Bullet Finance View’, “I have heard of this, but it’s only spread, and in Lantu and Dongfeng’s Internally, there is indeed encouragement, but no compulsion. Internal employees have certain discounts for buying Lantu cars, but this discount is far less than that of other brands, even less than Dongfeng Honda.” The source said.

The latest monthly FMCG data released by Dongfeng Group Co., Ltd. shows that in July 2022, the sales volume of Lantu Motors reached 1,793 units, a new monthly high since 2022, and the cumulative sales volume in the first seven months was 8,375 units. Starting from the start of mass production and delivery in August 2021, Lantu Automobile has accumulated sales of 15,166 units in one year.

Judging from the monthly data performance of Lantu’s first anniversary of mass production and delivery, only in December 2022, the monthly sales reached 3,300 units, and in January and July it exceeded 1,500 units, with an average monthly sales of 1,264 units. Judging from the overall situation in the past year, although sales have shown an upward trend, the growth rate is not ideal.

Judging from the sales data for the first seven months of 2022, Lantu has only sold 8,375 units in total. According to the sales target of 46,000 units set at the beginning of the year, it will only complete 18.21% of the annual target; Looking at the sales target of 31,000 units, it only completed 27.02% of the annual target. The timeline of Lantu’s 2022 target has passed by 58.33%.

From an objective point of view, the sales data of Lantu seems to be not high, but considering that it is the first model of a new brand, combined with the average price of the first model of 334,000 yuan and the second model of 360,000 to 690,000 yuan. From the perspective of price coverage, the current Lantu is obviously not born for volume, but is trying to lead the national brand to occupy the highland of the luxury car market. Of course, it would be better if the sales volume can be mentioned.

Among several state-owned car brands, the only ones that can be compared with Lantu are FAW’s Hongqi, BAIC’s Jihu, SAIC’s Zhiji, and Changan Avita, which is still on the road.

Hongqi has already crossed the hurdle in the early stage, and now it has sunk the luxury brand to the 100,000-level model. Although SAIC Zhiji has a high positioning, it has just begun to deliver, and the initial monthly sales are hundreds of units. The price of Avita led by Changan is comparable to that of Lantu, but it is still some time before mass production and delivery.

Looking at the domestic new energy vehicle market, Jihu and Lantu with prices ranging from 210,000 to 430,000 may be comparable. According to China News Weekly, in the first half of 2022, the cumulative wholesale sales of the two models of Jihu are 6,644 units, with a cumulative retail sales of 4,976 units.

Regarding the sales volume of Lantu automobiles falling short of expectations, a person close to Lantu told the Bullet Finance View that the main problem of Lantu is that the sales channels under the direct sales model cannot keep up. Up to now, Lantu has less than 100 offline channel stores. In the first half of 2022, Jihu has opened and put into operation 154 channel stores, and it is expected to reach 186 throughout the year.

In this way, considering various factors such as current sales, target positioning, and market feedback, Lantu, which is less than expected, is not worth mentioning as expected, but how many possibilities are there in the future?

3

Dongfeng’s blueprint dream

At present, Lantu’s market performance is not good, and its marketing strategy and channel construction have obviously failed to keep up with the pace of “fast and unbreakable” in the Internet era. Perhaps the genes of large-scale enterprises are the tonality of “Xu Xutuzhi”, compared to radical Internet marketing, a style of “seeking stability” seems to be more representative of Lantu.

A person close to Lantu told ‘Bullets of Fortune’, “As an independent brand promoted by the central enterprise Dongfengfeng, Lantu, on the one hand, wants to use the new energy vehicle track to provoke the important task of the rise of national brands, and on the other hand, it must dare to challenge the industry. Compared with gimmick marketing and Internet thinking, Lantu is more willing to stick to the dream of green cars, and believes that the combination of product quality and user needs is the key to supporting the long-term development of the brand.” said the above-mentioned person.

It is true that Lantu wants to shoulder the heavy responsibility of the rise of a national brand, but stabilizing the fundamentals of Dongfeng is the direction that Lantu needs to work hard most at present.

At the beginning of 2022, the Passenger Car Association released a list of the wholesale sales rankings of passenger car manufacturers for the whole year of 2021. In this list, Dongfeng Nissan, which ranked 6th, and Dongfeng Honda, which ranked 14th, both experienced a year-on-year decline of more than 10 percentage points in wholesale sales.

In terms of decline, although Dongfeng is not the largest among all automakers, its overall “basic market” is relatively weak compared to FAW and SAIC, which are both dominated by state-owned capital.

Especially since the fading out of Shenlong Motors (Peugeot and Citroen), for Dongfeng, it seems that only Nissan and Honda can “carry the lead”. However, these two joint venture brands are facing the rise of domestic independent brands and the pressure of switching from traditional fuel vehicles to new energy and intelligence.

In the face of the decline of joint venture brands and the rise of independent brands, Dongfeng has also made many attempts. For example, it launched the Fengshen brand as early as 2009. Judging from the performance of the past two years, although the sales are not bad, it is only a brand with an annual sales volume of 100,000, and the prices of the models of the Fengshen brand are generally low, mostly entry-level affordable models. Obviously, it is difficult to take on the burden of the national brand of Dongfeng, a central enterprise, and there is no way to undertake the lost market share of Nissan, Honda and Peugeot.

In order to undertake the lost market of the joint venture brand, Lantu has become the “new hope” after Fengshen.

According to the statistics of the monthly sales data of Lantu Automobile and Dongfeng Passenger Vehicle (Fengshen) in the past year, from August 2021 to July 2022, the cumulative sales volume of Dongfeng Passenger Vehicle was 167,900, and Lantu Automobile The cumulative sales volume was 15,200 units.

Although the sales volume of Lantu is less than 10% of that of Dongfeng passenger cars, the price gap of Lantu with an average price of over 330,000 yuan is three to four times that of Fengshen, which has a guide price of 60,000 to 140,000. If you add the Lantu Dreamer models that have delivered more than 1,000 units, the average price gap may be four to five times larger. In short, selling one Lantu is almost equivalent to selling four or five Fengshen.

One Fengshen, one Lantu, one high and one low, formed Dongfeng’s “Gemini” and carried the banner of Dongfeng’s own brand.

4

Epilogue

Lantu, which has high expectations, depicts Dongfeng’s “blueprint” for entering the high-end market, but the current performance is still facing the embarrassing situation of high expectations but weak sales. And the mission and heavy responsibility it shoulders cannot be realized in three to five years. Dongfeng’s expectations for Lantu will certainly not only look at the development of three to five years, nor will it require it to reach a new height in the industry in the short term.

To talk about how to look at Lantu’s achievements and losses this year, in addition to combining sales with price, product positioning, and insisting on meaning combined with historical mission, we should be more patient.

However, in the face of the consumer market, Lantu still has to answer the following questions carefully: Among the many new energy vehicle brands, how does Lantu prove the strength of its products through its own technology and brand? If we want to truly become the first choice of many consumers when replacing new cars, Lantu still needs to carefully polish the products and do a good job in channel construction, otherwise it will be a long way from the realization of the blueprint.

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