Titanium media note:This article comes from WeChat WeChat official account Yiou Automobile (ID: EO-AUTO), written by Guo Huaiyi, and published by Titanium Media with authorization.
The Krypton car (hereinafter referred to as Krypton), which has always claimed to insist on direct operation, is quietly reforming the channel network.
Yiou Automobile has learned exclusively that Krypton plans to expand its sales network by recruiting dealers on a large scale without changing its direct sales model. As the core of the previous sales network, Krypton will greatly reduce the number of new direct investment in the construction of official direct stores.
In the field of after-sales service, Krypton has also made a similar new plan. Dealers need to build an after-sales service center according to the standard of Krypton’s direct operation. The previous plan of building a direct after-sales network directly funded by Krypton has also been abandoned.
In July this year, Krypton also said that it would adhere to the direct sales model, and built more than 300 direct sales stores in 75 cities across the country at an average rate of one every two days.
However, due to the huge financial pressure, although Krypton did not give up the direct mode, it gave up direct investment in building and operating stores and chose to recruit dealers instead, so that dealers could pay high store construction and operation and maintenance costs.
In addition, a source who knows about Krypton told Yiou Automobile that Jason Lin, vice president of Krypton, is no longer in charge of channel planning, but is in charge of sales business, and Zhao Yuhui, vice president in charge of sales business, took over the channel planning.
Since its establishment, Krypton has mainly relied on the endorsement and blood transfusion of Geely Automobile to promote its own construction. As the saying goes, leaning against a big tree is a good way to enjoy the cool, so Krypton can move forward quickly, but Geely, who bears the weight, has a strong sense of being out of reach.
In December 2022, Geely officially announced that Krypton had submitted a draft registration statement for possible initial public offering to the SEC. But to this day, the IPO of Krypton has been slow to see progress. According to a source who knows about Krypton, Krypton originally planned to land in the US stock market in mid-2023, but the plan has been postponed because of the low valuation given by the market.
Regarding the adjustment of direct operation mode, related personnel changes and listing issues, Yiou Automobile has made a verification to the extreme, but as of press time, it has not received a reply.
Some investment bankers who did not want to be named told Yiou Automobile that since 2022, the capital market has not been optimistic about the development prospects of China’s new forces, and the share prices of Weilai, Tucki and LI have all plummeted. The plunge after the listing of zero-run cars has dealt a heavy blow to investor confidence. In this context, it is also helpless for Krypton to choose to suspend listing.
"In the future, we must vigorously promote the extreme family."
Since its establishment in 2021, the Krypton Direct Marketing System has included four types of stores: Krypton Center, Krypton Space, Delivery Center and Krypton Home.
Among them, Krypton Center, Krypton Space and Delivery Center are all directly funded and operated by Krypton. The large-scale krypton centers are located in the golden business district, which makes them have strong brand display attributes in addition to sales. Krypton space is small in scale, but it has the largest number and can reach consumers the most. As the name implies, the delivery center is mainly responsible for delivering new cars.
Extreme Krypton Home is completely different from the above three official direct stores. It is not a direct store in the true sense of extreme Krypton, but it is called — — Managed direct sales.
"The extreme family is the dealer, and the cost of opening a store and operating and maintenance is their own. There may be some subsidies and support."
Extremely insiders told Yiou Automobile that before that, extremely investors were basically from Lexus brand dealers. Although they are distributors, they are not separated from the direct marketing system. The most remarkable point is that the product price must be consistent with the center and space of Krypton. In addition, the decoration style and standard of the Kryptonian home must also keep the same style as the Kryptonian center and space.
According to Yiou Automobile, Krypton has launched a dealer recruitment plan, which is divided into two batches. The first batch of recruitment plans involved 18 provinces, municipalities and autonomous regions, with a total of 29 cities. Among them, Krypton plans to recruit in five cities in Zhejiang Province, with the largest number of recruits in the first batch of plans. Followed by Jiangsu and Guangdong, each with four cities.
The second batch of recruitment plans involves 16 provinces, municipalities and autonomous regions, with a total of 32 cities. Among them, Jiangsu and Shandong each have five cities to recruit, tied for first place. As four cities, Zhejiang still ranks among the top three in the recruitment plan.
The recruitment requirements given by Krypton clearly require that the applicant must be an independent legal entity approved by the industrial and commercial department with a registered capital of not less than 10 million yuan; In the local mainstream automobile business circle, it has a site with a use area of not less than 3,000 square meters and a service life of not less than 5 years; Can quickly build an excellent after-sales service team.
According to the data of official website on August 18th, at present, there are more than 312 directly operated stores in Krypton. Assuming that only one new Krypton store is built in each city in the above two recruitment plans, it will also bring 61 new stores to Krypton, with an increase of about 20%.
Outside the sales network, there will be similar adjustments in the direct after-sales stores.
In 2022, due to the poor after-sales service of third parties, Krypton was complained by many car owners. To this end, Krypton has decided to establish a direct after-sales service network. In April this year, Jason Lin, vice president of Extreme Krypton, once said: "We are also accelerating the construction of after-sales direct stores."
However, Yiou Automobile learned that after the after-sales centers in Hangzhou and Guangzhou were directly funded, the follow-up plans were basically abandoned.
In addition to the huge financial pressure, the qualification of the after-sales center is also a big obstacle. "Because dealers are all operating locally, their qualifications are not a problem for them, which is why there is a special recruitment requirement for the company to have after-sales service experience."
Different from the extreme center, where the space focuses on sales, the delivery center focuses on delivery, which integrates sales, delivery and after-sales. The construction standard must conform to the extreme direct marketing system. "This not only adheres to the direct marketing model, but also expands the sales and maintenance network, without financial pressure. Why not?"
Just as Krypton adjusted its direct marketing mode, there were personnel changes inside Krypton. It is reported that Jason Lin, the vice president of Krypton, who was in charge of channel business before, has been in charge of sales business. Zhao Yuhui, the former vice president in charge of the sales business, was transferred to the channel construction business due to the problem of integrity.
As the heaviest bargaining chip of Geely Automobile in the new energy market, Krypton can be described as a collection of thousands of kinds of love.
Geely invested 18 billion yuan in the vast structure of SEA. Originally, it was planned to be put on the models of the Lectra brand first, but it was finally used on the first model of Krypton 001.
In order to create a high-end image of the Krypton brand, Geely has put aside almost all the existing dealer networks and invested heavily to let Krypton build a direct network.
After the listing of Krypton 001, the car system software such as Caton was complained by the owners. In July, 2022, Krypton announced that it would replace Qualcomm 8155 chip for all owners of Krypton 001 for free.
This move directly costs Krypton three small goals.
Free replacement of 8155 chips has also won praise from the market, and consumers have begun to vote in RMB, and sales of krypton have risen rapidly. In October, November and December of 2022, the monthly sales volume of Krypton continuously exceeded 10,000 vehicles. In 2022, the annual sales volume of Krypton also reached 71,941 vehicles.
Although the sales volume is higher, like many new energy brands, Krypton has not walked out of the quagmire of losses. Geely Automobile’s 2022 financial report shows that its revenue in 2022 was 31.78 billion yuan, a tenfold year-on-year increase. However, the loss increased from 1.01 billion yuan in 2021 to 2.03 billion yuan in 2022.
As a "fellow brother" in Geely, although the attention of Lectra is not as good as before, it can achieve meager profits in 2022, but it has not held Geely back. In contrast, krypton, which cannot achieve self-hematopoiesis, has already hit Geely financially.
In 2022, Geely’s operating income and net profit were 148 billion yuan and 4.65 billion yuan respectively, with year-on-year growth of 45.6% and 6.8% respectively. It is really commendable to realize the double growth of revenue and profit in the market environment in 2022. But it is worth noting that Geely said in the financial report:
1. The Group’s internal profitability is under pressure due to the sharp increase in the cost of spare parts such as batteries and chips, and the large amount of investment in the initial stage of the development of extremely new business;
2. During this year (2022), the Group increased its loans to support the rapid growth of Krypton brand business;
3. Standard & Poor’s downgraded the Group’s corporate credit rating from "BBB-/ stable" to "BBB-/ negative", and Moody’s Investors Service downgraded the Group’s credit rating from "Baa3/ stable" to "Baa3/ negative" due to the pressure on profitability in the initial stage of new energy transformation.
It is not difficult to find that Geely’s transfusion of krypton has caused pressure on its profitability, increased loans (liabilities) and even downgraded its rating.
Perhaps because of this, Geely hopes that Krypton can quickly land in the capital market. In December 2022, Geely announced that Krypton had submitted a "draft registration statement for possible initial public offering" to the Securities and Exchange Commission (SEC).
But today, August 2023 has passed, but it is not seen below.
The above-mentioned extremely kryptonian people said that it was not that Geely and extremely kryptonian did not want to go public, but that the valuation was not ideal, which may also be the reason why Geely’s management said "listing on the right opportunity" at the performance meeting in March 2023.
"In the second half of 2022, the capital market was really unfriendly to China’s new car-making forces." An investment banker who did not want to be named told Yiou Automobile that the share prices of Weilai, Xpeng Motors and LI all fell sharply in the second half of 2022. After the zero-run car was listed in the environment at that time, the share price was once terrible. "So it is difficult to go public later, and no one buys it."
According to public data, it was not until March 2023 that the share price of zero-running cars continued to stabilize above the issue price. Among Wei Xiaoli, LI’s share price performed slightly better, while Wei Lai’s and Xpeng Motors’s share prices have not yet returned to the June 2022 price.
Although the listing has been delayed for a long time, it is fortunate that the market performance is firm. The listing of Krypton 009 and Krypton X has further boosted sales. According to official data, in July this year, the delivery volume of extremely krypton vehicles reached a record high, reaching 12,039 vehicles, up 139.7% year-on-year. In the first seven months of this year, the cumulative sales volume reached 54,672 vehicles, a year-on-year increase of 127%.
However, the price war in the auto market rekindled in July, and it was extremely difficult to face the sales pressure again. At the beginning of August, Krypton announced the introduction of a price equity policy for Krypton 001, with a limited price reduction of 30,000-37,000 yuan. Price reduction and promotion is undoubtedly another stress test for Krypton and Geely Finance.
