Wen｜Li Yifan

On March 30, Geely released its 2019 annual financial report.

Despite the report showing that in 2019, Geely Automobile's total revenue of 97.4 billion yuan, a year-on-year decline of 9%; net profit of 8.26 billion yuan, a year-on-year decline of 35%, but for 2020, Geely is still not afraid.

At the earnings conference, Geely Holding Group President An Conghui made it clear that:

Even if it is affected by the epidemic, Geely will not lay off employees, cut salaries, or delay the payment of employee salaries, and will not adjust downward the 1.41 million-unit sales target set at the beginning of the year, and the company will try to find a way to improve efficiency and complete the target through internal organizational changes.

This is an absolute king bomb.

The wind is blowing and the water is cold, and the auto industry is in winter

The economy will shrink dramatically in 2020.

That's the prediction of almost every research organization right now.

The relationship between manufacturing and the epidemic is not as direct as that of the food and drink industry or tourism, but the implications are extremely deep.

On the one hand, the manufacturing sector is inherently labor-intensive, and the entire supply chain is being led by the nose by the epidemic; on the other hand, the manufacturing sector is far more embedded in globalization than other industries such as agriculture and entertainment, and the more the epidemic spreads, the deeper the impact.

China's manufacturing industry is even more so. Its own stage of development, is the front of Europe and the United States blockade, after the Southeast Asian pursuers. The global spread of the epidemic will directly lead to China's manufacturing industry is surrounded by enemies, in the transformation and upgrading of the road encountered heavy resistance.

It can be said that 2020, for any area of China's manufacturing industry, is a big test against the wind.

Particularly the automotive industry, which is more affected by the economy and income.

Market researcher IHS?MARKIT has lowered its forecasts for 2020 auto sales in almost all regions of the world, with global vehicle deliveries expected to fall more than 12 percent year-over-year to 78.8 million, Bloomberg reported. This decline is even greater than the "Great Recession" around 2009.

Naturally, China is not immune. As of today, the Federation has twice lowered the 2020 overall car market sales expectations, from 1% growth, to 5% decline, and then 8% of the plummet. Negative growth in the car market this year seems to be a foregone conclusion.

So we see, almost all the initiative to mention this year's sales of car companies, talk about the topic is: downward adjustment of the annual target.

Nissan lowered its annual operating profit forecast by 43%;

Renault lowered its operating margin target from 4.8% to 3% to 4%;

Great Wall's sales target was lowered from 1.11 million to 1.02 million, and its net profit target was lowered from 4.7 billion yuan to 4.05 billion yuan;

Guangzhou Automobile, on the other hand, took the entire group as a whole, and its sales growth target was cut to 3 percent from 8 percent.

What came along with the downward revision of the targets were more frantic layoffs and salary cuts by car companies.

Early in March, Volkswagen announced it was continuing last year's layoffs by cutting 7,000 jobs by 2023;

On March 26, Ford announced that 20% to 50% of the pay of 300 executives would be delayed for at least five months starting May 1;

On March 26, GM issued a bulletin to all its employees that it would take a temporary 20% pay cut;

On March 30, Aston Martin said it would temporarily fire some of its employees;

On March 31, Fiat Chrysler (FCA) said that starting April 1, global employee pay would be temporarily cut by 20 percent.

Domestic is no exception, from BAIC, SAIC, Jiangling, Weimar and other automakers, to Youxin, Guazi, car treasure and other second-hand car e-commerce companies, all have been exposed to have taken pay cuts.

2019 was already a rough year for the auto industry, with more than 100,000 layoffs in the global auto industry; with this trend, the 2020 market is predictable.

In fact, the general trend has already been seen. According to the data of the China Association of Automobile Manufacturers (CAAM), in February this year, China's automobile production and sales were completed 285,000 and 310,000 units, respectively, down nearly 80% sequentially and year-on-year.

See how much confidence and courage Geely needs not to lay off employees, not to cut salaries, not to extend salaries, not to lower targets.

Even if Geely now has the capacity to be China's third-largest passenger car brand, and even if An Conghui was all smiles when he announced the decision, we still know that it won't be an easy task.

Because this year's economic and industry trends aren't even fully under the control of the companies themselves. Whether there will be repeated epidemics, subsidy policies and so on, are the key factors affecting the development of enterprises and the industry.

Not just Geely. Looking at the whole industry, in addition to pharmaceuticals, games and a few online consumer industries by the epidemic is relatively small, most of the enterprises and industries, are facing the scale and profit shrinkage, layoffs and pay cuts coexist pressure.

But Geely is still willing to publicly make the "four no's" commitment, in addition to the courage to honor, I'm more touched to see this commitment to the employees, to their own upstream and downstream industry chain, and even to the industry as a whole to bring confidence.

Who gave the courage and confidence?

Geely's commitment did not come out of nowhere.

Much of their bottom line stems from feedback from earnings reports.

First, there's the cash flow.

In 2019, Geely's cash level, which includes bank balances and cash and pledged bank deposits, rose 23% year-over-year to $19.28 billion.

Lee Donghui, executive vice president of Geely Holding Group, admits that this is Geely's most immediate capital. "First of all, we have more than 19 billion yuan of cash reserves, an increase of more than 3.5 billion over 2018, which also makes us have sufficient backing to face the challenges of the epidemic."

The importance of cash flow to a business cannot be overstated, and to some extent it determines its ability to survive and grow.

Even if the enterprise has the ability to make profits, but if the cash turnover is not working well, the normal production and operation of the enterprise, solvency will be affected, and then spill over to the production, credibility, and ultimately affect the survival.

In the case of their own scale and normal production and operation, the more abundant the cash flow of the enterprise, the more dynamic, the stronger the ability to resist risk.

So often, the amount of profit may not represent the health of the enterprise, cash flow is the standard.

For example, not long ago, even a large restaurant chain such as Xibei, said that if the epidemic continues, cash reserves can only support 3 months, they will face closure. And Internet giants such as Amazon and Jingdong, despite the annual losses, but as long as the cash flow is sufficient to increase turnover and market share through losses, they simply do not take profitability as the immediate goal.

Secondly, the market share and average selling price.

In 2019, Geely's market share in the domestic auto market increased from 6.2% to 6.5%, and the average selling price increased slightly by nearly $100, of which the sales of models above 100,000 yuan accounted for more than 39% of the total, becoming the main selling price range of the Geely brand; the average selling price of the Link brand is 156,000 yuan, which is already among the mainstream price range of joint venture brands.

This side reflects that Geely's degree of recognition and popularity in the hearts of consumers is steadily increasing.

Plus, Geely's sales structure itself is the parallel development of cars and SUVs, there is no obvious short board. All these allow Geely to survive in a healthier position in both optimistic and pessimistic markets.

In mid-March, British brand evaluation organization Brand?Finance released a list of the "2020 Top 10 Automotive Groups with the Highest Global Brand Portfolio Value", in which Geely is the only Chinese auto brand on the list.

This healthy sales and price structure, along with cash flow, has boosted Geely's strategic certainty and resilience in the face of the epidemic.

Finally, Geely's profit structure has also shown a trend toward greater diversification.

In 2019, Geely's sales of 113,000 new-energy vehicles increased 69% year-on-year, unlike fuel vehicles, bucking the trend. At the same time, Geely and its subsidiaries have also set up joint ventures with LG Chem and Ningde Times respectively, and have already begun to increase investment in the new energy sector. This year, new energy is bound to remain the focus of Geely's development.

And in terms of exports, Geely exported 58,000 units in 2019, up 109% year-on-year. With the epidemic sweeping through Europe, Geely on the one hand "digging" in European car companies, and on the other hand, Link will officially enter the European market this year, Geely's overseas market opportunities are not small.

These changes are the reserves necessary for the development of thick and thin.

New hope for 2020

And at the conference, An Conghui revealed the following three changes, which also give Geely more possibilities in 2020.

One, more models.

An Conghui said that Geely will launch six new models this year, including Geely ICON, Hao Yue, Preface, Geometry C, Link 05, 06. These models not only belong to different segments, and there is no obvious conflict with the positioning of the current models. Judging from the pre-sales of the Geely ICON and the Link 05, these models are likely to help Geely increase its market share again.

The second is cost control.

According to the content of the financial report, Geely's investment in research and development in 2019 is very high, amounting to 5.4 billion yuan, or 5.6% of revenue. According to Li Donghui, these investments are mainly focused on three directions: platform technology, new models and "new four". Especially the platform technology, such as Geely and Volvo joint development of the CMA platform, as well as Geely independent research and development of the BMA platform and electric vehicle PMA platform, are R & D heavyweight.

These platforms are basically all completed in 2019 to wrap up the work, and the first model of the PMA platform will also be officially released in 2020. That means that this year Geely's R&D costs for this segment will inevitably start to translate into revenue.

At the same time, Li Donghui also revealed that the recent prices of copper, lead, aluminum, steel, oil and other raw materials are declining, Geely will seize this purchasing opportunity, and strive to achieve a cost reduction of 10% or more this year in all aspects of the raw materials, sales costs, management costs and so on.

Thirdly, the synergistic effect of the group's brands may be amplified.

For Geely, perhaps the biggest change in 2020 will be its upcoming merger with Volvo. When the two become one, both are bound to get efficiency gains and cost reductions, while Geely's brand power will be amplified again, benefiting both.

With this step toward globalization, Geely's thinking is that it wants the synergies between the Geely brand and the group's Proton, Lutz, Smart, and other brands to be maximized by 2020 as well.

With all this background and hope, we also seem to have more confidence in Geely's claims of no layoffs, no pay cuts, and no target reductions.

And compared to us, the industry as a whole, and the employees involved, actually need more of a boost from Geely's commitment and attitude.

In the face of a major crisis like an outbreak, it's easy for pessimism to spread, and people always need to be energized by the energy of being cared for and being held accountable.

Like the recent cosmetics brand Lin Qingxuan.

Markedly two months ago, Sun Laichun, founder and chairman of Lin Qingxuan, was still full of anxiety, "Before January 31, I was basically in a state of semi-collapse, so anxious that I couldn't sleep the whole night, and after calculating the accounts, the cash could only last 67 days."

In the most difficult time, he sent to all employees, "a letter to the darkest hour", spilling more than 10,000 words, one side of the commitment to "*** in and out, no layoffs", one side of the staff pleaded with employees to switch the mode of work, the online office, full marketing, and with his determination to overcome the difficulties.

It was originally a letter to encourage morale, out of anxiety, even Sun Lai Chun himself did not expect, but was openly issued by the staff, and then a good multi-media forwarding, thousands of customers leave a message, order.

The result was that despite the closure of the store and the freezing of customer traffic, Lin Qingxuan's February results grew against the trend, and online sales increased by 400%, surviving the most difficult epidemic.

Many have said that 2020 could be the worst year of the past decade, but could be the best year of the next decade.

Not broken, not established, "a hundred waste" also means reshuffle, the big wave of sand, the sinking for gold.

In the automotive market, which has long been a stock competition, this is even more so. Geely is very clear, even if again bitter, as long as the 2020 adhere to, the future of the road will be much better. And this future, not only including themselves, but also all employees, dealers, suppliers, including the entire upstream and downstream industry chain.

This is a mouthful of "pull one hair and move the whole body".

We can only wish such a gas-boosting enterprise a smooth journey!

This article comes from the author of the automobile home, does not represent the views of the automobile home position.