Wei Jianjun is renowned as the "sober mind" of the automotive industry.

With 35 years of experience in the sector, this industry veteran has consistently delivered accurate insights on the industry's development. From exposing "hidden safety hazards in door handles" to criticizing "overhyped intelligent driving," his warnings have consistently proven prescient.

Recently, Wei Jianjun once again offered his perspective to the automotive industry. On May 23, Wei Jianjun, Chairman of Great Wall Motors, sat down for the third time with Deng Qingxu from Sina Finance to participate in the recording of "Qiushi" - The Confidence and Path of Chinese Automobiles Going Global.

During the program, Wei Jianjun addressed the misconceptions of the industry's "sales-only" mentality and "overtaking in corners," emphasizing that suicidal price cuts and internal competition would degrade the quality of Chinese cars and potentially devastate the automotive industry. He urged the industry to adopt a long-term and principled approach, returning to rational and sustainable growth.

Wei Jianjun's advice is not just a voice for Chinese automakers deeply affected by the chaos but essentially a defense of the "Made in China" ethos. It also aims to propel Chinese automobiles from "superficial scale" to genuine "global competitiveness."

/ 01 / The Industry Encounters a Capitalization Crisis

Historically, while capital can play a role in highly competitive fields, excessive capitalization often backfires on industry development, as seen in the current automotive industry.

To seize market share, many automakers have resorted to capital as a weapon, engaging in price wars by sacrificing profits for sales. This prolonged price war has left the entire industry bleeding.

In 2024, the automakers' "price war" caused direct losses of 138 billion yuan, drastically reducing the industry's profit to 462.3 billion yuan, a year-on-year decline of 8%, with a profit margin of only 4.3%.

This decline in automakers' profits is creating a lose-lose-lose situation for OEMs, supply chains, and consumers.

For OEMs, profitability declines have led some enterprises to report losses for consecutive quarters. Many OEMs have had to reduce R&D expenditures and control personnel costs, thereby weakening their competitiveness. For instance, after halving the R&D budget of one automaker, its intelligent driving system fell behind the industry.

With profit declines, some OEMs also pass on the pressure to suppliers by significantly reducing procurement prices of parts and components to cope with competitive pressures. This has caused small suppliers to gradually withdraw, increasing the risk of supply chain disruptions. According to incomplete statistics, multiple small and medium-sized suppliers have ceased operations, and some OEMs have even faced capacity connection issues.

When automakers and suppliers face survival pressures, consumers also bear the brunt.

On one hand, the industry's extreme low-price competition indirectly affects product quality, disrupting the stability and reliability of the supply chain. On the other hand, frequent price cuts by automakers undermine the asset value of consumers. Faced with the dual risks of "quality reduction" and "price fluctuations," consumers have begun to lose confidence in brands, thereby affecting the industry's overall reputation.

In fact, similar involutional phenomena have not been uncommon in the past, such as the e-commerce platform's "only refund" policy, which squeezes merchants' survival space and fosters a bad atmosphere of low quality and low prices. Malicious price cuts and local protection have led to surging sales but plummeting profits for some new energy vehicles, with some project funding chains breaking, leaving car owners struggling with maintenance and repairs.

In response to these involutional phenomena, the People's Daily published an article on May 26, pointing out that reasonable competition helps improve total factor productivity, benefiting consumers while ensuring that enterprises obtain sufficient profits to continue innovating. Low-level "involutional" competition, however, leads to a lose-lose outcome.

This aligns with Wei Jianjun's viewpoint. At the darkest moment when the automotive industry is mired in excessive capitalization, Wei Jianjun's voice sounds like a dawn horn, striving to clear the clouds and see the sun for China's automotive industry.

Wei Jianjun exclaimed: "The healthy development of electric vehicles cannot be excessively constrained by capital. Any business needs profits to sustain and make continuous investments for growth. We respect capital, but we cannot overcapitalize it."

Great Wall Motors' steady and upward development trend also validates the correctness of Wei Jianjun's advice to the industry, setting a benchmark for the development of Chinese automobiles.

/ 02 / Quality is the First Principle for Automakers

The first principle embodies the underlying logic of enterprise development. For the automotive industry, quality is the bedrock of automaker development. It determines that taking quality as the core driving force is the only path to corporate and even industry prosperity.

From this perspective, examining Great Wall Motors' financial performance, which significantly outpaces the industry, brings clarity. Despite the profit decline in the automotive industry, Great Wall Motors' profits have risen.

In 2024, Great Wall Motors' non-recurring net profit was 9.735 billion yuan, a year-on-year increase of 101.4%. In a horizontal comparison, Great Wall Motors' profitability is also stronger than that of A-share automotive companies. In 2024, Great Wall Motors' gross profit margin reached 19.51%, while the average gross profit margin of A-share listed automakers was only 10.8%.

Great Wall Motors' profits are rising against the trend precisely because it has refused to participate in suicidal price wars from the outset. In Wei Jianjun's view, as a bulk consumer good, cars are not fast-moving consumer goods, and "users will ultimately pay for durability." Therefore, Great Wall Motors deeply cultivates technology and refines quality.

In 2024, Great Wall Motors' R&D investment was approximately 10.4 billion yuan, accounting for 5.2% of the company's sales, exceeding 10 billion yuan for three consecutive years. With continuous R&D, Great Wall Motors has, on the one hand, developed core technical capabilities. Currently, Great Wall Holdings has disclosed 6,888 patents and been granted 4,665 patents, ranking first among private automotive groups in China for three consecutive years. Among them, the number of patent grants in the new energy field has ranked first among Chinese enterprises for three consecutive years, enabling Great Wall to have self-produced and leading-edge capabilities in core competitive areas such as intelligent driving, intelligent cockpits, electric and hybrid vehicles.

On the other hand, with a pragmatic attitude, Great Wall Motors spends money where it matters. When the industry was obsessed with stacking lidar, refrigerators, sofas, and large TVs, Great Wall Motors allocated a significant portion of its R&D budget towards "invisible quality" such as chassis anti-rust processes and the proportion of high-strength steel in the vehicle body.

Regarding quality requirements, many indicators of Great Wall Motors exceed national mandatory standards: the strength of the A-pillar reaches 1500MPa-2000MPa, while the national standard is typically 900MPa-1500MPa; the roof compression resistance is generally more than 4 times the national standard, which is 3.0 times the curb weight of the entire vehicle or 45.0kN (whichever is smaller).

High quality has also earned the trust of users for Great Wall Motors. In J.D. Power's 2023 China Vehicle Dependability Study (VDS) report, Great Wall Motors ranked first among independent brands; the China Automobile Dealers Association confirmed that Great Wall Motors' average three-year resale value is 8-15 percentage points higher than that of new forces.

After the quality-driven benign development has been validated, Great Wall Motors is taking concrete actions to promote the healthy development of the entire industry. For example, Great Wall Motors has established the industry's first full-life-cycle quality traceability system, striving to bring the industry back to prioritizing quality and self-financing.

/ 03 / A Crucial Leap from Superficial Scale to Global Competitiveness

After three decades of accumulation, China's automotive industry has reached a globally leading level in technology.

However, price wars have severely harmed the competitiveness of Chinese automobiles. In price competition, automakers have achieved only superficial sales growth but lack profit ammunition. In 2024, Toyota's profit alone was equivalent to half of that of hundreds of Chinese automakers. At the same time, as mentioned earlier, profit declines have led to supply chain turmoil, further weakening the international competitiveness of the overall industrial chain.

In response, Great Wall Motors advocates abandoning short-sighted behaviors that artificially inflate sales and achieving high-quality globalization through deep technological cultivation and localized operations.

Taking localized operations as an example, Great Wall Motors is the first Chinese automaker to establish three full-process vehicle production bases overseas and the first to establish a new energy vehicle production base overseas.

The advantage of localized operations is that it allows for the unified deployment of research, production, supply, sales, and service resources, directly connecting with the market and users. This not only reduces the levels of communication and reporting by overseas teams but also allows for a keener insight into the pain points of overseas users and solutions, which is conducive to enhancing the company's global brand effect and thus achieving a leap from product exports to brand exports.

Not limited to improving its own competitiveness in going overseas, Great Wall Motors is also enhancing the competitiveness of the entire Chinese automotive supply chain.

China's automotive supply chain is in a critical period of transformation from "large and scattered" to "strong synergy." However, the upstream and downstream collaboration mechanisms represented by technology research and development, parts and components supply, and service systems still face pain points such as efficiency fragmentation and repeated cost transmission. After the pressure on vehicle prices continues to be released, multiple links in the chain have begun to experience investment delays and profit shrinkage. The synchronous R&D capabilities of some OEMs and supporting enterprises are limited, weakening the competitiveness of the overall industrial chain.

In this regard, Great Wall Motors, led by Wei Jianjun, sets an example by not squeezing the supply chain and maintaining healthy cooperation with suppliers. In 2024, Great Wall Motors' accounts payable turnover days were 51 days fewer than the average accounts payable turnover days of the A-share passenger vehicle sector, ensuring the stable development of suppliers.

In fact, Wei Jianjun's approach aligns with the country's top-level strategy. Recently, a high-level meeting was held, and Li Chao, Deputy Director of the Strategy Research Office and spokesperson, stated that the government will systematically address the issue of "involutional competition" in multiple key industries from four aspects: innovation drive, local constraints, industrial layout, and industry self-discipline. Focusing on the automotive industry, the top-level government essentially hopes that the automotive industry will complete the transformation from price wars to technology wars and value wars.

When Great Wall Motors' actions converge with the top-level will, Wei Jianjun is promoting a crucial leap for Chinese automobiles from superficial scale to genuine global competitiveness.