Recently, BAIC BJEV (600733.SH) has seen a series of personnel changes in its management. Market attention has been drawn to the resignation of Chairman Liu Yu, who will no longer hold any position after leaving the company. Dai Kangwei, who stepped down as manager, succeeded Liu Yu as the new Chairman.

Stockstar notes that Liu Yu served as Chairman since January 2021 but failed to lead BAIC BJEV out of its loss-making quagmire during his tenure, putting considerable pressure on the new Chairman Dai Kangwei. In the first half of this year, BAIC BJEV is expected to incur a loss of RMB 2.4 billion to RMB 2.7 billion, which means that during Liu Yu's three and a half years in office, BAIC BJEV has lost over RMB 18.5 billion in total.

Moreover, Dai Kangwei also faces sales pressure. In the first half of this year, BAIC BJEV failed to maintain last year's high growth rate, with sales declining by 20%. Notably, some models of the main brand ARCFOX will be recalled due to safety hazards, totaling 3,418 vehicles.

As the HIMO S9 is about to be launched and delivered, Dai Kangwei is likely to face the first major challenge since taking office. The long-term losses and persistent sluggish sales also need to be addressed by the new leadership team.

01

Deep in Loss Quagmire

Major Management Changes

On the evening of July 19, BAIC BJEV announced that it had recently received written resignation reports from Chairman Liu Yu and Manager Dai Kangwei. Due to work reasons, Liu Yu resigned from his positions as Director and Chairman of the 10th Board of Directors and Chairman of the Strategic Committee of the Board, and will no longer hold any position in the company. Dai Kangwei also resigned from her position as Manager for work reasons.

From his resume, Liu Yu was born in November 1976 and graduated from Beijing Institute of Technology with a master's degree in business administration. From November 2012 to June 2016, he served as Deputy General Manager and General Manager of Beijing Automotive Sales Co., Ltd., and Director of the Procurement Center of Beijing Automotive Group (01958.HK). From June 2016 to June 2020, he was Vice President of Beijing Automotive Group, concurrently serving as President of Beijing Automotive Research Institute and Executive Vice President of Beijing Hyundai Motor Company.

From July 2020 to January 2021, Liu Yu was appointed as Manager and Director of BAIC BJEV. Since January 2021, he served as Chairman and resigned as Manager on June 9, 2021.

Stockstar notes that during Liu Yu's three and a half years at the helm, BAIC BJEV has been mired in losses. From 2021 to 2023, BAIC BJEV generated revenues of RMB 8.697 billion, RMB 9.514 billion, and RMB 14.32 billion, with growth rates of 64.95%, 9.4%, and 50.5%, respectively. Corresponding net profits attributable to shareholders were -RMB 5.244 billion, -RMB 5.465 billion, and -RMB 5.4 billion, with growth rates of 19.11%, -4.22%, and 1.19%, respectively.

According to the recently disclosed 2024 semi-annual performance forecast, BAIC BJEV failed to turn a profit. During the reporting period, it is expected to incur a net profit loss of RMB 2.4 billion to RMB 2.7 billion, an expansion from the RMB 1.98 billion loss in the same period last year. After deducting non-recurring items, the net profit loss is expected to be RMB 2.45 billion to RMB 2.75 billion, compared to RMB 2.512 billion in the same period last year. Based on these estimates, BAIC BJEV has lost at least RMB 18.5 billion during Liu Yu's tenure.

Regarding the first-half loss, BAIC BJEV stated that competition in the new energy vehicle market has intensified, with price wars heating up, squeezing profit margins. Meanwhile, to continuously advance product premiumization, the company has invested heavily in technology research and development, brand channel construction, brand image enhancement, and operational efficiency improvement, which has had a certain impact on short-term performance.

Unlike Liu Yu, Dai Kangwei will continue to serve at BAIC BJEV and succeed him as Chairman. It is worth mentioning that Dai Kangwei previously succeeded Liu Yu as Manager.

Dr. Dai Kangwei holds a Ph.D. in mechanical engineering from Beijing Institute of Technology and is one of the rare female leaders in the industry, known as a prominent post-80s female technocrat. According to her resume, from March 2021 to September 2021, she concurrently served as General Manager of BAIC BJEV Powertrain System Branch; from April 2021 to July 2024, she was Director and General Manager of BAIC BJEV; from June 2021 to July 2024, she was Manager and Director of BAIC BJEV; and since July 2024, she has been Deputy Chief Engineer (General Manager Assistant Level) of BAIC Group, Chairman of BAIC BJEV, and Chairman of BAIC BJEV.

Stockstar notes that in addition to the change in leadership, other core management positions at BAIC BJEV have also seen changes. Zhang Guofu and Liu Guanqiao were appointed as Manager and Deputy Manager, respectively. Jia Hongwei resigned from his positions as Supervisor and Chairman of the 10th Supervisory Board due to work reasons and will no longer hold any position in the company. Chen Qingbo was nominated as a candidate for Supervisor of the 10th Supervisory Board and will assume his duties upon approval by the general meeting of shareholders.

02

ARCFOX Safety Hazards

Sales Challenge for HIMO Brand Post Appointment

Stockstar notes that in addition to the challenge of turning a profit, Dai Kangwei also faces the reality of sluggish sales growth.

From 2020 to 2023, BAIC BJEV's annual sales were 25,900, 26,100, 50,200, and 92,200 vehicles, respectively. While sales grew by 84% in 2023, they are still far behind the 150,600 vehicles sold in 2019 and also lag behind the momentum of emerging auto companies.

Sales data shows that BAIC BJEV's sales "reversed" in the first half of this year, declining by 20.4% year-on-year to 28,011 vehicles.

Currently, BAIC BJEV has two major brands: ARCFOX and BEIJING. ARCFOX is the main brand, with models such as the Alpha T Forest Edition, Alpha S Forest Edition, Alpha S Pioneer Edition, Smart Parent-Child Vehicle Koala, Alpha T5, and the recently launched Alpha S5.

ARCFOX is produced by BluePark Magna, a joint venture between BAIC BJEV and luxury vehicle manufacturer Magna International. At that time, BAIC BJEV stated that it would leverage Magna's strengths in research and development, validation, and manufacturing processes to bring ARCFOX's high-end products to world-class quality.

In 2020 and 2021, the starting prices of ARCFOX's Alpha T and Alpha S models were both above RMB 240,000. In May 2022, the ARCFOX Alpha S HI version was launched with a starting price of up to RMB 397,900.

However, ARCFOX's premiumization strategy failed due to low sales and shifted to cost-effectiveness. Recently, the ARCFOX Alpha S5 was officially launched, with the 560MAX model priced from RMB 176,800, billed as the "only 800V pure electric sedan under RMB 200,000".

Notably, some ARCFOX models have also been recalled recently due to quality issues. BluePark Magna filed a recall plan with the State Administration for Market Regulation, deciding to recall certain Alpha T and Alpha S pure electric vehicles produced between November 2, 2021, and June 10, 2022, totaling 3,418 vehicles.

Some vehicles within the scope of this recall have defective materials in the wave clips that fix the brake hoses, which may break, causing local loosening and wear of the brake hoses. In extreme cases, this can lead to brake fluid leakage, extended braking distance, and safety hazards.

It is reported that this recall was initiated after the State Administration for Market Regulation launched a defect investigation. Affected by the investigation, BluePark Magna will replace the wave clips free of charge for the recalled vehicles, and if the brake hoses are worn, they will be replaced to eliminate safety hazards.