Chinese electric car maker WM Motor strives to rescue business

Chinese electric-vehicle maker WM Motor say they will adjust their corporate strategy as it struggles with corporate debt and intense pressure in their competitive home EV market.

China has the world’s biggest electric car market but is also the most competitive with many more EV manufacturers compared to other markets. 

Chinese electric-vehicle maker WM Motor said a Shanghai court has accepted a so-called pre-restructuring application by the company, which is mired in financial difficulty and collapsing sales.

In a statement, WM Motor said it will adjust corporate strategy and keep communicating with relevant parties to resolve its financial and debt problems. Earlier this week, WM Motor was mentioned in a notice on China’s national enterprise bankruptcy information disclosure platform. 

Just a month ago, Hong Kong-listed Apollo Future Mobility walked away from a deal to buy the company for $2bn (€1.9bn), citing financial market uncertainty and China’s uneven economic recovery.

WM Motor said on Tuesday that it was suffering “short-term operating difficulties” due to factors including the sluggish capital market, sharp fluctuations in raw material prices and setbacks in getting funding. The company said it aims to avoid bankruptcy through restructuring.

Its difficulties reflect the boom-and-bust cycle among smaller players vying it out in China, the world’s biggest electric car market, where BYD now accounts for about one-third of all new energy vehicle sales, pushing the likes of WM Motor to the sidelines.

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WM Motor sold about 35,000 electric sport utility vehicles in 2021 and a similar number last year, data from the China Automotive Technology and Research Centre show. In the first eight months of this year, it sold only 1,387 cars. 

Sharp reversal

It’s a sharp reversal for the company founded in 2015 by Freeman Shen, a former chief executive officer of Zhejiang Geely Group. At one point, WM Motor was regarded as one of the most promising Chinese electric vehicle startups, backed by Baidu and Tencent, setting delivery records and considering a listing on China’s answer to the Nasdaq.

WM Motor had planned to launch its latest M7 electric vehicle in 2023, which would have put five of its models on the market, but that didn’t happen. Instead it laid off employees, suspended factory production and cut back on aftersales services. 

Meanwhile, Mercedes-Benz sales of ultra-luxury vehicles such as the S-Class slumped in the third quarter, a blow to the carmaker’s strategy of focusing on cars with the highest profit margins.

Orders of high-end Mercedes vehicles dropped 11% to 69,900 units in the third quarter compared to the same period a year ago, the carmaker said. Global sales of its flagship S-Class model declined 18%, while sales in China, the company’s biggest market for the car, fell 12%. 

Under chief executive Officer Ola Källenius, Mercedes is directing resources to its most expensive vehicles, including Maybach limousines, AMG performance cars and the G-Wagon off-roader. The carmaker is shifting away from less profitable entry-level models like the compact A-Class.

 

• Bloomberg