Neta website outage sparks rumors of brand’s collapse
In the early hours of January 6, rumors swirled that Neta was the latest Chinese auto producer to experience a flash crash. The automotive market in China is jittery after the flash crash of Jiyue Auto last month. Neta has responded defiantly, threatening action against those who spread the rumor.
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The rumor was sparked by Neta’s website being down in the early hours of the morning with a sign saying that the website was under maintenance. Subsequently the website has been repaired and is now operating as normal.
There have been stories about problems with Neta throughout much of 2024. Initially, these problems centered around the Nanning plant, which appears to have ceased production somewhere in February. Chinese media then suggested in early November that the brand’s main factory in Tongxiang, Zhejiang province, had also ceased production for half a month.
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Accompanying all this have been stories of staff layoffs, and Neta stopped publishing sales figures. Then, in early December, Zhang Yong (Daniel Zhang) was replaced as CEO by the company founder, Fang Yunzhou. It’s claimed that Zhang remains as a consultant for the company.
In an internal letter, Fang frankly admitted to current difficulties faced by the company while reviewing the company’s 10-year entrepreneurial history.
More importantly, he laid out a turnaround plan for the embattled company. With what seems an increasingly common tactic for producers in China, Neta is looking to overseas as a way of escaping the rampant price competition in the domestic market.
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The aim in the next two to three years is for half the sales to be domestic and the other half in the global market. To achieve this, the company is emphasizing the creation of global bestselling models.
According to company insiders Zhang had ignored market demand to focus on building the cars he wanted. Fang’s strategy appears to reset this to boost profitability.
In the letter, he said that the company would focus on products that align with market expectations and have a positive gross profit margin. Fang claims that the gross profit margin in 2025 will turn positive and that the company will be profitable as a whole in 2026.
The brand’s parent company, Hozon Auto, will push forward with its IPO on the Hong Kong Stock Exchange. It has already received a ticker code for the stock.
Neta has already entered several markets in Central Asia, Southeast Asia, Latin America, and South Africa. In addition, it has opened factories in both Thailand and Indonesia. Previously, the brand has indicated that it was looking to enter both the European and Australian markets. The current status of these plans is unknown.
Editor’s note:
The flash crash of Jiyue has put a focus on the fortunes of new entrants to the auto market. Many of these are struggling due to the intense competition in the Chinese market, made worse by the ongoing price war, meaning that profits are very limited.
Today’s frenzy around Neta just shows how much on edge the markets are. Although Neta is under threat, the fact that it is doing relatively well overseas and that Fang seems to realize that this may be the key to getting the company out of its troubles bode well.
What doesn’t bode so well is PR problems like the story with quality problems that led a Neta car to drop from 401 km to 40 km range in 1.5 years.
