Earlier this month, we reported that Neta was facing severe problems. Neta founder Fang Yunzhou recently spoke positively about the company on a talk show and suggested that it was succeeding in turning around its current issues.
Neta’s problems initially appeared to be isolated to its Nanning plant. According to reports in early March, the factory had already ceased production for 20 days. In early November, Chinese media suggested that the brand’s main Factory in Tongxiang, Zhejiang province, had also ceased production for half a month.
Accompanying the production woes has been a reduction in workforce along with salary cuts for those remaining. According to Do News, the total number of Neta employees has decreased from 7,932 at the end of last year to around 5,000. In the R&D Department, salaries have been reduced by between 5% and 30%. Those on an annual salary of less than 300,000 yuan will receive a 5 percent cut, whereas those on salaries of more than 1 million Yuan will receive a 30 percent salary reduction. It’s believed that all departments have implemented salary cuts.
As we previously reported, the overriding problem is the lack of sales. From January to September 2024, Neta delivered 53,853 units domestically, reaching less than 30% of its annual sales goal. Unusually, Neta did not publish sales results for October, but industry insiders suggest that the figure was around 4,500.
It’s believed that all assembly was concentrated at the Tongxiang factory, and production largely halted at the Yichun and Nanning plants. Do News quotes a Neta insider under the pseudonym of He Qi as saying the factories at Nanning and Yichun not only had illegal issues, but the models produced at them were not selling well. The Yichun plant produces the Neta S and Neta GT, whereas the Nanning plant produces the Neta Aya.
Fang Yunzhou claimed in the interview that over the past two months, Neta had seized the peak season and gained sufficient orders. Furthermore, he said that a large number of orders had been received at the Guangzhou Auto Show.
“Internally, we will streamline our business, focus on our core business, optimize our organization, and reform our payroll to build a more efficient organization, and strive to turn cash flow positive next year and enhance our competitiveness,” said Fang.
It should be pointed out that although Fang founded Hozon Auto, which owns the Neta brand, he is not actually the CEO of the company. The company has had quite a turbulent history, slipping in and out of private and public ownership. In 2018, he once again found himself in charge of the company after it was taken over by several local government funds, which is when he hired Zhang Yong as the CEO.
The former marketing director of BAIC BJEV Zhang had much success selling EVs to ride-hailing schemes, and he used those to gain initial success also in Neta. However, it would seem that luck has perhaps run out for Zhang and that he cannot rely on the old playbook. The Neta insider quoted by Do News said, “Neta’s biggest problem is not the employee problem, nor the technical ability, but the boss’s decision-making problem, he likes to do what he likes, not what the public likes.” He Qi adds, “he just likes to build the cars he likes.”
The recent coming out of the shadows of Fang suggests that Zhang may be about to be sidelined. Whether this will be enough for the company, which this year celebrates its 10th anniversary, to survive for another 10 years remains to be seen.
Nanning Industrial Investment recently held a supplier conference to provide financial support for Neta’s supply chain. This has resulted in the resumption of production and operation of the Nanning factory.
It should be noted that while the company appears to be doing badly in China, it has commenced production at plants in Thailand and Indonesia within the last 12 months. Furthermore, the company is pushing ahead with exports in various markets and is building a factory in Malaysia.
Hozon Auto’s Hong Kong IPO currently appears to be on hold despite receiving a ticker code, H1940.
Sources: Autohome, Do News,
