Earlier this month we reported that Neta was experiencing serious problems. Neta founder Fang Yunzhou recently spoke positively about the company in a talk show, suggesting that it is succeeding in reversing its current problems.
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Neta’s problems initially appeared to be due to the Nanning factory. According to reports in early March, the factory had stopped production for 20 days. In early November, Chinese media suggested that the brand’s main factory in Tongxiang, Zhejiang province, had also halted production for half a month.
The production problems were accompanied by a reduction in the workforce and salary cuts for those who remained. According to Do News, the total number of Neta employees has fallen from 7,932 at the end of last year to about 5,000. In the R&D department, salaries have been reduced by 5% to 30%. Those with annual salaries of less than 300,000 yuan will receive a 5 percent cut, while those with salaries of more than 1 million yuan will receive a 30 percent salary cut. It is believed that all departments have implemented salary cuts.
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As we previously reported, the biggest problem is the lack of sales. From January to September 2024, Neta delivered 53,853 units domestically, achieving less than 30% of its annual sales target. Unusually, Neta did not publish sales results for October. but industry insiders suggest the number was around 4,500.
It is believed that all assembly was concentrated at the Tongxiang factory, with production largely ceasing at the Yichun and Nanning factories. Do News quotes a Neta insider under the pseudonym He Qi as saying that the factories in Nanning and Yichun not only had illegal problems, but the models produced there did not sell well. The Yichun factory produces the Neta S and Neta GT, while the Nanning factory produces the Neta Aya.
Fang Yunzhou claimed in the interview that Neta had taken advantage of the peak season in the past two months and secured sufficient orders. In addition, he said that a large number of orders had been received at the Guangzhou Auto Show.
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“Internally, we will streamline our business, focus on our core activities, optimize our organization and reform our payroll to build a more efficient organization, and aim to turn cash flow positive next year and increase our competitive position,” said Fang.
It should be noted 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, sliding in and out of private and public ownership. In 2018, he regained control of the company after it was acquired by several local government funds. Then he hired Zhang Yong as CEO.
Former BAIC marketing director BJEV Zhang had a lot of success selling electric vehicles to taxi programs, and he used that to achieve initial success in Neta as well. However, it appears that Zhang’s luck may have run out and he can’t 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 wants, not what the audience likes.” He Qi adds, “He just likes to build the cars he likes.”
Fang’s recent emergence from the shadows suggests that Zhang is about to be sidelined. Whether this will be enough to ensure the company, which is celebrating its tenth anniversary this year, survives for another ten years remains to be seen.
Nanning Industrial Investment recently held a supplier conference to provide financial support to 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 poorly in China, it has begun production at factories in Thailand and Indonesia in the past twelve months. In addition, the company is continuing exports to various markets and is building a factory in Malaysia.
Hozon Auto’s Hong Kong IPO appears to be currently on hold despite receiving a ticker code, H1940.
Sources: Autohome, Do News,