The price war that started last year has put automakers in a dilemma where revenues are increasing but profits are not, or where losses are increasing while sales are not improving significantly.

However, the price war is still going on. At the beginning of the year, BYD took the lead in cutting prices and shouted the slogan that electricity is cheaper than oil; at the end of March, Xiaomi went public and set off a second wave of price cuts.

Recently, A-share listed automakers have successively announced their performance in the first quarter of 2024, including SAIC, BYD, Great Wall Motor, Changan Automobile, GAC Group and Seres. From the quarterly financial reports of many companies, we can more or less understand the risk resistance of various automakers after the first round of price wars.

Among them, BYD, Great Wall Motors and SERES performed well, while SAIC and GAC did not.

As the largest automobile group in China, SAIC still leads in terms of revenue, but its ability to make money is not as good as before. In the first quarter of 2024, SAIC Group's operating income was 138.984 billion yuan, down 1.19%; net profit attributable to shareholders of listed companies was 2.714 billion yuan, down 2.48%; net profit after deducting non-recurring gains and losses was 2.121 billion yuan, down 1.97%.

GAC Group is facing the same situation. In the first quarter of 2024, GAC Group achieved revenue of 21.566 billion yuan, a year-on-year decrease of 18.79%; net profit attributable to shareholders of listed companies was 1.22 billion yuan, a year-on-year decrease of 20.65%; net profit attributable to shareholders of listed companies after deducting non-recurring items was 687 million yuan, a year-on-year decrease of 52.08%.

The decline in both revenue and profit was mainly due to the performance of joint ventures. SAIC and GAC were previously automakers that relied heavily on joint venture brands, with SAIC's joint ventures accounting for nearly 70% of the group's total sales. In recent years, due to the continued impact of price wars and delayed transformation, the market share of joint ventures has continued to decline. At the same time, the group's own brands have also failed to boost the group's overall performance.

However, the first quarter reports of BYD, Great Wall Motors and SERES proved to the market that even if the price war is fierce, automakers will still be profitable in the short term.

BYD: Huge advantages of vertical integration of supply chain

Despite the significant price cuts on its main models, BYD maintained profit growth. According to the financial report, in the first quarter of 2024, BYD's revenue increased by about 4% year-on-year to 124.94 billion yuan; net profit attributable to shareholders of listed companies was 4.57 billion yuan, an increase of 11% year-on-year; net profit attributable to shareholders of listed companies after deducting non-recurring items was 3.75 billion yuan, an increase of 5.24% year-on-year.

At the same time, BYD's gross profit margin in the first quarter remained above 20%, reaching 21.9%.

The confidence to start the price war first comes from the huge cost advantage brought by the vertical integration of the supply chain. However, compared with the revenue scale of about 180 billion yuan and the net profit of about 8.67 billion yuan in the fourth quarter of last year, BYD's growth rate has slowed down.

Great Wall Motors: Optimizing sales structure and making money overseas

In the first quarter of 2024, Great Wall Motor achieved revenue of 42.86 billion yuan, a year-on-year increase of 47.6%; net profit was 3.228 billion yuan, a year-on-year increase of 1752.55%, creating the best financial performance in the same period in history.

Regarding the growth in revenue and net profit, the financial report stated that the main reasons were the growth in sales scale, the optimization of sales structure, and the increase in per-vehicle revenue. In the first quarter of 2024, Great Wall Motors sold 275,300 new vehicles, a year-on-year increase of 25.11%. Among them, the sales volume of tanks with an average price of more than 200,000 doubled year-on-year, raising the selling price and profit margin of the vehicles. According to a research report released by a relevant securities company, it was calculated that the average sales price of Great Wall Motors' vehicles in the first quarter was 156,000 yuan, a month-on-month increase of 9,000 yuan and a year-on-year increase of 24,000 yuan.

At the same time, Great Wall Motors' export volume also far exceeds the overall industry level. In the first quarter of 2024, Great Wall Motors' overseas sales increased by 78.51% year-on-year to 92,800 vehicles, accounting for 33.7% of its total sales in the first quarter. At present, all five major brands under Great Wall Motors have achieved overseas expansion, entering markets such as Germany, the United Kingdom, Sweden, Ireland, and Israel, and plan to enter 15 countries including Spain, Italy, Switzerland, and Austria in 2024, and plan to cover most of the European market in 2025.

However, in the long run, Great Wall Motors still needs to solve the problems of internal friction in product prices and the low proportion of new energy products.

SERES: Huawei Effect

In the first quarter of 2024, SERES achieved revenue of 26.561 billion yuan, a year-on-year increase of 421.76%; the net profit attributable to shareholders of the listed company was 220 million yuan, a year-on-year increase of 135.12%.

Seres achieved a quarterly turnaround, mainly due to the continued improvement in the market performance of the Wenjie series and the gradual emergence of economies of scale. Data shows that in the first quarter of 2024, Seres' sales increased by 374.77% year-on-year to 94,800 vehicles, setting a new record for a single quarter. Among them, the cumulative sales of Wenjie were 82,400 vehicles, M7 was 69,500 vehicles, M9 was 10,600 vehicles, and M5 was 2,158 vehicles. In the first quarter of the Chinese market luxury brand sales rankings, Wenjie was the highest-ranked Chinese brand.

On the other hand, the financial report stated that due to multiple measures such as cost reduction and efficiency improvement, technological innovation, etc., Seres' operating efficiency has been effectively improved. The financial report data shows that in the first quarter of 2024, Seres' operating cost rate decreased by 8 percentage points month-on-month; gross profit margin increased to 21.5%. Some securities firms predict that according to this trend, Seres may enter a profit cycle in the third quarter of 2024.

According to the latest sales data for April, Ideal surpassed Wenjie by a slight margin. However, Ideal and Wenjie were inevitably impacted by Xiaomi Motors, which was launched and delivered at the end of March. As for how destructive this second wave of price war is, we can only wait for the semi-annual report to find out.