"We define the period from May 31st to September 31st as the Galaxy 1.0 stage, and we are committed to quickly achieving market breakthroughs. From October 1st, we entered the 2.0 stage, which is not only the concept of two main products, but also the end point model of multiple channels and various profit methods are constantly expanding." At the launch event of the 50,000 Galaxy L7 recently,Bach, general manager of Galaxy Business Unit, admitted in an interview with the 21st Century Business Herald that although Geely Galaxy L7 has good sales, user awareness is not very high, and ordinary users in many places do not recognize Galaxy’s new products. The 2.0 stage will continue to infiltrate the public in large quantities to achieve improvement and breakthroughs.
On February 23 this year, the new mid-to-high-endSeries – "Geely Galaxy" was officially released, mainly covering the price range of 150,000-300,000 yuan. It will launch 7 models within 2 years, including 4 intelligent electric hybrid L series and 3 intelligent pure electric E series. The former adopts Geely Galaxy intelligent "electric hybrid" architecture, covering A0 to B-level intelligent electric hybrid products; the latter adopts Geely Galaxy intelligent "pure electric" architecture, covering A-level to D-level intelligent pure electric products.
At that time, the group had a lot of expectations for the Galaxy series – "The Galaxy series will launch a new car every quarter to rapidly expand its competitiveness in the field" "The Galaxy L7 has no rival in the A-class SUV" "The sales goal of each product of the Galaxy series is to become the top three in the market segment" "The three brands/series of Galaxy, Geometry and Lynk & Co will enter more than 70% of the market".
The first model of the compact SUV Galaxy L7 was launched at the end of May, and the 50,000 new car was launched at the Geely Baoji factory on October 15, less than half a year after its first new car was launched; the second model of the compact car L6 was launched in mid-September; the third model of the pure electric coupe, E8, will also be launched and delivered within the year.
Within three months to achieve monthly sales of more than 10,000 yuan, the Galaxy L7 has made a good start, allowing this new model series, which is responsible for the transformation of Geely’s brand new energy, to initially gain a foothold in the market. The task of continued growth will fall on the shoulders of the Galaxy L6 and Galaxy E8. Burdened with more expectations and pressures, can "Galaxy" help Li Shufu, chairperson of Geely Holding, realize the "blue dream"? The market has little time left for Geely. For this giant in the era of fuel vehicles, where will Geely’s new energy transformation go when the decline of fuel vehicles intensifies?
Can the Galaxy series help Li Shufu realize his dream?
In 2022, after ranking first in sales of Chinese brand passenger cars for five consecutive years, Geely lost the title of its own brand.
From a township enterprise in Taizhou, Zhejiang Province, it has grown into a leading enterprise of China’s own brands. With the rolling wheels of China’s automobile industry, Geely, whose sub-brands are blooming everywhere, has established a huge automobile kingdom. However, behind the brilliance, in the face of the rapidly changing Chinese automobile market and the menacing new energy transformation, Geely seems to be temporarily left behind.
Geely’s development can be roughly divided into three stages: the first stage is the "barbaric growth stage" before Geely’s acquisition of Volvo; the second stage is the "back-to-Geely stage" after the acquisition of Volvo, including the launch of Lynk & Co, which is the most typical product of Volvo’s back-to-Geely, and also conforms to Geely’s high-end demands; the third stage is the two blue Geely action plans mentioned by Li Shufu, chairperson of Geely Holding, in early 2021, one is to focus on energy-saving and new energy vehicles, 90% of which are new energy and hybrid vehicles; the second is to focus on pure electric smart vehicles and actively participate in the competition in the intelligent pure electric vehicle market.
In fact, it is not too late for Geely to enter the new energy market. In 2015, it launched the first pure electric vehicle Emgrand EV, and three years later, it launched GSe. In April 2019, it released a new brand Geometry Car, shouting the slogans of "Global Electric Vehicle Brand Leader" and "Building the World’s Best Electric Vehicle", and launched Geometry A. After that, it launched a new brand "Maple Leaf", which was later changed to Ruilan, which specializes in the production of electric car-hailing.
However, the technological advantages accumulated in the fuel era have not been continued in the field of new energy vehicles. In order to seize sales, the positioning of geometric brands has also begun to explore the so-called mid-to-high-end market at the beginning of its birth. In addition, the oil-to-electricity operation, similar products but higher prices have greatly reduced its cost performance. The process of new energy transformation is not as fast as expected. In 2020, Geely Automobile sold 68,100 new energy and electrified vehicles, and the current sales of new energy and electrified vehicles accounted for only 5.2% of the total sales. Li Shufu once set a goal of "new energy and electrified vehicle sales to reach 90% of the total sales by 2020", which is a far cry.
In 2021, Geely proposed a new "Blue Geely" initiative. During the same period, the domestic new energy vehicle market has also undergone earth-shaking changes. Geely is also accelerating its offensive. In March 2021, Geely veteran An Conghui served as CEO of Extreme Krypton, leading Geely to sprint towards high-end electrification. At the same time, Geely’s first-hand cultivation of Jiayue began to take charge of Geely Automobile Group.
If the advent of Extreme Krypton officially sounded the horn of the transformation of the Blue Action Plan and redefined Geely’s brand height in the smart electric vehicle market. The birth of Geely Galaxy highlights Geely’s ambition to seek scale in the new energy market, aiming to fill the market gap of Extreme Krypton brands positioned above 300,000 yuan and geometric brands positioned below 150,000 yuan, trying to enhance the advantages of new energy vehicles with a more complete product matrix and regain the throne of the "first brother" of its own brand.
In 2022, the official announcement will suspend the production of fuel vehiclesShowing explosive growth, the annual sales volume was 1.8685 million, an increase of 152.5% year-on-year, surpassing Geely Automobile in one fell swoop. The latter sold 1.43 million cars in 2022, an increase of 8% year-on-year, of whichSales are 328,700, tripling from 2021, with a penetration rate of about 23%. Jiayue has said that Geely’s goal in the new energy vehicle market in 2023 is to increase by more than 100% compared with 2022.
The market is running out of time for Geely, a giant in the era of fuel vehicles that urgently needs to come up with competitive products in the new energy era – Geely Automobile hopes to further label its new energy products through the Galaxy series. The launch of seven new cars at the press conference showed Geely’s determination to transition to new energy.
"After the breakout of Geely Krypton, the whole of Geely will be fully new, and the arrival of Galaxy means that Geely will quickly transform into new energy." Lin Jie, senior vice president of Geely Automobile Group, said in an interview with 21st Century Business Herald reporters. "Geely’s existing brands have clear positioning and division of labor in their respective market segments. Geometry focuses on the new energy market below 150,000 yuan, Geometry focuses on the market above 300,000 yuan, and the Galaxy series is mainly within 150,000 yuan – 300,000 yuan. Its sales target in 2023 is that each product must enter the top three in the market segment. Geometry + Galaxy’s two new energy product series will cover 65% of the future new energy vehicle market share of [Geely Automobile]."
Products and channels are changing simultaneously, and Galaxy is attacking in an all-round way
For Geely, the release of Galaxy has given them a range of mid-to-high-end products that originated from themselves and are designed for the new energy sector.
"In the past, the characteristics of the electric vehicle market structure were dumbbell-type, micro-electric vehicles under 100,000 yuan and intermediate electric vehicles above 300,000 yuan contributed more to sales, but starting from this year, the market structure is obviously concentrated in the middle, and gradually to the spindle-type development, which also means that the middle market will become the largest market segment in the future." Some industry insiders told reporters.
This is precisely the market that Geely Galaxy is targeting. In the opinion of industry insiders, the price difference between the fuel vehicles and the Geely brand is large, which affects the acceptance of users. Geely Galaxy helps Geely brand new energy vehicles, especially hybrid cars, to differentiate and promote. More importantly, the mid-to-high-end positioning is an easy price range.
"In today’s new energy market, the competition between enterprises and enterprises lies in products, the competition between products and products lies in cost, and the cost is determined by technology and innovation. Investment in technology can win this war."
In fact, the cost-effectiveness and product strength brought by technical advantages have been partially verified on the extreme krypton brand. In 2022, the extreme krypton sold nearly 72,000 vehicles with the extreme krypton 001 model; in August this year, the price of the extreme krypton 001 was reduced by 30,000 – 37,000 yuan, and the starting price was reduced to 269,000 yuan. The effect of the price reduction is obvious. In August this year, the extreme krypton hit a new monthly delivery volume. The monthly delivery volume reached 12,300 vehicles. In January-August, the extreme krypton car delivered nearly 70,000 vehicles, almost matching the sales volume of last year.
However, Galaxy and Krypton are in a different situation. The former bears more pressure and expectations. On the one hand, the 15-300,000 yuan new energy vehicle market it is targeting is particularly competitive. It has to deal with the top two in the single model listAnd, with the new energy vehicles to reduce the dimension of traditional fuel vehicles, sniper 180,000 – 250,000 yuan of this joint venture car world; on the other hand, the Galaxy series shoulders the heavy responsibility of Geely’s new energy transformation.
In order to start the Geely Galaxy series, the first production car Galaxy L7 (13.87-18 5,700 yuan) is equipped with Geely’s new car operating system Galaxy NOS and the new AegisSecurity system, a new generation of Raytheon hybrid technology (Raytheon 8848). In addition, Galaxy has an independent product logo and channel ecosystem, including direct sales and agency distribution models, which almost have the elements of an independent brand.
From May 31st listing, to July monthly sales for the first time exceeded ten thousand, and then to October 15th ushered in the 50,000 new car off the production line, the speed of Galaxy L7 in this year’s increasingly rolled market performance can be said to be eye-catching. Up to now, Geely Galaxy L7 has sold over ten thousand for three consecutive months.
Bach told the 21st Century Business Herald reporter, Geely Galaxy L7 flagship model Starship version is the best-selling, the second top with MAX version accounted for the second, the two models accounted for more than 90% of total sales, Galaxy L7 main sales range maintained at about 160,000 yuan.
"Now the overall replacement rate is about 40% -50%, of which about 30% are Geely fans and old owners. The remaining customers are basically from the past joint venture fuel vehicle owners, especially the 5-8 year old joint venture fuel vehicle users. In addition, there are also some new users, concentrated in the 25-35 age range, who are buying their first car in life," Bach said.
In addition to L7, on September 16, Geely Galaxy launched the second model Galaxy L6 (115,800 – 149,800 yuan), sniping A-class joint venture cars including Xuanyi, Langyi, Suiteng, Corolla, etc., and also trying to "grab food from the tiger’s mouth" from Qin PLUS DM-i (9.48-17 9,800 yuan), but Geely Galaxy L6 entry threshold is higher. Fan Junyi, general manager of Geely Automobile Sales Company, revealed that Geely Galaxy L6 is quite different from the competing user portrait, which is also Geely Galaxy’s way to break through the price war, that is, to fight the value war.
The data shows that Geely Galaxy L6 sold more than 3,000 units in September. "From the previous booking situation, Tianjin is the city with the largest reservation volume of Geely Galaxy L6. Dalian, Shenyang, Changchun, Harbin and other reservations have reached more than 100 single stores, and the order situation in the southern region is better." Bach told reporters that he hoped that Geely Galaxy L6 and Geely Galaxy L7 will form a CP combination, at least in terms of sales and end points. The two are equal goals.
Zhou Xiulong, general manager of Geely Automobile Baoji Company, revealed that the Baoji factory has officially started double-shift operation since July, with a maximum daily production capacity of more than 800 units, and a normal production capacity of about 700 units a day. At the same time, upstream suppliers have also started double-shift operation, including the Raytheon Electric Hybrid 8848 production base also located in Baoji.
Although Geely Galaxy L7 sales have performed well, Bach admits that user awareness is not very high, and ordinary users in many places do not recognize Galaxy’s new products. "At the beginning, we attracted the first wave of Galaxy fans with the quality and characteristics of the products. This is not enough. In the 2.0 stage, we will continue to infiltrate the public in large quantities in order to achieve improvement and breakthroughs."
At the product level, in addition to Geely Galaxy L6 and L7, which mainly target the A-level hybrid market, Geely Galaxy E8, the third car of the Geely Galaxy series, focuses on the B-level high-end pure electric market and will be launched and delivered within the year. Bach told reporters that pure electric products are the majority of the product series planned for next year.
Geely Galaxy’s breakout, in addition to product leadership, channel assistance is also crucial. According to official data, Geely Galaxy currently has more than 500 channels across the country, and is expected to reach about 650 by the end of the year. It will expand to 1,000 by 2024.
"Everyone who understands this industry will know that it basically needs to cover about 1,000 stores in the country to be considered a relatively complete form. Expectations are expected, but it still needs to conform to the laws of reality – how much each store sells, whether the profit situation is good or not, and the healthy and stable development of channels are aspects we need to ensure." Bach stressed.
With the transformation of automobile electrification entering the deep water area, industry insiders believe that the Pareto Principle of China’s automobile industry is becoming more and more obvious. By 2025 at most, there may only be 8-10 companies with monthly sales of over 10,000 yuan in China, and the arrival of the new energy era has become inevitable. The price war in the automobile market is bound to reach the end of this year, or even next year. Car companies must be ready for a decisive battle for 20 months. By the end of next year, it will be possible to see who can survive in the Chinese automobile market.
"The current price war situation filled with gunpowder will not last long. There are many participants in the auto market in our country, and independent brands have taken up the ante new energy vehicle track. If the industry grabs market share through price wars, it will lead to a decline in car companies’ profits under pressure, and the industry competition landscape will deteriorate." Bach said that Geely will adhere to the value war, quality war, service war and corporate ethics war on the basis of price advantages to achieve a comprehensive "value upward".
