Bloomberg News
- Emma O’Brien
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SAIC-GM-Wuling makes the Mini, a hit with young, female buyers
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Company first built huge following around its small, boxy vans
WATCH: A little-known automaker in China’s southwest has been dominating
the world’s largest electric car market since last July.
Since last July, a little-known automaker in China’s southwest has
dominated
the world’s largest electric car market, outselling bigger players and even
Tesla Inc.
almost every month with a tiny, bare-bones EV that starts at just $4,500.
The Hongguang Mini is the brainchild of
SAIC-GM-Wuling Automobile Co., a joint venture between SAIC Motor Corp. and
Guangxi Automobile Group Co., two state-backed automakers, and U.S. giant
General Motors Co.
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A Hongguang Mini in Liuzhou, China. Photographer: Qilai Shen/Bloomberg
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Based in the city of Liuzhou, known for its limestone mountains and river-snail
soup, the company -- which has sold some 270,000 of the cars within nine months,
making it the best-selling EV in China -- has even bigger ambitions for the
future. It’s aiming for annual sales of 1.2 million vehicles next year, almost
equal to the number of EVs churned out by China’s carmakers in 2020 combined.
It’s an eyebrow-raising target, but even before the Hongguang Mini, Wuling had a
track record for producing winners in a market that’s defining the new era of
driving. Set up in 2002, the Chinese-American JV built its business selling
microvans: dependable sliding-door workhorses that earned the nickname ‘
the bread box car’ in Mandarin, and were China’s top-selling passenger vehicle in 2017. Millions
of them ply the country’s roads, used by contractors and delivery drivers
alike.
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Zhang Yiqin. Photographer: Qilai Shen/Bloomberg
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The buyers of those gas-guzzling gray vans are almost exclusively male, which
makes Wuling’s pivot to the Hongguang Mini -- which has a top speed of 100
kilometers (62 miles) an hour and 12-inch wheels -- all the more extraordinary.
Shortly after its debut last July, the automaker realized the vehicle was
gaining a following among young women, a phenomenon it leaned into with an
approach that bends conventional wisdom about how cars are sold.
“Our company’s mentality is to produce whatever people need,” Wuling’s
head of branding and marketing, Zhang Yiqin, said in an interview. “We keep
close tabs on our users. The hurdles to electric car adoption can only be
cleared when consumers find using them a comfortable thing.”
Too Cute for Comfort
Sales of SAIC-GM-Wuling's Mini EV have been outstripping Tesla in China
Source: CAIN
To that end, Zhang has staffed his team with employees who understand the
Hongguang Mini’s customer base, which is now around two-thirds female. At 35, he
jokes he’s the elder statesman of the group whose age averages around 27.
Slogans like ‘Young and Eager’ are splashed across the walls of Wuling’s
headquarters in Liuzhou, a city that’s embraced EVs alongside the company with
30% of all car sales electric last year, the highest rate in China, according to
WAYS Information Technology.
Wuling’s success with the Hongguang Mini was driven by a targeted marketing
campaign conducted almost entirely online, according to Zhang. His team often
communicate with consumers directly via various social media platforms, and it
was a customer’s request for more hues that saw the company come up with
Hongguang Mini’s latest iteration -- the
Macaron. It comes in avocado green, lemon yellow and white peach pink, with an
optional solid-color roof for contrast, to mimic the vanilla butter cream that
sandwiches the French meringue confections of the same name.
It’s also how they landed on one of the car’s key selling points -- besides its
rock-bottom price point: Hongguang Mini drivers are able to customize their
vehicles in a way that’s not possible elsewhere.
Using “stickers,” the car’s panels and body can be transformed. Some sport the
Nike swoosh, some have galaxy-like outer space scenes and others cartoon
characters from Hello Kitty and Doraemon. The original Hongguang Mini comes in
around 20 different base colors, which can be switched up, and buyers can
customize the interior as well.
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Zorah Zhang in her Hongguang Mini. Photographer: Qilai Shen/Bloomberg
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Zorah Zhang (no relation) is a typical client. The 23-year-old is a fan of Hayao
Miyazaki, the Japanese animator who directed My Neighbor Totoro, a fantasy film
featuring a character called
The Catbus, a grinning feline whose seats are covered in fur.
She’s pimped her Hongguang Mini to resemble it, spending around 15,000 yuan
($2,300) to cover the car’s interior with brown velveteen and studding the roof
with lights that sparkle at night.
“A lot of my friends have the Mini, you see them everywhere in Liuzhou,” said
Zhang, who lives with her parents (they drive a BMW sedan). “I love things that
reflect my character. I may change the look of the car again if there’s other
stuff I fancy.”
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Interiors of Zhang’s Hongguang Mini. Photographer: Qilai Shen/Bloomberg
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As frivolous as turning a set of wheels into a fashion accessory may seem,
there’s a very real market up for grabs.
Outside of Liuzhou, EV penetration in China is still only around 6% and
competition is fierce. Tesla may be the name that resonates loudest,
particularly in larger cities like Beijing and Shanghai, where its first
Gigafactory is located, but
a host of newer, local
entrants from
Nio Inc.
to Xpeng Inc.,
Li Auto Inc.
and
WM Motor
are crowding in.
At the same time, other home-grown players like BYD Co., a carmaker long backed
by Warren Buffett, are upping their EV game and international behemoths such as
Volkswagen AG are plowing billions of dollars into new electric lineups.
With consumers in China overwhelmed by choice when fossil-fuel cars are added to
the mix, automakers need to give motorists what they want to survive, said
Jochen Siebert, managing director of consultancy JSC Automotive in Singapore.
“SAIC-GM-Wuling has to come up with new ideas all the time to attract
consumers,” Siebert said. The Hongguang Mini is “a kind of accessory, which
means it’s a fashion item that might go out of fashion sooner or later.”
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Customization options inside a SAIC-GM-Wuling dealership in
Liuzhou, China, earlier in May. Photographer: Qilai Shen/Bloomberg
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For now, it’s a strategy that’s paying dividends for Wuling. The company, owned
50.1% by Shanghai-based SAIC, 44% by GM’s China unit and 5.9% by Guangxi
Automobile, sold 1.6 million vehicles in total last year. While that was down
about 4% from 2019 amid the pandemic, Wuling’s new-energy vehicle sales almost
tripled to 174,000 units.
For GM -- which is
doubling down
on electrification and autonomous driving under Chief Executive Officer Mary
Barra -- the Hongguang Mini appears to have been a boon. The carmaker saw
revenue of $9.9 billion from its China auto joint ventures in
first-quarter results
out last month, up from $4.3 billion for the first three months of 2020. GM,
which has
several other partnerships in China, doesn’t break out Wuling’s revenue in its financial results.
While customer engagement has distinguished the Hongguang Mini, cost has been
main driver of its blockbuster sales in a country where many find the sticker
price of a Tesla Model 3, which sells for the equivalent of $39,300, beyond
reach. The basic Hongguang Mini starts at $4,500, and even the new Macaron sells
for under $6,000.
Wuling has been able to churn out cheap cars thanks in part to its good
supply-chain management, honed with the super-popular microvans. Many of
Wuling’s suppliers have also set up manufacturing bases in Liuzhou, which has
helped cap costs further. It’s a model that’s being replicated by car companies
in other cities and provinces across China, flattering for Wuling but
challenging too as the price of rivals’ cars come down.
Multinational automakers are also eyeing off the compact EV space, with
Daimler AG
set to make an electric version of the
Smart
-- for many, the consummate tiny car -- in China with its own venture
partner.
The global shortage of semiconductors is also weighing on Wuling, with the
Hongguang Mini, despite being a basic EV, still requiring over 100 chips.
Hongguang Mini production has been impacted by the shortfall, with output of the
Macaron expected to be down around 15% in May, according to Zhang.
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Hongguang Mini’s final assembly line at the SGMW BaojunAuto City in
Liuzhou on May 19. Photographer: Qilai Shen/Bloomberg
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The hefty sales target for 2022 is the cornerstone of Wuling’s plan to maintain
its market-leading momentum. After debuting a convertible Hongguang Mini at the
Shanghai Auto Show in April, it’s
aiming to release a
mid-cycle enhancement of the vehicle later this year and is working on a
two-seater EV targeted at younger men, Zhang said.
At a Wuling dealership in downtown Liuzhou, user-experience manager Li
Zhengguang says there’s a four-person team focused solely on new media. They
communicate with would-be customers using
Douyin, as TikTok is known in China, and Little Red Book, a trusted social shopping
platform popular with young women, sharing photos and videos. Li, who used to
sell diamond engagement rings, says there’s not a lot of difference between
jewelry and cars. Create desire for a cool product and buyers will come, he
says.
Pitching the Hongguang Mini not as a cheap car but a coveted accessory in
brand-conscious China is brilliant, JSC Automotive’s Siebert said.
“It’s become a hallmark of SAIC-GM-Wuling over the past 20 years to always
surprise the market, and themselves,” he said. “They’ve done extremely well
because they focus on the right things. On quality, when they were mainly making
microvans, and now on marketing.”
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