Persistent Competition Pressures Profitability for Great Wall; Lacks a Convincing NEV Strategy
Great Wall Motor is China’s largest sport utility vehicle and pickup truck manufacturer. Unlike other local automakers who often team up with foreign brands to produce vehicles, Great Wall is dedicated to developing mass-market homegrown cars. The company’s unique SUV-focused strategy has yielded excellent results historically—returns on invested capital averaged 34% during 2013-2017 when China’s SUV market enjoyed rapid growth, far exceeding its weighted average cost of capital. We attribute Great Wall’s past dominance in the SUV space to first-mover advantages.