Doubts surround Great Wall's future prospects as its sales fall, manufacturer denies reports of axing employees

Gasgoo.com (Shanghai June 10) - As the launch of the Haval H8 continuing to be delayed, Great Wall Motor's stock took another hit this Monday. According to a report appearing on the China Securities Journal today, the manufacturer's stock fell 5.77 percent that day, finishing at 26.29 RMB ($4.276). Furthermore, Great Wall sedan sales fell dramatically in May. Opinions on the manufacturer's future are divergent, with some believing that its SUV business will achieve successful results, while others worry that its stock will continue to fall.

According to its sales report for the month of May, Great Wall sold a total of 51,837 vehicles, down 12.55 percent from April and 15.67 percent from last May. The manufacturer's cumulative sales for the first five months of the year totaled 298,900 vehicles, representing negative year-on-year growth of 3.87 percent.

The manufacturer's sedan sales have experienced an exceptionally dramatic fall. A total of 4,643 Great Wall sedans were sold in May, down 44.27 percent from April and a full 73.51 percent from last May. Two of the manufacturer's flagship sedan models, the Voleex C30 and C50, saw their sales fall 68.62 percent and 77.5 percent, respectively.

In the past five years, Great Wall was heralded as a black horse by many industry analysts, with its sales growing rapidly year by year as it led other own brand manufacturers by a large margin. However, its excessive reliance on the SUV segment has limited its overall competitiveness.

The manufacturer's future progress will still depend on its performance in this segment. A research report by Guotai Junan Securities shows that demand for the Haval H6 SUV is still outpacing supply, and that the small fall in sales has been due to limited production capacity. Great Wall's plan for this year is to introduce new models to allow it to cover the economy-level, entry-level and luxury-level SUV segments.

However, a research report from the CICC offers a conflicting view. According to the report, the H6's sales fall was due to competition from both own brand and joint venture models. Meanwhile, the report attributed its falling sedan sales to increasing pressure from increasingly affordable JV sedans, such as the Toyota Vios and Yaris, both priced around 70,000 RMB ($11,385). This is similar to the situation other own brand manufacturers selling subcompacts priced between 65,000 RMB and 95,000 RMB ($10,572-$15,451) are facing.

In the midst of this news, Great Wall officially denied reports that the manufacturer will let go of 20,000 staff by the end of this year. According to a statement made by a senior official, it is actually currently actively expanding its automobile operations. The source emphasized that its staff of over 60,000 employees is crucial to this development.