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On October 19th, Jianghuai Automobile announced that the company plans to transfer some of its assets through public listing, involving the inventory of the three factories of the passenger car company, fixed assets, projects under construction, buildings, land use rights and Xinqiao factory structures and equipment assets of the passenger car company, with a proposed listing price of 4.498 billion yuan.

According to the announcement, the transaction is to be divided into three asset packages, as follows: one package: Anhui Jianghuai Automobile Group Co., Ltd. passenger car company three factory inventory, fixed assets and projects under construction. Second package: Anhui Jianghuai Automobile Group Co., Ltd. Passenger car Co., Ltd., the third factory buildings, projects under construction and land use rights. Three packages: structures and equipment of Xinqiao factory of Anhui Jianghuai Automobile Group Co., Ltd.

It is understood that the two factories involved in the transfer of Jianghuai automobile assets are in fact the two factories that Jianghuai and NIO cooperate with, that is, Jianghuai NIO advanced manufacturing base and NIO second advanced manufacturing base, that is, NIO F1 factory and Xilai F2 factory, these two factories are built by Wei, but the production qualification comes from Jianghuai Automobile. The industry believes that the Jianghuai Automobile is ostensibly a transfer factory, but in fact it is a transfer of production qualification, and the asset transfer may eventually be taken over by Wei, so as to achieve independent production qualification.

At present, the production qualifications of the models under NIO come from Jianghuai Automobile, which is also the reason for the emergence of "Jianghuai Automobile" in the tail mark of NIO model. It is understood that all the Lai models are manufactured by Jianghuai Automobile, and the cooperation between the two companies has been maintained since 2016, successively producing ES8, ES6, EC6 and other models for NIO. In March 2021, Jianghuai Automobile and NIO reached a deepening cooperation and established Jianghuai Advanced Manufacturing Technology (Anhui) Co., Ltd., in which Jianghuai Automobile holds 51% of the initiative and continues to produce ES7, EC7, ET5 and other models for NIO. The cooperative production period is from May 2021 to May 2024. However, compared with Xiaopeng Automobile and ideal Automobile to build cars independently through acquisition, the mode of contract manufacturing is very difficult to be recognized by the market, and many car owners will deduct the tail bid of "Jianghuai Automobile" after buying the model.

In response to the transfer of assets related to JAC Automobile, Qin Lihong, president of the co-founder of NIO, said that the two factories are indeed Jianghuai and NIO cooperation, but will not affect the production and operation of NIO. The company will communicate on relevant matters at an appropriate time and will not comment on the matter until then.

There is a precedent for acquiring independent production qualifications through the acquisition of factories. For example, Xiaopeng Motor, whose first model, Xiaopeng G3, is manufactured by Haima Automobile. In 2020, Xiaopeng Automobile achieved independent production through the acquisition of Guangdong Fudi Motor. Its subsequent models, such as Xiaopeng P7 and Xiaopeng P5, are all produced by Xiaopeng Automobile's own factory.

The same is true of ideal cars. Before the Beijing factory was officially put into production, all models of ideal cars were produced by Changzhou base. In December 2018, Beijing Auto and Home acquired a 100% stake in Chongqing Lifan, a subsidiary of Lifan Automobile, for 650 million yuan, obtaining the qualification for the production of new energy vehicles. At the same time, Chongqing Lifan's production base in Changzhou is leased to ideal cars, becoming the production base of ideal ONE. In 2021, ideal Automobile took over Beijing Hyundai Shunyi No. 1 Factory, transformed into an ideal automobile green intelligent manufacturing base in Beijing, and started construction in October of that year. In June this year, the production qualification of Beijing ideal Automobile Co., Ltd. was approved, and the new Beijing Shunyi Intelligent Factory will be officially put into production this year to support the production of pure electricity and extended range products.

New power car companies initially achieved mass production and listing of their products through contract manufacturing, mainly because of the problem of funds, but contract manufacturing also has many disadvantages, in addition to the high cost of contract manufacturing every year. OEM by traditional car companies will also face production and quality control problems. For the new power car companies, to get rid of contract production and achieve independent car construction, they can take the initiative in their own hands.

Let's take a look at Jianghuai Motors. In fact, the performance of Jianghuai Motor has been somewhat unsatisfactory in recent years. For the purpose of transferring assets, JAC Motor said in the announcement that the asset structure can be further optimized through the asset transfer, and if the transaction is implemented smoothly, it will have a positive impact on the company's financial position and operating performance. According to the financial report, the net profit of Jianghuai Automobile in the first half of 2023 was 160 million yuan, turning losses into profits, while operating income increased 25.9 percent to 22.37 billion yuan compared with the same period last year.

"simultaneous development of passengers and businessmen" has always been the strategic policy of Jianghuai Automobile, and the commercial vehicle sector plays an important role, but affected by macro factors such as the continuous rise in international crude oil prices and the slowing down of infrastructure, the decline in sales in the commercial vehicle sector with stronger profitability will also directly lead to a reduction in revenue of JAC Automobile. In addition, in the passenger car market, Jianghuai Motor owns Jianghuai, Ruifeng, Sihao and other brands, among which Sihao, a joint venture with Volkswagen in China, bears greater development expectations, but the current development of the brand is mediocre. There is also a lot of uncertainty about whether it can be squeezed into the front end of the market.

In the first half of the year, Jianghuai Motors launched a new pure electric brand "Yttrium for". The first model based on the new electric platform, Yttrium 3, was launched in June and is positioned as a 100000-yuan pure electric car against BYD dolphins. However, there are not many bright spots in the market performance of yttrium 3, with sales of 1061, 2191 and 2490 respectively from June to August. Although sales are rising month by month, they are only 1/10 of the level of BYD dolphins in the same period. Whether it can become a popular model of Jianghuai Motors remains to be tested by the market.

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