The automotive industry is currently undergoing fierce competition, which has turned into a relentless elimination round. As manufacturers strive to capture market share, the "price war" has emerged as a predominant theme for 2024, further complicating the dynamics within the market.

In this turbulent environment, numerous car manufacturers are taking a step back to reassess their strategies, with Great Wall Motors at the forefront. While many companies are plunging into aggressive price reductions to spike sales, Great Wall has notably maintained relatively stable pricing and consistently communicated its strategy of prioritizing "value preservation over volume."

Under this pragmatic philosophy, Great Wall Motors has still reported commendable performance. On January 14, the company released a profit forecast for 2024, predicting a net profit attributable to the parent company to range between CNY 12.4 billion and CNY 13 billion, marking a year-on-year increase of 76.60% to 85.14%. Their cumulative sales are projected at 1.2332 million vehicles, showing a negligible growth of 0.21%.

Despite minimal growth in sales, the significant year-on-year rise in net profit demonstrates that Great Wall is performing relatively well compared to its competitors. For instance, Changan Automobile, another giant in the industry, anticipates roughly 2.683 million vehicles sold in 2024, with a modest year-on-year growth of 5.1%. However, by the end of the third quarter of last year, Changan's profit was merely CNY 3.58 billion, reflecting a whopping 63.78% decline. The stark contrast between the two companies’ financial outcomes is apparent.

The inclination to abandon the obsessive pursuit of sales volume can be observed even among leading car manufacturers, yet Great Wall Motors has emerged with impressive profitability data.

So, how has Great Wall managed to bolster net profits significantly despite stagnant sales growth? Two pivotal factors contribute to this success. The first is the optimization of product structure. In 2024, Great Wall's sales reached 1.2332 million units—an achievement that falls short of its initial target of 1.9 million units, translating to a sales fulfillment rate of less than 65%. This marks the fourth consecutive year in which they have failed to meet their sales goals. Thus, on the surface, their performance in terms of sales appears to leave much to be desired.

However, beneath the stagnant overarching figures, there are positives to be identified. A deeper analysis of sales reveals that of its five primary brands, three experienced an actual decline in sales: Haval sold 706,200 units in 2024, down 1.25%; Great Wall Pickup totaled 177,100 units, marking a 12.47% decline; and Ora saw a staggering 41.69% drop with 63,272 units sold.

Conversely, the WEY and Tank brands recorded growth; WEY achieved 54,728 units sold, a 31.55% increase, while Tank reached 231,000 units sold, up 42.12%. It's worth noting that Haval, Great Wall Pickup, and Ora are positioned in the more budget-friendly segments, whereas WEY and Tank cater to the higher-end market. Despite an overall static figure, Great Wall's product structure has visibly shifted towards more premium offerings.

Recent reports indicate that sales of vehicles priced over CNY 200,000 have reached 309,600 units, an increase of 37.13%. This distinct migration towards valuing profit over sheer volume illustrates that Great Wall is indeed refraining from an obsessive pursuit of market share.

Additionally, expanding focus on overseas markets has substantially contributed to the impressive net profit increase in 2024.

Great Wall's overseas sales reached 453,141 units in 2024, reflecting a remarkable growth of 43.39%. This acceleration outpaces the overall sales growth within the company, as they have successfully catered to a global user base exceeding 14 million and established over 1,300 distribution channels worldwide, accumulating total overseas sales surpassing 1.7 million vehicles.

Highlighting their strategic international product placements, by the third quarter of 2024, the Haval Big Dog model was launched in Uzbekistan, while WEY exhibited its Gao Shan model in Europe. Meanwhile, Tank’s 300 and 500 models have been introduced into markets in Malaysia, Azerbaijan, and Chile; and Ora's Good Cat model was marketed in Qatar and Uruguay. The Great Wall Pickup brand has also expanded to Mexico and Uruguay.

It is crucial to recognize that the competition in overseas markets is considerably less intense than in China's hyper-competitive environment, leading to higher profit margins. For example, in 2023, Great Wall’s overseas business achieved a gross profit margin of 26%, surpassing China's rate of 15.5% by over 10 percentage points. This pragmatic recognition of risk has catalyzed their greater emphasis on the international market.

In the fiercely competitive world of automotive sale practices, Great Wall Motors proves that alternative strategies, focused on profitability rather than just volume, can yield impressive financial results.

On the landscape of the automotive industry, adopting the "value over volume" strategy is a rare sight. Last year, luxury automaker BMW attempted a similar approach, publicly announcing an end to price wars and increasing prices on various models. However, this effort resulted in disappointing outcomes, with BMW managing to sell only 34,800 vehicles in August, a sharp decline of 42% from the previous year’s sales of 60,000.

The question lingers: Why has Great Wall's strategy of "value over volume" succeeded where others have stumbled?

Predominantly, this success is rooted in the robust technological foundation built over the years. As a leader during the gasoline vehicle era, Great Wall Motors has cultivated substantial expertise in internal combustion engines. For instance, they have an impressive two-decade-long history of development in diesel engine technology and introduced China’s first diesel SUV, the Haval H3, in 2006—a vehicle powered by the GW2.8TC diesel engine.

Over the years, Great Wall has consistently advanced diesel engine capabilities in terms of performance, fuel efficiency, and emissions, resulting in several high-powered diesel engines tailored for pickup and SUV models that are acknowledged as industry leaders. These offerings have been well-received by over 1.83 million customers across more than 170 countries around the globe.

Despite the underlying strength from their legacy—the focus on high-end vehicles and the expansion into new markets both capitalize on their earlier technological successes—Great Wall faces mounting pressures in an era of rapid technological shifts.

For instance, while the Tank brand currently dominates the off-road category, signaling both products and reputation, a wave of new entrants into this space is beginning to challenge their stronghold. Reports indicate that companies like BYD, Chery, Dongfeng, and Changan have recently ventured into off-road segments, introducing products that cater to similar market price points.

The entry of such competitors could potentially undermine Tank’s market authority, impacting Great Wall’s performance in this lucrative segment.