Introduction

Sales targets are here to stay, but they must evolve into a strategic tool rather than a strategic goal.

As April gives way to May, automakers reflect on the sales targets set at the beginning of the year, with many likely falling behind schedule.

Setting annual sales targets, ranging from conservative estimates of 10%-20% growth to ambitious doubling targets, has become standard practice for automakers. Last year, this pursuit drove remarkable success: BYD surpassed 4 million annual sales, while Chery, Geely, and Li Auto set new records. Overall, annual automobile production and sales surpassed 31 million units, setting a new historical high.

However, this rapid sales growth was fueled by a distorted price war, leading to inevitable profit pressures. In 2024, the automotive industry's profit margin was squeezed to 4.3%, trapping many brands in a vicious cycle of revenue growth without profit increase.

While spreading costs through sales volume to achieve economies of scale is a near-universal rule for profitability in the automotive industry, the current juncture presents new challenges. Consumers are less swayed by price incentives, brands are struggling with revenue growth without profit increase, and price wars are shifting to value wars. These changes necessitate a reevaluation of the emphasis and pursuit of sales volume and who truly benefits from sales targets.

01 When Propaganda Surpasses Practical Value

Before discussing the necessity of sales targets and their beneficiaries, it's crucial to acknowledge their significance.

High sales volumes reflect an automaker's market share, brand competitiveness, and consumer recognition. Announcing future sales targets demonstrates competitiveness to the market and boosts investor confidence. For instance, when Hyundai Motor announced its global sales target of 5.55 million vehicles by 2030, its share price surged by 4%.

Similarly, when Askey launched the M8, it frequently disclosed order data to showcase popularity and strength to investors, indirectly revealing the company's healthy operating status.

Furthermore, sales targets based on an automaker's development and market trends provide a clear direction for future growth, drive resource optimization, and facilitate strategic planning and resource allocation, informing the supply chain of inventory data.

For example, Li Auto's chassis engineers revealed that before the 2025 L series facelift, over 300,000 suspension units were needed annually. This large demand for air springs enabled Li Auto to collaborate with suppliers like Baolong and Konghui, leveraging economies of scale to lower prices and enhance user driving experiences.

Last year's BYD supplier negotiations also revealed that top automakers with large orders and ambitious sales targets have more bargaining power.

Sales targets also serve as excellent promotional material. At the 2025 Changan Automobile Global Partner Conference, Zhu Huarong stood in front of a screen proclaiming the "3311" plan's unwavering commitment to the annual sales target, fully exposing Changan's confidence, determination, and ambition.

However, as market competition intensifies and brand recognition becomes critical, sales targets' propaganda value often surpasses their practical significance. In 2024, only seven automakers met their sales targets, a meager number. Among new-force brands aiming for 50% growth or doubling, only NIO, Li Auto, Xiaomi, and Hongmeng Zhixing fulfilled their sales promises.

This year, whether due to overly ambitious targets or consumer wait-and-see attitudes, as of April's end, only Xpeng Motors among new-force brands achieved over 30% of its sales target, with sales progress outpacing time.

Even when sales fall short, the market is forgiving. Minor underperformances are quickly forgotten amid overall sales growth, while meeting targets significantly enhances brand image. Setting sales targets thus becomes a risk-free investment, allowing automakers to confidently set targets without "after-sales" concerns, paving the way for overly optimistic projections.

02 Who Benefits from Missed Sales Targets?

During a roundtable interview with Ideal Auto at the Shanghai Auto Show, a media outlet asked, "At the Ideal MEGA launch communication meeting last year, you mentioned a sales target of 8,000 units. Within 90 days, Ideal Auto adjusted its target. Today, at the Ideal MEGA Home launch, no sales target was discussed. What have you learned this year?"

After brief reflection, Liu Jie, President of Ideal Auto's Product Line, responded, "We communicated the Ideal MEGA sales target early but later realized it had little value to users. Whether 8,000 or 10,000 units, users care more about the product value the brand provides."

This suggests that automakers' sales targets are often irrelevant "self-indulgences" in consumers' eyes, raising the question: Who benefits from setting them?

While sales targets increase brand sales, they can also shift automakers' focus from user-centric product development to competition and short-term achievements. Trading price for volume has become the norm, pressuring automakers' profits. In 2024, despite a 4.1% revenue increase, the automotive manufacturing industry's total profits declined by 8%. This profit decline extends across the supply chain, with upstream suppliers like Cummins and Magna revising their performance expectations downwards.

Overly high sales expectations can mislead suppliers, leading to thin margins and excess inventory when sales fall short.

03 Reverting to a Tool-Oriented Approach

In 2024, Great Wall Motors decisively "abandoned volume for profit preservation," selling 1.2333 million vehicles, flat compared to 2023 and far from its 1.9 million target. Despite unchanged sales, Great Wall Motors' profits surged, with total operating revenue increasing by 16.73% to 202.195 billion yuan, net profit attributable to shareholders rising by 80.76% to 12.692 billion yuan, and non-recurring net profit growing by 101.40% to 9.735 billion yuan.

Profit growth was driven by increased sales of high-end models, with sales of vehicles priced above 200,000 yuan rising by 37.13% to 309,600 units. Sales of Ora Motors, Great Wall Motors' low-end brand, declined by 41.69%.

While leading automakers like BYD, Geely, and Chery exceeded sales targets and achieved double-digit revenue and profit growth, their success stems from established industry leadership and clear target setting. Xiaomi and NIO, still in growth stages with lower market shares, can quickly amplify economies of scale through increased sales volume, confirming the positive impact of reasonable sales targets.

Sales targets are not inherently problematic. In the industrial era, they were beacons for economies of scale, cost spreading, and proving viability to the market. However, as the industry transitions to intelligent electrification and consumers become more rational, blindly pursuing sales targets comes at a heavy cost.

Fortunately, signs of change are emerging. Great Wall Motors' "abandoning volume for profit preservation" strategy proves that profit growth doesn't solely depend on scale. The "2025 McKinsey China Automotive Consumer Insights Report" also shows that consumers are more enthusiastic about shortened new model and technology release cycles than price wars, with the former having a net stimulating effect of 10.8% versus 3.6% for the latter.

Sales targets will persist but must evolve into strategic tools rather than goals. After all, sales without healthy profit support are mere numerical games, and growth detached from user value will eventually fade.

Editor-in-Chief: Li Sijia Editor: He Zengrong