The automotive industry has been in a long-term recession. Siwei Xintu aims at the long-term battle of autonomous driving transformation

Against the backdrop of the explosion of artificial intelligence technology, autonomous driving technology, which has attracted widespread attention in the automotive industry, has also begun to enter the public's field of vision, and the capital market has therefore become more and more eager to pay attention to the dynamics of the autonomous driving field. On August 27, NavInfo, a well-known domestic digital map and autonomous driving service provider, announced its 2020 first half financial report.
 

The semi-annual report is not optimistic

The financial report shows that its revenue in the first half of the year was 961 million yuan, a decrease of 11.28% from the same period last year, a slight decline; the net profit attributable to shareholders of the listed company was -163 million yuan, a decrease of 290.61% compared with the same period last year, turning from profit to loss.
 

Specifically, both the revenue and net profit attributable to shareholders of Siwei Tuxin have declined significantly, especially the net profit attributable to shareholders, which has dropped nearly three times from a profit of 85.6 million yuan in the same period last year to a loss of 163 million yuan at present. The reason behind the sharp drop in profits is that Siwei Tuxin's core business has been cold overall.
 

In terms of core business, NavInfo's performance is not satisfactory at all. Not only did the revenue of the two core businesses of navigation and location big data decline by 39%, but the revenue of related businesses such as advanced driver assistance and autonomous driving, car networking, and chips also fell by nearly 30% year-on-year. This is the most important factor leading to the decline in NavInfo's performance.
 

After the business revenue fell, the capital market also lost confidence in NavInfo. After the semi-annual report was released on August 27, NavInfo's stock price fell by 3.99% the next day, from 17.06 yuan at the close of the 27th to 16.38 yuan the next day, a significant drop.
 

The difficulties faced by NavInfo are not just the problem of falling stock prices. The first quarter financial report of this year showed that NavInfo had lost 72.593 million yuan, and the semi-annual report showed that NavInfo's losses had expanded again. This is undoubtedly a double whammy for NavInfo.
 

However, from an industry perspective, the poor financial report of NavInfo is not only due to problems in its own operations, but also related to the negative impact brought about by the sharp drop in sales in the automobile industry due to the epidemic.
 

The automotive industry is lagging behind due to the downturn

As a digital map service provider, NavInfo's navigation business, which accounts for the majority of its revenue, is highly dependent on automakers. Its navigation business revenue model is mainly to provide paid in-vehicle maps to car manufacturers and make profits from it, and in-vehicle maps account for as much as 60% of NavInfo's navigation business revenue.
 

As the navigation business is highly dependent on automobile companies, NavInfo was naturally affected when the automobile industry faced a cold winter. According to the data of the China Association of Automobile Manufacturers, the domestic automobile sales in 2018 were 28.081 million, and the growth rate of automobile sales fell by 2.8%. This was the first time that the domestic automobile industry experienced negative growth. It was precisely because of the decline in automobile sales that NavInfo's business revenue also fell.
 

After the automotive industry experienced a period of sluggish growth, the sudden outbreak of the COVID-19 pandemic in 2020 made matters worse. Under the influence of the pandemic, the production and sales of the automotive industry were further affected. According to data from the China Association of Automobile Manufacturers, domestic automobile sales fell by 92% in early February, and year-on-year sales plummeted by more than 90%.
 

The unfavorable environment of the automotive industry has inevitably affected NavInfo, so it is not difficult to understand the decline of its navigation business. In addition to the navigation business, NavInfo's autonomous driving, chips, and car networking businesses also provide services to the automotive industry, and are inevitably affected by the cold winter of the automotive industry.
 

Specifically, during the epidemic, the car sales of Toyota, Volkswagen and other companies that NavInfo cooperated with all declined, which directly led to a sharp drop in NavInfo's revenue. However, the difficulties faced by the automotive industry did not make NavInfo lose its fighting spirit. In the face of an unfavorable market environment, NavInfo is still actively seeking change and looking for new business growth points.
 

In the latest financial report, the board of directors of NavInfo also stated that the company is still improving product quality and increasing resource integration efforts to promote high-quality transformation and development of its business.

Intensify the transformation to autonomous driving

During the epidemic, NavInfo expanded the diversified commercial monetization of its businesses through refined operations, and focused on promoting the high-quality transformation of its five major businesses: navigation, advanced driver assistance and autonomous driving, on-board chips, location big data, and Internet of Vehicles.
 

Specifically, in terms of navigation business, NavInfo has improved its map data and navigation data compilation service capabilities, and added image classification and recognition functions for AR navigation products; in terms of advanced driver assistance and autonomous driving business, it has launched assisted positioning, fuel saving and other services, and provided map solutions for L4 unmanned autonomous driving taxis;
 

In the chip business, NavInfo has started the commercialization of chip technology and completed the tape-out of the second-generation AMP and TPMS chips; in the location big data business, it has improved the service scope and accuracy of the business, and further enhanced the visualization capability of three-dimensional space-time services; in the Internet of Vehicles business, NavInfo and JD Cloud have cooperated to launch the "Jingyuzuo & Dou8" car machine, which has increased hardware sales channels and broadened revenue sources.
 

In the field of autonomous driving, NavInfo focuses on five major business segments to create a "data + cloud + AI + chip + hardware and software integration" solution to enhance the comprehensive service capabilities of autonomous driving technology.
 

Judging from the progress of various businesses, NavInfo's transformation is mainly aimed at improving service capabilities and commercialization. In the face of an unfavorable market environment, the purpose of NavInfo's transformation is obviously to improve its own monetization capabilities and alleviate the problem of tight capital chain under the impact of the epidemic. In addition, NavInfo has stepped up its business transformation efforts to continue to improve its competitive barriers in the autonomous driving track.
 

However, the development of the domestic autonomous driving industry is still immature, and there are still many problems in technology research and development and commercial application. Under such circumstances, NavInfo will face many challenges if it wants to reverse its losses by focusing on the autonomous driving track.
 

Long War

At present, the domestic market's autonomous driving industry is still facing technical problems such as sensor recognition and data network transmission. In addition, it will take a long time for domestic autonomous driving technology to reach the L5 level. Under such circumstances, the autonomous driving industry will remain in the technology research and development stage for a long time, which is obviously not good news for companies with insufficient financial strength.
 

Autonomous driving is an industry that requires high investment and heavy R&D. In the absence of full implementation of technology applications, high R&D investment will inevitably make NavInfo's capital chain even tighter. Furthermore, NavInfo just turned from profit to loss in the first half of 2020. If it increases its R&D investment, the performance pressure it faces will increase again.
 

Secondly, the decline in sales growth in the automotive industry has also had an adverse impact on NavInfo's application of autonomous driving technology. And due to the impact of the epidemic, the long-term uncertainty factors in the automotive market will increase, which means that NavInfo will face many challenges for a long time.
 

Furthermore, personnel changes have also had an adverse impact on NavInfo. After the semi-annual report was released, NavInfo's deputy general managers Dai Donghai and Jing Muhan submitted their resignation applications, which may have an adverse impact on the company's normal operations.
 

Under the influence of multiple negative factors, NavInfo's layout in the field of autonomous driving has become more unpredictable. In this context, how NavInfo can solve the problem of losses and continue to maintain its place in the autonomous driving competition has become a topic of greater concern to the outside world. The introduction of new technologies and national policies has pointed out the direction for NavInfo.
 

Under the influence of new technology waves such as 5G, AI, and the Internet of Things, autonomous driving technology, which is closely related to smart cities, has also received policy support. As a deep participant in domestic autonomous driving, NavInfo has ushered in the dawn of hope. However, given NavInfo's current strength and resources, if it wants to continue to participate in this technological revolution, NavInfo needs to make more preparations. This will be a long-term war and it needs to continue to fight for endurance.