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A car company has been exposed to layoffs

2024-07-18 Update From: AutoBeta NAV: AutoBeta > News >


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Recently, there are media reports that Star Motor will start a large number of layoffs before the end of September, the proportion of layoffs is about 30%. At the same time, there is also news that the factory in Chengdu has been shut down and a large number of employees responsible for production and supply have been laid off.

At present, the polar star side has not responded to this news.

In fact, it is not surprising that the star will start layoffs. As early as January this year, officials announced 15% of global layoffs, involving 450 employees. At the time, officials said the layoffs were meant to adjust the size of business and operations and reduce external expenses. Accelerate profit margin improvement and reduce the company's total capital requirements to achieve cash flow balance by 2025. A little longer, in May 2023, Star revealed that it would cut about 300 jobs by 10% worldwide to pay more attention to cost management, while hiring was frozen. At the time, JohanMalmqvist, the company's chief financial officer, said the company was working to reduce operating expenses and take targeted measures against its employees. "based on the current macroeconomic environment, the company is looking to control costs," JohanMalmqvist explained.

Of course, the fact that Polaris started several layoffs has something to do with poor sales behind it. Relevant data show that from 2020 to 2023, the global sales of Star were 10200, 29000, 51500 and 54600 respectively. Among them, the sales in China are decreasing year by year. From 2021 to 2023, the sales of Polar Star in China are 2048, 1717 and 992 respectively. Last year, officials lowered last year's sales target of 80,000 to 60,000 to 70,000 vehicles because the new model, the Star 3, could not be delivered on time in the summer of 2023. Although the government lowered its sales target, it still failed to meet its annual sales target. Data show that last year, the global annual sales of Star cars was 54600.

Poor sales must be followed by an increase in losses. Data show that from 2021 to 2023, Polar's losses were US $1.007 billion, US $466 million and US $542.7 million, respectively, with a cumulative loss of US $20.016 billion over three years. In order to increase sales, in terms of products, officials have also adjusted the price of its new model, Star 4, to lower the threshold for consumers to buy. However, taking the Chinese market as an example, under the background of increasingly fierce competition, the listing of Star 4 has not brought about an increase in sales. Data show that from January to May, only 884 Star 4 vehicles were sold in China. Senior management has also made frequent adjustments. According to incomplete statistics, six terms of CEO have been replaced in China alone since the establishment of Polar Star. In June, Star Motors again made a series of high-level adjustments, appointing Van Ande as chairman of the board. The post of chief operating officer is held by Qin Peiji, deputy general manager of Geely Automobile Group sales Co., Ltd., and is mainly responsible for the sales, channel development and marketing of the company. The CMO position is held by Jia Xiaohui, Senior Director of Public Relations of Volvo Greater China sales Company.

It is not known whether this high-level change will help boost the sales of Star Motors. However, since the beginning of 2024, extreme Star has not been comfortable, facing not only poor sales and increased losses, but also the risk of delisting. Although officials hope to cut costs through layoffs, they are not optimistic about capital. As of press time, the share price of Ji Xing Motors is still below $1. As we all know, according to the rules of the Nasdaq Stock Exchange, if the company closes less than $1 for 30 consecutive trading days, it will receive delisting notice. Star Motor needs to close at more than $1 for 10 consecutive trading days within the next 180 days, otherwise it will face the risk of delisting.

The data show that: Polar was originally a car modification manufacturer and became a supplier of performance models to Volvo in 2005. In 2009, Volvo included Polar Star in its racing and performance car research and development department. In 2015, Volvo acquired Polar Star wholly and became Volvo's electrified high-performance R & D department. In October 2017, Volvo and Geely jointly announced the formation of a joint venture brand Polestar. In June 2022, Polar Star sounded the opening bell and listed on the NASDAQ Stock Exchange in the United States. In June last year, Polar announced that it would set up a joint venture with Star Meizu Group for the Chinese market, that is, Polar Technology, to take over Polar's business in the Chinese market. Among them, Polar Motors owns 49% of the shares, and Star Meizu holds 51%. Starkey Meizu is responsible for arranging the future financing of the joint venture. At present, there are Polestar 1, Polestar 2, Polestar 3, Polestar 4, Polestar 5, Polestar 6 and other models on sale.

Of course, the auto industry is concerned that the biggest problem with poor sales of Star cars is related to factors such as low popularity, long delivery time, and unobvious price advantages in the same class of models. For reference, the price of Polar 2 is 258000 yuan to 338000 yuan. Tesla Model 3 model is marked, but there is a certain gap with Model 3 in terms of key parameters such as battery life and power. According to the official plan, the global delivery target for 2025 is 155000-165000 vehicles. However, judging from the current sales of Star cars, it is still very difficult to achieve the goal. At present, with the rise of the price war, a new round of knockout has begun. How to maintain the strength and survive in the new round of competition is the most important question that should be considered at the moment.

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