Behind the explosion of air suspension, how Konghui Technology became the leader in 5 years

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New Supply Chain Army

When fuel vehicles turn into new energy vehicles, the number of parts used in a vehicle changes from 30,000 to 10,000. Most of the car brands with the greatest potential are new faces. Under the opportunities of the times, suppliers have shown their talents. Old suppliers have transformed, new suppliers have emerged, and some leading companies in other industries have also entered the auto parts market to jointly reconstruct the entire industrial chain. “Later Auto” launches a series of articles on the new supply chain, focusing on the reshaping of the automotive supply chain.

Because of the battery pack, an electric vehicle is about 0.5 tons heavier than a fuel vehicle. That weight makes electric cars more dangerous to drive, and the car’s braking and bump resistance are harder to control. It’s like a fuel truck overloaded with 8-10 adults.

All that risk and weight rests on the car’s four suspensions – four steel bars wrapped in springs. It supports the entire car and also controls the car’s shock absorption function to reduce the bumpy feeling caused by uneven road surfaces.

Electric vehicles require better suspension performance. A bump on the battery pack at the bottom of an electric vehicle can easily cause the battery to rupture or spontaneously ignite. Only the suspension can avoid bumps on the chassis.

One solution in the automotive industry is air suspension, which replaces the original coil springs with rubber bladders that can be inflated and deflated. The rubber bladder is like a balloon, which can provide better shock absorption function, can also change the elastic force of the spring, adjust the height of the vehicle body to control wind resistance and improve the vehicle’s endurance.

Before the rise of pure electric vehicles, air suspension only appeared in luxury fuel vehicles with more than 800,000 yuan, such as BMW and Porsche. The technology was mainly in the hands of the German companies Continental and Vibach.

Electric vehicles bring about changes in the form of automobiles and create new opportunities for the reshaping of the automobile supply chain.

Konghui Technology, a Chinese air suspension company established only five years ago, seized the opportunity and is now the leader in this field in China, with a market share of nearly 40% in the first half of this year.

A group of technical academics decided to start a business

Source Code Capital Managing Director Wang He paid attention to Konghui Technology when he was studying the field of automobile chassis parts in 2021, and observed it for a year before taking action.

Wang He feels that starting a business in the field of automotive chassis parts is very difficult for most Chinese companies. The automobile chassis can be divided into three main parts: steering, braking and suspension. In the field of steering and braking, international suppliers have technological and scale advantages, and it is difficult for Chinese suppliers to compete with them. The air suspension market was a very small market at that time. The only major international manufacturers were Continental and Vibach, which provided fuel vehicles with more than 800,000 yuan.


The entire air suspension system consists of several mechanical structural parts and electronic components. Image source: Konghui Technology.

After the emergence of electric vehicles, the suspension market gained some momentum. Electric vehicles require suspension with better performance to better control body stability and avoid chassis collisions. “We logically deduce that the air suspension category will definitely rise.” Wang He said.

How big will the air suspension market be in the future? It was not easy to judge at the time. But after locking in this field, choosing Kong Hui was a relatively simple decision, Wang He said.

At that time, the only companies in China that made air suspension were Konghui Technology in Zhejiang and “Baolong Technology” in Shanghai. Baolong is a listed company that was established in 1997. It makes metal and rubber structural parts for cars. In 2017, it started to get involved in air suspension. Kong Hui is the only startup company that has entered the investor’s field of vision.

Zhejiang Kong Hui was founded in 2018, but the people at Zhejiang Kong Hui have been studying automotive chassis technology for much longer than that.

The predecessor of Zhejiang Konghui is Changchun Konghui, and its founder is Guo Konghui, the first academician of the Academy of Engineering in the Chinese automotive industry. Guo Konghui is the founder of automobile dynamics research in China. Since the 1960s, he has been engaged in research on automobile tire mechanics, automobile handling stability and other aspects. He has published textbooks, served as vice president of Jilin University of Technology and professor of Jilin University. , has taught more than 300 masters, doctoral students and postdoctoral students.

In 2007, 73-year-old Guo Konghui founded Changchun Konghui with more than 30 students, and his son Guo Chuan served as general manager. Guo Chuan said that the reason his father started his own business was that he was obsessed with technology. There were many restrictions on doing scientific research in school, and he did not have enough funds to support more research and realize his technical ideals.

Changchun Konghui is an automobile engineering design company. Its main business is to provide automobile chassis technology services to automobile companies. It has adjusted automobile steering and suspension systems for FAW Hongqi, and has also served Dongfeng, Brilliance, SAIC-GM-Wuling and other vehicles. enterprise.

Technical services require testing, and testing requires equipment. The most critical equipment is the KC test bench for testing car suspension. Without this equipment, R&D personnel cannot quantify car suspension parameters and optimize car performance.

At that time, the price of a foreign KC test bench exceeded RMB 30 million, and Changchun Kong Hui could not afford it. Guo Konghui and more than 30 students built it themselves. The first test bed cost 2 million yuan to build. “It can only tell you what is wrong with the suspension design of the vehicle model, but the test accuracy, test efficiency and reliability are far behind.” At that time, Kong Hui was in charge of suspension technology in Changchun Wang Mian said.

The capabilities of experimental testing equipment and technical service capabilities complement each other. With the first KC test bed, Changchun Kong Hui’s technical consulting business has also made progress. In 2010, Changchun Konghui undertook the trial production and trial installation project of FAW Hongqi’s electronically controlled suspension system prototype, which required the replacement of the original vehicle’s traditional suspension with an electronically controlled suspension system. This incident allowed Kong Hui’s team to get involved in the control algorithm, software, air spring design matching, system integration matching, and related experimental testing of the electronically controlled suspension system of passenger cars.

The business of technical consulting and selling test equipment is not easy to do. A project usually requires dozens of technical personnel and takes 1-2 years. The scale is not large enough to retain talents and leverage resources. When doing consulting, you need to teach your clients. Once the clients learn it, they won’t consult again. It’s a “one-time deal.” A piece of testing equipment can be used for ten years. There are dozens of car companies in China, and selling testing equipment is a “one-time deal.”

Guo Chuan realized the development bottleneck and believed that Kong Hui must transform from a technical consulting company into a parts company to amplify the technical advantages Changchun Kong Hui had accumulated over the years.

Guo Chuan studied industrial modeling at Jilin University as an undergraduate, then went to the University of Hong Kong to study for a master’s degree in mechanical engineering and an MBA from the University of Nottingham. He worked as an engineer at FAW and the Hong Kong Bus Service Company. In 2004, he joined the auto parts company “Tianjin Huanyu Rubber” Plastic” served as general manager and resigned in 2007 to start a business with his father.

Until 2015, Guo Chuan had not seen a definite transformation opportunity. He believes that Chinese parts companies can only initially target Chinese car companies, because foreign car companies have mature supply chains and will not give opportunities to emerging Chinese parts companies. If Kong Hui wants to start a business in chassis parts, he must wait for Chinese car companies to build high-end models.

In 2016, Guo Chuan learned that FAW Hongqi was already discussing air suspension orders with overseas suppliers. He realized that there was an opportunity for transformation.

Air suspension is an expensive system, costing more than 7,000 yuan not counting shock absorbers. In fuel vehicles, this is not a very necessary part, and only a few high-end luxury cars use it. As the new energy vehicle market develops and domestically produced vehicles become more high-end, Guo Chuan vaguely sees that the air suspension market seems to be opening up.

Kong Hui has decades of technical accumulation in the field of automobile chassis technology, and is no stranger to electronically controlled suspension. He once made an electronically controlled suspension prototype for FAW, and also made oil and gas for a missile launch vehicle for China Ordnance Group. Suspension System. Starting in 2016, Kong Hui officially entered the production process of air springs, first making imitation parts, starting from the aftermarket, manufacturing and selling air springs for car maintenance, in order to understand the mass production process and supply of air suspension. chain.

In mid-2018, NIO ES8 was launched and delivered, equipped with air suspension as standard, and quarterly sales exceeded 7,000 units. This is the first time that a Chinese car company has sold a car for more than 400,000 yuan and applied air suspension to a model of this level. This makes Guo Chuan more determined about the development prospects of this market. He decided to throw away his baggage, leave Northeast China, and start a business for the second time.

He and Lan Tu are “suffering brothers”

In October 2018, Guo Chuan took more than 20 people from Changchun Konghui from Changchun to the Yangtze River Delta, the most developed automobile industry chain, and registered and established “Zhejiang Konghui”.

Changchun Konghui still exists and continues to engage in automotive chassis technology consulting business, maintaining a team of 150 people. Zhejiang Konghui is a parts company that develops, designs, and produces electronically controlled suspensions for passenger cars. It operates independently from Changchun Konghui. Guo Chuan serves as chairman and CEO. “Prepare a blank sheet of paper and draw again.”

Wang Mian also moved to Huzhou with Guo Chuan and served as the director of Kong Hui Hardware Research Institute. Miao Jian, who was once responsible for finance at FAW, joined Kong Hui in 2020 as head of the marketing department. Miao Jian is also a shareholder of Changchun Konghui and has known Guo Chuan for many years.

Zhejiang Kong Hui’s start-up capital was 4 million yuan, which came from Changchun Kong Hui’s old shareholders. After that, Wuxing District of Huzhou provided several million yuan of start-up capital to Zhejiang Kong Hui, and coordinated three small workshops in an industrial park, where Kong Hui started the road to domestically produced electronically controlled suspension.

In the second year, Kong Hui grew to 60 employees, half of whom were R&D and design personnel. Wang Mian, head of mechanical components technology, led engineers to design the air suspension from scratch – electric vehicles are heavier than fuel vehicles and China’s road conditions are more complex. He believes that copying existing solutions will not be of much help.

At the same time, Liu Yang, Kong Hui’s head of electronic control technology, is also expanding the control algorithm, software and controller hardware teams. Developing software and hardware capabilities simultaneously in the early stages also enriched Kong Hui’s business model – selling a complete suspension system rather than simple hardware.

When designing products, Kong Hui also began to develop production equipment simultaneously. In the past, the air suspension market was small, and it was a common practice in the industry to find equipment companies to customize non-standard equipment. Wang Mian said that directly buying a piece of foreign air spring production equipment would cost RMB 30 million and the delivery time would take two years. After weighing the balance, they decided to find a domestic supplier to jointly develop the equipment.

Kong Hui’s first client was Lan Tu. Guo Chuan and Lantu CEO Lu Fang met when they were working at FAW. At that time, Lu Fang was still the director of FAW Car Product Department. Before going to Huzhou, Guo Chuan told Lu Fang that he wanted to work on electronically controlled suspension. Not long after the establishment of Zhejiang Konghui, Lu Fang left FAW to Dongfeng Motor’s H Division – the predecessor of Lantu.

In July 2020, Dongfeng officially launched the Lantu brand. The goal is to learn from the new car-making forces to make mid-to-high-end electric vehicles. Air suspension is an important configuration of the product.

Before finding Kong Hui, Lan Tu had negotiated cooperation with foreign suppliers such as Mainland China and Weibak, but it did not go well. Lantu was a new car company at the time, and many foreign suppliers simply did not believe that Lantu could sell thousands of units a month. “You can pay, but I will quote an absurdly high price. I won’t take risks.” Guo Chuan said that this was the common mentality of foreign suppliers at the time.

Lu Fang later found Guo Chuan. After repeatedly comparing the technical solutions of several bidding companies, he believed that Kong Hui was the most feasible. A new automobile company and a newly established parts company with no experience in mass production came together. “We share the same disease and we are brothers in distress,” Guo Chuan said.

Due to the lack of mass production experience on both sides, the cooperation between Kong Hui and Lan Tu has experienced some bumps in the road. Lantu did not have enough manpower and resources to cooperate with Kong Hui’s development, so he handed over the definition of the entire air suspension system to Kong Hui. The designed full load weight of Lantu’s model at the time was 3.7 tons, equivalent to 3 Volkswagen Bora. It was also the first time for Kong Hui to undertake a complete mass production project and faced many challenges.

When Kong Hui was making the first batch of handmade prototypes, a serious accident occurred—the air bag of the air suspension exploded. Wang Mian and more than ten people went to Wuhan overnight to solve the problem with Lan Tu. They worked until the day before the Spring Festival, and then the epidemic broke out. Affected by the epidemic, the entire Lantu project was delayed for nearly half a year.

By May 2021, only 2 months before Lantu’s first car FREE was launched, Kong Hui’s air spring prototype had another problem. The air spring’s bladder was at risk of falling off due to incorrect process parameters.

Lu Fang was very anxious and said directly to Guo Chuan: “Why don’t we use the air suspension this time?” Kong Hui had already invested two years in it, and Lan Tu’s project would determine the life or death of the company. “If Lantu’s project is suspended, the company may be doomed. If a new company can’t get its first project, who among other car companies will dare to use your stuff in the future?” Guo Chuan said.

Lantu marked Kong Hui in dark red on the project management form, which meant there was a huge risk of supply interruption. At that time, only chip and electronic component suppliers that had been cut off due to the epidemic were also marked in dark red.

Guo Chuan and Wang Mian took dozens of engineers to Lantu to report, explaining the corrective measures one by one, and breaking down the risk of supply interruption into more than 100 problem items marked in dark red. After Wang Mian returned to the company, he modified the sample design during the day and took the engineers to dig out molds next to the CNC machine tool at night. He stood and worked from 8 pm until dawn the next day. It took at least two months to find a supplier. It was too late. You can only do it yourself.

Guo Chuan and other senior executives also moved into the company. Miao Jian, who was in charge of project management at the time, also prepared induction cookers and pots in the office. When he was hungry after working overtime, he would cook for everyone. Sometimes I order dumplings, sometimes I fry sausages.

When it came to product verification before mass production, Kong Hui tested more than 100 sets of samples and passed the durability test for 5.6 million cycles. Wang Mian said that ordinary suppliers usually only do 3 million tests.

In July 2021, Lantu FREE was finally launched on the market. After Kong Hui’s unremitting efforts, the product passed Lantu’s acceptance, was mass-produced and shipped, and was installed in Lantu’s car. The risk of miscarriage on the first project was eliminated. Not only that, after Lantu FREE was launched, 95% of consumers chose the version with air suspension. Kong Hui not only completed the first mass production delivery, but also completed the air suspension version. The importance has also been verified by the market.

That year, Kong Hui also successfully completed two equity financings, the Pre-A round from Lenovo Star and the A round from Xiaomi Industrial Investment.

During his cooperation with Lan Tu, Kong Hui’s capital chain bottomed out for a time. In the first half of 2020, there was only more than 1 million yuan left in the account. No money could be found, and the company could not survive for half a year. During that time, Guo Chuan often suffered from insomnia and met with more than 20 investors in a few months. After the chat, most of the investors lost contact directly. In the most difficult time, Guo Chuan relied on his personal credit to seek a loan of 30 million from the Rural Commercial Bank of Wuxing District, Huzhou. At that time, Kong Hui didn’t even have any collateral, only three small workshops rented from the government, and he already owed half a year’s rent. It was not until the second half of 2020, when Lenovo Star invested 20 million yuan in revenue, that Kong Hui’s survival crisis was temporarily alleviated.

Source Code Capital only invested in 2022, when Kong Hui supplied the product in batches. Prior to this, Wang He believed that air suspension was an incremental component worthy of attention in electric vehicles, but it was always difficult to judge how large this market would be. More investors are not familiar with the air suspension product. It is not a popular lithium battery or semiconductor, and it does not seem to have anything to do with autonomous driving and intelligence. What is air suspension and can you really make a lot of money?

Sign the “Military Order”

Ideal L series products initially found three suspension suppliers, and Kong Hui was the last one to complete the installation.

After the Lantu project was delivered, Guo Chuan received news from an alumnus, “Baolong has entered Li Auto’s suspension supplier directory, why haven’t I seen you?”

Guo Chuan urgently took several senior executives to Changzhou to “report”. Kong Hui had already supplied Lantu at that time and was the only company in China that could mass-produce air spring products. But at that time, the suppliers of Ideal L8 and L9 had been determined, and Kong Hui only received an order for L7.

Ideal also gave Kong Hui a “military order” to guarantee supply, which stated that Kong Hui promised to “go all out to ensure the development of Ideal air springs, make no excuses, overcome all difficulties, and ensure that the goal is achieved on time.” This military order It is still on the bookshelf in Guo Chuan’s office, with his signature on it.

Kong Hui is not satisfied with just supplying L7. They learned at the time that the ideal L9’s idle production capacity was insufficient. At the Ideal “Air Suspension Technology Day” held in July this year, Liu Liguo, vice president of Ideal Vehicle Engineering, recalled that Ideal had approached overseas suppliers Continental and Vibach, but Continental only sold a complete set of products, including body and suspension. Other hardware must be adapted according to mainland China. However, Vibach does not believe that the monthly sales volume of Ideal L9 will exceed 10,000, and is only willing to supply 5,000 units per month (one set per vehicle, including 4 air springs).

Miao Jian judged that it would not be a problem to sell 20,000 units of the ideal L series products in one month. “At that time, Ideal ONE could sell more than 10,000 units a month. As long as the product had no major flaws, the L series would only sell better than Ideal ONE. Moreover, Ideal ONE had no competitors in the dad car market at that time.” Miao Jian said.

Based on this judgment, Kong Hui prepared production capacity according to the monthly payment of more than 10,000 units. In order to shorten the delivery time, the project team was seriously deprived of sleep for a period of time, and the work that could be done in parallel was definitely not serialized, and the development time was shortened by 6 months.

“If the mold is scrapped and can be re-opened, it will cost one or two million. I think it is okay to bet on one or two million.” Miao Jian said.

Kong Hui made the right bet.

On July 17, 2022, 40 days before the delivery of the Lideal L9, during a user test drive in Chongqing, the air suspension of this vehicle, which Li Xiang called “the best SUV within 5 million yuan”, suddenly failed and the wheel The arches almost touch the wheels.

Public opinion was in an uproar. Ideal later responded that the suspension was not “broken” but “the buffer ring inside the air spring was damaged.” The test drive drove through a “pit 20 cm deep and 1 meter square” at a speed of “90 km/h”, and the working conditions exceeded the engineering design limits of the components.

The L9 had not yet been mass-produced at the time, and the air springs installed on the test car came from an overseas supplier. Shortly after the incident, Ideal suspended purchases of air springs from this supplier. It was Kong Hui who replaced him.

Liguo Liu, vice president of vehicle engineering, said at an event in July this year that the reason why Lili originally changed the overseas supplier was that it could not guarantee sufficient production capacity when the L9 was delivered. The first reason for choosing Kong Hui is that “the values ​​​​are consistent with the ideal. Others don’t believe in the ideal and sell tens of thousands of vehicles a month. Kong Hui believes in it.”

On the eve of the launch of the Ideal L9, Li Xiang conducted a “blind test” on the products of Baolong, Kong Hui and Vibach – installing the air suspensions of the three companies on three vehicles. After the test drive, Ideal believes that Kong Hui’s tuning style is more suitable for the L9’s model positioning.

Although Kong Hui prepared production capacity in advance, the order volume exceeded 10,000 on the night of L9’s release. Subsequently, it has grown steadily, and sales have exceeded expectations.

According to the original plan, Kong Hui still had 3 months to prepare for production capacity. However, orders for L9 increased rapidly. What was originally 3 months of work now had to be completed within 1 month. At the same time, Kong Hui must also prepare for the L7 to be delivered in six months, and needs to expand production capacity with a monthly supply of at least 30,000 units.

Ideal sent R&D, procurement and quality teams to Kong Hui to watch Kong Hui complete tests and ramp up production capacity. Kong Hui also specially prepared an “Ideal War Room” for these guests from afar.

Kong Hui also sent people to Shanghai to make “suicide” deliveries. It was the time of the epidemic and Shanghai was in a semi-closed state. The training staff of the Ideal Shanghai R&D Center had room and board in the company. Kong Hui sent someone to deliver the package to Shanghai, and he was quarantined for 15 days when he came back. At the peak, 10 people were quarantined at the same time. In order to ensure delivery, almost the entire project department is focused on the ideal L project.

Our own production capacity is ready, but the production capacity of the supply chain is still far behind. Qian Chengxiang, vice president of Kong Hui’s supply chain, led a team to visit suppliers one by one, asking them to expand production, sign new contracts on the spot and press their fingerprints. He also asked them to re-sign with upstream suppliers to ensure supply, and “brainwashed” the suppliers: “You want Believe it or not, Ideal can really sell 30,000 units a month. If we don’t expand production this time, we won’t have the chance to do business with Kong Hui. Anyone who doesn’t will be replaced immediately.”

In the end, with the joint efforts of all parties, Kong Hui completed the data lock as scheduled, ensuring the node for mass production and delivery of L9. After working for three months in one month, Kong Hui increased the monthly production capacity of the first ideal dedicated line from 0 Pulled to 10,000 units.

Last year, Kong Hui sold 70,000 air spring assemblies. Without the L9 order, this number would have been 30,000 units. It only took Kong Hui one quarter to go from third to first in the industry. Shipments are expected to reach 300,000 units this year. More and more investors are interested in Kong Hui, and Guo Chuan receives dozens of WeChat friend applications every week to discuss investment cooperation.

In Guo Chuan’s eyes, Lantu gave Kong Hui a ticket, which verified Kong Hui’s years of technology accumulation; ideally helping Kong Hui become a qualified auto parts supplier. When the cooperation with Lantu began, Kong Hui only had three small workshops and had not yet established a quality department. In the early stages of cooperation with Ideal, Kong Hui did not even have a dedicated trial production department.

“We are making products and processes at the same time, improving the organization, expanding the market, financing, renovating the factory and moving,” Guo Chuan said.

Kong Hui moved out of his workshop in Wuxing District, Huzhou last year and moved to a larger park in South Taihu New District, Huzhou. There is a 5-story office building and a 90,000-square-meter factory. The factory currently has a total of 8 production lines and is expected to expand to 11 by the end of the year. Kong Hui found a professional production equipment company to continuously optimize the production line. Now the automation rate has exceeded 90%, and 330 units can be produced in double shifts a day, which is nearly 27% higher than last year.

In order to attract more outstanding talents, Kong Hui also plans to move the headquarters from Huzhou to Suzhou in the second half of this year and establish a new R&D center.

Opponents often sneak into the factory

Currently, Kong Hui’s market share in China’s air suspension market reaches 39.2%, ranking first. The second place Vibach has a market share of 23.3%.

Miao Jian set up two blackboards in the project department, which listed projects for more than 40 car models, taking up two-thirds of the space. He said that both boards would be filled before the end of the year.

By June next year, these projects under development will be converted into Kong Hui’s market share. Judging from the current orders, Kong Hui will be the company with the highest market share of air suspension in China until at least 2025. Wang Han predicts that China’s air suspension market will exceed 10 billion yuan in 2025.

The market has become larger and competition is much more intense than before. Major international manufacturers such as Continental and Vibach are increasing their investment in air suspension. Baolong has also followed closely and won a lot of orders. Top Group, which makes automobile chassis, will start laying out the air suspension business in 2021. The product is expected to be launched this year. Launched in the third quarter. Some auto companies with “vertical integration” capabilities have also taken it upon themselves to develop and produce this high-value auto parts. Fodi Technology, a subsidiary of BYD, and Great Wall Seiko, a subsidiary of Great Wall Motors, both plan to develop and produce air suspensions in-house.

“Competitors often sneak into our factory.” Miao Jian said. When the purchasing department of a car company contracted by Kong Hui went to audit the factory, it once brought an engineer from the suspension department of its parts company.

Guo Chuan clearly sees the huge opportunities in today’s market and the fierce market competition tomorrow. If Kong Hui wants to maintain his lead for a long time, he must find his position and build a moat.

Compared with Continental and Vibach, Kong Hui has more convenient conditions and stronger willingness to serve customers in the Chinese market, and can respond to the needs of car companies faster; Baolong is Kong Hui’s main rival at the moment, but Kong Hui Hui is larger in scale and has more advantages in terms of cost; Tuopu, Fudi Electronics, and Great Wall Precision are still in the early stages of investment, and their products have not yet been launched. Kong Hui still has time to make better products and control costs better.

Air suspension involves many fields such as product design, research and development, and manufacturing, which requires continuous investment in technology, sufficient scale, and manufacturing experience. In terms of technology, Wang Mian admitted that Kong Hui still has room for improvement compared with foreign manufacturers. For example, the rubber used for bladder skins. The difference between different rubbers mainly lies in the formula, and the formula is not available for purchase. Even the manufacturers of bladder skins may not be able to figure it out. Because the leather factory just buys a few additives and makes rubber according to a certain ratio. The formula of the additive factory is the raw material ratio of the additive factory at the next level. The best bladder rubber formula in the world is not in the hands of any one company, but is scattered throughout the entire industry chain.

“Even if you poach the CEO and technical director, he may not know what the rubber formula is.” Wang Mian said.


Ideal technicians come to visit Konghui’s production line. The second from the right is Wang Mian.

At present, most of Kong Hui’s orders are for air springs. Ideal to buy air springs from Kong Hui and make the software algorithm and controller myself. Lantu purchases a complete suspension system from Kong Hui. The air springs come from Kong Hui and other components are integrated through procurement. Guo Chuan believes that if Kong Hui wants to maintain its leading edge, it must have the ability to provide a complete set of automotive electronically controlled suspension systems in the future. This year, Kong Hui began to supply dual-chamber air springs to Ji Krypton, and will later expand to “more advanced electronically controlled suspension categories.”

Wang He believes that competition in the field of air suspension will eventually return to the cost advantage brought by scale, and once established, it will be difficult to shake.

Compared with overseas suppliers, Chinese companies enjoy lower personnel costs and can operate normally by maintaining a gross profit margin of 20%-25%, while German companies usually pursue a gross profit margin of 30%-40% or above, “Kong Hui” The market will not be left with this space.

He thinks it will be difficult for new companies entering the market today to stay. The threshold for air suspension is not high, but it is not low either. You need to master the rubber, clamping technology, and understand chassis dynamics. Today, the products of Kong Hui and Baolong have been proven by the market and their costs can be controlled. Car companies have little incentive to take risks and choose a new supplier.

Unless there are changes in the supply chain or major changes in technical solutions, he believes that once the market pattern is formed, it will be difficult to break. This is also a common feature of many industrial products. “After its cost reaches a certain proportion, new entrances (new entrants) will not be profitable unless there is a revolutionary iteration of the technology.”

Kong Hui will control the gross profit margin within 25% in the future. Guo Chuan said that this can maintain the price advantage of the product and is enough to support the company’s daily operations. “Car companies will not be jealous after seeing this.”

Wang He believes that 2023-2025 will be the fastest growing period for Kong Hui, because the penetration rate of new energy vehicles continues to increase. He concluded that the reason why Kong Hui was able to succeed was that, on the one hand, Kong Hui’s team had a group of “people who were willing to work hard on technology” and had many years of accumulation in the field of chassis technology. On the other hand, it is also because of seizing the opportunity that China’s automobile industry has moved towards “high-end upward”, which was unimaginable in the era of fuel vehicles.

“Kong Hui’s success is like the success of many industrial sub-category companies. It is ‘unintentional intervention’. You continue to research and develop, explore, suddenly discover a new product or business, and then start it. When you see By the time you reach your goal, it will be too late.” Wang Han said.

The 88-year-old Guo Konghui is very pleased with the achievements of Konghui Technology today. In the era when Guo Konghui started his business, Chinese parts and components companies relied more on China’s demographic dividend to engage in low-margin, low-threshold material processing business. Today, Kong Hui surpasses overseas suppliers and ranks first in market share in the complex component of air suspension.

At present, almost all electric vehicles worth 300,000 yuan are equipped with air suspension. The cost of a set of air springs is 2,000-3,000 yuan, and the cost of the entire system is about 7,000 yuan. Car companies generally only reserve 5% of the BOM cost (Bill of Materials, the cost of all parts) for air suspension.

As costs continue to decrease in the future, Guo Chuan predicts that in five years, air suspension may be standard on models priced at RMB 200,000 or even RMB 180,000. By next year, cars worth about 250,000 yuan will have air suspension.

The cost reduction space of air suspension is Kong Hui’s own growth space. To make air suspension a car worth 180,000 yuan, Kong Hui still needs to continue to improve products and expand manufacturing scale. Of course, the popularization of such an expensive component also requires car companies that are more pursuing products and a market that is more tolerant of new things.

Source of title picture: Entrepreneurship pioneer Tucker: The Man and His Dream

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