Since last July, a little-known automaker in China’s southwest has dominated the world’s largest electric car market, outselling larger rivals and even Tesla Inc. . almost every month with a tiny, bare EV starting 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 US giant General Motors.
Headquartered in the city of Liuzhou, famous for its limestone mountains and river snails, the company – which sold about 270,000 vehicles within nine months, becoming the best-selling EV in China – even even bigger ambitions in the future. It aims to hit 1.2 million annual vehicle sales next year, roughly the number of electric vehicles that Chinese automakers will produce in 2020 combined.
It’s an awe-inspiring goal, but even before the Hongguang Mini, Wuling had a track record of producing winning cars in the market that defined a new era of driving. Founded in 2002, the Chinese-American venture has built a small truck business: its dependable sliding-door carriages have been nicknamed ‘breadbox carts’ in Mandarin and are China’s best-selling passenger vehicle in 2017. Millions of them have used it. the country’s roads, used by contractors and delivery drivers.
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 that the car had attracted a following of young women, a phenomenon it relied on with its understanding-bending approach. common sense about how to sell cars.
“Our company’s mentality is to make whatever people need,” Zhang Yiqin, Wuling’s head of branding and marketing, said in an interview. “We closely monitor our users. Barriers to the use of electric cars can only be removed when consumers feel comfortable using them. “
To that end, Zhang has staffed her team with employees who understand Hongguang Mini’s customer base, currently about two-thirds female. At 35, he joked that he was the oldest statesman of the group whose average age was around 27. Slogans like ‘Young and Eager’ were strewn across the walls of Wuling’s headquarters in Liuzhou, a city that includes trams along with the company with 30% of total cars. Electricity sales last year, the highest rate in China, according to WAYS Information Technology.
According to Zhang, Wuling’s success with the Hongguang Mini was driven by a targeted marketing campaign conducted almost entirely online. His team often communicates directly with consumers through various social media platforms, and it was the customer’s request for more colors that led the company to come up with the latest version of the Hongguang Mini – Macaron. . It comes in butter green, lemon yellow and white peach, with an optional solid color roof for contrast, mimicking the French confectionary vanilla buttercream of the same name.
That’s also how they landed on one of the car’s key selling points – besides the lowest price: Hongguang Mini drivers can customize their vehicles in a way that’s not possible elsewhere.
Using “stickers”, panels and bodywork can be transformed. Some sport Nike swoosh, some have galaxy-like space scenes, and other cartoon characters from Hello Kitty and Doraemon. The original Hongguang Mini comes in about 20 different base colors, which can be changed and the interior can also be customized by buyers.
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 whose character is called The Catbus, a grinning cat whose feather chair.
She packed her Hongguang Mini to resemble it, spending about 15,000 yuan ($2,300) to wrap the car’s interior in brown velvet and decorate the roof with twinkling lights at night.
Zhang, who lives with his parents (they drive a BMW sedan), said: “A lot of my friends have Minis, you see them everywhere in Liuzhou. “I love things that reflect my personality. I can change the look of the car again if there are other things that I love. “
It may seem frivolous to turn a set of wheels into a fashion accessory, but there is a very real market to grab.
Outside of Liuzhou, the electric vehicle penetration rate in China is still only about 6% and competition is fierce. Tesla might be the biggest hit, especially in larger cities like Beijing and Shanghai, where their first Gigafactory was located, but a host of newer local companies from Nio Inc. to Xpeng Inc., Li Auto Inc. and WM Motor is crowded.
At the same time, other major players like BYD Co., an auto maker long backed by Warren Buffett, are ramping up their video game, and international giants like Volkswagen AG are investing billions of dollars into new electrical product lines.
Jochen Siebert, managing director of Automotive Consulting Joint Stock Company in Singapore, said consumers in China are overwhelmed by choices when fossil fuel-powered cars are added to the mix. Car manufacturers need to give drivers what they want to survive.
“SAIC-GM-Wuling always has to come up with new ideas to attract consumers,” says Siebert. The Hongguang Mini is “a kind of accessory, which means a fashion item may go out of style sooner or later”.
For now, it’s a strategy that is paying dividends for Wuling. The company, which is 50.1% owned by Shanghai-based SAIC, 44% by GM China and 5.9% by Guangxi Automotive, sold a total of 1.6 million vehicles last year. Despite a drop of about 4% from 2019 amid the pandemic, Wuling’s new energy vehicle sales have nearly tripled to 174,000 units.
For GM — which is doubling down on electrification and autonomous driving under CEO Mary Barra — the Hongguang Mini appears to have been a boon. The automaker posted $9.9 billion in revenue from auto joint ventures in China in its first-quarter results last month, up from $4.3 billion in the first three months of 2020. GM , which has several other partnerships in China, not beyond Wuling’s. revenue in its financial results.
While customer engagement has helped set the Hongguang Mini apart, cost is the main driver of its blockbuster sales in a country where many find the sticker price of a Tesla. The Model 3, which sells for the equivalent of $39,300, is out of reach. The basic Hongguang Mini starts at $4,500, and even the new Macaron sells for under $6,000.
Wuling was able to make low-cost cars in part thanks to good supply chain management, honed with the super-popular microcars. Many of Wuling’s suppliers have also set up production facilities in Liuzhou, which has helped limit costs further. It’s a model being replicated by car companies in other provinces and cities across China, well suited to Wuling but also challenging as rivals’ car prices drop.
Multinational automakers are also eyeing the compact electric vehicle space, with Daimler AG set to create an electric version of the Smart – for many, the perfect small car – in China Nation with its own joint venture partner.
A global semiconductor shortage is also weighing on Wuling, with the Hongguang Mini, despite being a base EV, still requiring more than 100 chips. According to Zhang, production of Hongguang Mini has been affected by the shortage, with Macaron production expected to drop by about 15% in May.
The massive revenue target for 2022 is the cornerstone of Wuling’s plan to maintain market leadership momentum. After unveiling the Hongguang Mini convertible at the Shanghai Auto Show in April, they are aiming to launch a mid-cycle facelift version of the car later this year and are working on an EV. The two-seaters are aimed at young men, Zhang said.
At a Wuling dealership in downtown Liuzhou, user experience manager Li Zhengguang said there was a four-person team focused solely on new media. They communicate with customers who will be users of 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 much of a difference between jewelry and a car. He said: Create a desire for a great product and buyers will come.
The introduction of the Hongguang Mini is not a cheap car but a coveted accessory in China, said Siebert of JSC Automotive.
“It has become a hallmark of SAIC-GM-Wuling over the past 20 years to always surprise the market and themselves,” he said. “They did a great job because they focused on the right things. In terms of quality, when they mainly created small passenger cars, and now marketing. “