– Transition to New Energy Fuels High-Quality Development and Expands Global Growth Opportunities
On August 22, Wuling Motors (0305.HK) released its 2024 interim results. For the first half of the year, Wuling Motors reported total revenue of RMB 3.946 billion, with a gross profit margin of 10.8%, up about 270 basis points from 8.1% in the same period of 2023. The profit for the period was RMB 21.125 million, representing a 72.3% year-on-year increase.
Despite intensified market competition and pressures from industry transformation, the automobile sector showed an overall upward trend in the first half of the year. From January to June, revenue in China’s automotive industry reached RMB 4.767 trillion, reflecting a 5% year-on-year increase. The growth in vehicle production and sales also improved profitability for upstream industry chain companies. Wuling Motors’ latest results are notably strong.
Steady Profit Growth and Synergistic Development Across Three Major Sectors
Wuling Motors primarily offers commercial vehicles, automotive power systems, and automotive parts. Benefiting from the robust development of the global automotive industry chain, these three major sectors have advanced in tandem, driving revenue and profit growth for Wuling Motors.
Breaking down the performance of each sector:
1/ Automotive Power Systems: By focusing on upgrading traditional fuel vehicle engines and developing new energy power systems, Wuling Motors has maintained its established customer base while securing new orders for high-efficiency and cost-effective HEV hybrid assemblies. This approach combines traditional power technology upgrades with new energy power integration. In the first half of the year, revenue reached RMB 902 million, with casting product sales totaling 515,000 units, up 26.2% from the same period in 2023.
2/ Automotive Parts: Wuling Motors has continued mass production of key NEV components such as electric drive axles, motors, and electronic controls, achieving breakthroughs in both products and customer acquisition. In the first half of the year, sales to new customers amounted to RMB 1.042 billion, accounting for 38.6% of the total revenue in this segment. The share of revenue from customers outside SGMW increased to 38.6%. Various new energy electric axles have been used in projects for Great Wall Motor, JAC, and BAIC Qingdao. The first commercialized electric drive coaxial axle for the Changan Kaicheng market has already entered mass production. Wuling Motors’ parts products are gradually moving toward mid-to-high-end markets, capturing trends in high-end and intelligent products, and expanding its diverse customer base, supporting further performance growth.
3/ Sales and Manufacturing of Commercial Vehicles: Following last year’s restructuring and strategic adjustments, Wuling Motors’ commercial vehicle business has expanded into international markets and promoted new products. Currently, NEVs such as logistics vehicles, sightseeing buses, and patrol vehicles have been exported to countries including Vietnam, Singapore, Thailand, the United States, and Australia. In 2024, the company’s global expansion continued with its first export to Egypt, delivering 200 vehicles. As Wuling Motors accelerates the development of new energy and intelligent products, it creates new growth opportunities for commercial vehicle revenue, contributing to overall performance growth.
Each sector shows varying degrees of success, and Wuling Motors’ continued optimization of product structure, commitment to technological innovation, and cost control measures have established stable profitability.
Notably, the synergy between the commercial vehicle, automotive power system, and automotive parts sectors has created significant benefits along the industry chain. With factories in Guangxi, Shandong, Chongqing, and Hubei, Wuling Motors now has an annual production capacity of over 2 million sets of automotive parts. The Jingmen Base, dedicated to supporting Great Wall Motor, generated RMB 333 million in revenue in the first half of the year, with promising future potential. The combination of industry chain and technological advantages enables Wuling Motors to maintain leadership in product quality, cost, and scale, providing strong brand competitiveness and resilience through industry cycles.
Creating new high quality productive forces and accelerating overseas expansion
New energy, exports, and intelligence are emerging as key drivers of performance for China’s automotive industry chain. Strengthening China’s new energy vehicle industry chain is closely linked to enhancing productive forces with higher quality.
In the context of balancing energy security and achieving “dual carbon” goals, coupled with policies promoting large-scale vehicle trade-ins to stimulate automotive consumption, the new energy vehicle market is showing steady growth and increasingly high-quality development.
According to data from the China Association of Automobile Manufacturers (CAAM), from January to June 2024, production and sales of new energy vehicles reached 4.929 million and 4.944 million units, respectively, marking a year-on-year increase of 30.1% and 32%. Domestic sales totaled 4.339 million units, up 35.1% year-on-year; exports were 605,000 units, up 13.2%. The total sales of new energy vehicles in China for 2024 are expected to reach 11.5 million units, indicating strong growth momentum.
Wuling Motors is continuously strengthening its layout in the new energy sector across its three main business segments. In the long term, this will provide sustained new growth driver for its performance. From the current customer group perspective, Wuling Motors has accumulated a sufficient number of new energy customers. In addition to major client SGMW, there are well-established new energy automotive companies or emerging companies such as Great Wall, Chery, Geely, Foton, and Hozon. Furthermore, Wuling Motors is actively implementing a diversified customer policy and achieving outstanding results. For example, in the first half of the year, its independently developed new energy parts products made significant breakthroughs in securing overseas clients, successfully completing the development and supply of rear drive axle assemblies and driving system assemblies for the first new energy passenger car exported to Vietnam. As automotive enterprises expand their production and sales targets in 2024 compared to last year, this will undoubtedly create growth opportunities and drive comprehensive business growth for Wuling Motors.
Furthermore, the new energy vehicle industry will inevitably move towards high-quality development. Recently, the profit margins in the automotive industry have shown a downward trend. However, a positive change this year is that several automotive enterprises have exited the “price war” and are focusing more on the business quality. As the automotive industry enters a phase of healthy development, the whole industry chain is expected to move toward common prosperity, and Wuling Motors’ profitability is likely to further improve.
In addition, Wuling Motors is actively striving to expand internationally and seize overseas development opportunities. In March of this year, Wuling Motors established an innovation center in Hong Kong. It is understood that the vision of the Wuling Motors Innovation Center is to be based in Hong Kong, leverage resources from the mainland China, and serve a global market. Its business includes forward-looking R&D, parts development, automotive intelligence and digital services, international sales services, and industrial incubation.
The establishment of this innovation center will effectively enhance Wuling Motors’ technological strength and product competitiveness. As Hong Kong serves as an excellent window for the mainland China to expand its new energy business overseas, Wuling Motors will be able to more efficiently reap the benefits of global market development, drive the growth of related companies’ overseas sales of new energy vehicles, and achieve rapid improvement in its own performance.
Looking ahead to the prospects of the overseas market, recent research reports indicate that in the passenger car sector, the market share of self-owned brands is gradually increasing, and the product exports is changed to capacity exports, with a high sustainable growth of export. The internationalization of China’s commercial vehicles is rapidly advancing. In 2023, the total export volume of China’s commercial vehicles reached 770,000 units, tripling compared to 2017.
China’s automobile exports, particularly commercial vehicles, are experiencing rapid growth. Recent data suggests that by 2024, China’s automobile exports could reach 6 million units, representing a 15%-20% increase. Commercial vehicle exports are expected to reach 850,000 units, with a 15% growth rate. This growth indicates a significant acceleration in the internationalization of China’s automotive industry, providing Wuling Motors with more opportunities to secure vehicle and core component orders, thereby boosting its performance to a new level.
Summary:
In summary, Wuling Motors exhibited robust business performance in the first half of this year, and its strategic layout is steadily progressing, which will continue to yield operation outcome.
This year marks a significant moment for the development of new energy vehicles in China. In July, the monthly retail sales penetration rate of domestic new energy passenger cars exceeded that of traditional fuel vehicles for the first time, indicating that new energy vehicles have truly become mainstream. Moreover, Wuling Motors has accumulated ample industry experience, a solid customer group, and technological strength. As a result, its new energy layout and future potential will gain market recognition. Transitioning from the era of fuel vehicles to that of new energy vehicles, Wuling Motors is experiencing a leap in its intrinsic value.