Again, Great Wall Motor (02333.HK, 601633.CN) has let down stakeholders, prospective buyers and many automotive analysts who have been eager to see what a Chinese Land Rover looks like.
It wasn’t too long ago that the sports utility vehicle maker, touted as the most profitable domestic car company, rolled out a concept model of the Havel H8 series to great fanfare at this year’s Beijing Auto Expo.
Last week, Great Wall announced in a stock exchange filing that the release of the high-end marque will be delayed because of technical problems — knocking noises from the transmission drive system at high speeds. Preorders have been cancelled.
This was not the first delay. In January, the carmaker moved back the H8 launch three months.
The significance of the H8 series is that it bears the hallmarks of Great Wall’s attempts to upgrade its product line to cater to SUV buyers at the very high end. The strategy has been useful in fending off competition and protecting margins.
At no less than 200,000 yuan (US$32,055), the H8 will be the most expensive indigenous SUV brand on the market, a credible challenger to Land Rover and Jeep.
Initially, market response to the H8 had been quite positive, helping drive Great Wall’s H-share price to a historic high of HK$51.90 in October from less than HK$30.
Even after the company put off the H8 launch in January, shareholders and prospective buyers continued to applaud Great Wall’s devotion to quality and optimum user experience. Many didn’t mind the wait.
This time, however, with investor patience wearing thin, Great Wall shares took a knock. On Friday, the stock fell below the 10 percent daily limit and tumbled to its worst close in a year on Tuesday at HK$27.05.
Major institutions have a bearish outlook on the stock. UBS doubts whether the H8 can hit the road early next year and has lowered the carmaker’s projected net profit to 8.6 billion yuan.
Citigroup said that even if the H8 makes it this year, Great Wall would have a hard time convincing the market about its quality given the delays over technical issues.
Great Wall sold 59,273 vehicles in April, down 11.24 percent year on year. Aggregate sales during the first four months fell 1 percent to 24,703.
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