Nezha restructuring: Between Debt and Hope

In mid-June, the "Nezha Automobile Restructuring Statement" circulated online. Since then, the restructuring process of Hozon New Energy has gradually entered the public eye, and "restructuring" has become the annual theme word for this company, which once ranked among the top in new force sales.

From debt declaration to investor recruitment

On September 12, over a hundred days after announcing its restructuring, the first creditors' meeting for the Neta Auto restructuring case was officially held online, marking a critical stage in Neta's restructuring process. It is reported that the administrator of Hozon New Energy disclosed some data and related restructuring information.

According to relevant disclosures, as of August 31, a total of 1,631 creditors have filed claims with the court, with the total amount reaching over 26 billion yuan. Of these, 1,340 claims have been reviewed and confirmed, totaling approximately 5.1 billion yuan. Specifically, there are three secured claims involving an amount of 1.194 billion yuan; 1,265 are ordinary claims amounting to 3.987 billion yuan; and there are 72 claims that have not been confirmed, with the related amount reaching as high as 10.616 billion yuan.

As of the end of August 2025, excluding corporate debt, Hozon New Energy and its affiliated companies still owe over 5,000 employees a total of approximately 460 million yuan in wages, severance payments, benefits, reimbursement claims, and housing funds. Additionally, the company's monetary funds account balance is only about 15.4591 million yuan, including approximately 420,000 yuan in acceptance guarantees and around 15 million yuan in bank deposits. The significant imbalance between assets and liabilities has become a pressing issue to be resolved during the restructuring process.

The manager systematically explained the reasons that led to Hozon New Energy's predicament during the meeting. In his view, there are two main aspects. On one hand, since 2023, due to intensified industry competition, market share has concentrated towards leading companies, and the continuous price reductions by these leading companies have further squeezed the survival space of second-tier brands, resulting in a sharp decline in Hozon New Energy's profitability.

On the other hand, in order to smoothly advance the IPO, Hozon New Energy cleared most of its bank loans, resulting in operating capital pressure, and the failure of the listing further exacerbated the financial strain. The combination of internal and external factors ultimately pushed it towards restructuring.

According to reports, the administrator has adopted a series of emergency measures to maintain basic operations. On one hand, negotiations with suppliers are underway to keep the vehicle system services running; on the other hand, a differentiated adjustment strategy has been implemented regarding salary issues. It is reported that many employees have experienced delayed salary payments for six months, leading to talent loss in some key positions. In response, the administrator decided to pay full salaries to current employees, while implementing salary caps for some senior executives and suspending salaries for founding partners, aiming to balance talent retention and cost-saving with limited resources.

It is noteworthy that, according to the meeting's decision, Nezha Auto will continue its operations from September 12 until the termination of the company's restructuring process, primarily focusing on the retrofitting of defective vehicles and after-sales maintenance work. The administrator stated that this decision is based on two considerations: first, to preserve the asset value of the debtor, and second, to ensure after-sales repair services for 400,000 Nezha car owners, thereby maintaining the basic trust of the owner community in the brand. A stable user base is considered one of Nezha Auto's core assets, which will lay the foundation for attracting quality restructuring investors and future resumption of production.

It is understood that the matters involved in this creditors' meeting, such as asset management, continued operations, the creditors' committee plan, and rules of procedure, still require a vote by the creditors.

In the previous August, Hozon New Energy was listed as a dishonest executor by the court for failing to fulfill an execution target of 57,600 yuan, and its legal representative Fang Yunzou was again restricted in consumption. According to incomplete statistics, as of now, Hozon New Energy has 2 enforcement cases and 102 high consumption restriction orders under its name. The legal representative Fang Yunzou faces 4 equity freezes and 162 high consumption restriction orders. These judicial records indicate that its funding chain issues are quite deep.

Image source: Hozon New Energy Manager

On August 4th, the manager officially released the "Announcement on the Public Recruitment of Restructuring Investors" regarding investor recruitment, following a preliminary recruitment on June 30th. According to the announcement, potential investors are required to pay a deposit of 50 million RMB. The final selected investor must also pay an investment deposit of 100 million RMB within three working days after signing the "Restructuring Investment Agreement." Currently, the deadline for potential investors to submit their application materials has passed, and the final outcome of Nezha Auto's restructuring has not yet been announced.

It is reported that more than 70 investors have signed up to participate. The administrator clearly stated in the recruitment announcement that priority will be given to investors who can provide funding support for resumption of work and production before the restructuring, which shows the urgency of resuming operations.

Previously, there were related reports indicating that Shan Zi Gao Ke was advancing the restructuring with Nezha Auto's parent company, Hozon New Energy. It was reported that the original Hozon New Energy personnel would complete the handover and withdrawal after October 1, and the Shan Zi Gao Ke team would officially take over. Hozon New Energy responded by saying, "This is fake news; Shan Zi Gao Ke is not restructuring Nezha Auto," and "at least, WM Motor has not yet received any substantial participation intent materials from Shan Zi Gao Ke." In response, Shan Zi Gao Ke stated that the company currently has the intention to participate in the restructuring, but specifics should be based on official information.

Industry observers point out that investors value Nezha Auto's production qualifications, production capacity, and overseas market channels. However, what lies ahead for Hozon New Energy is the urgent need to resolve its debt crisis and restore its production and service systems.

According to past reports, some positive signs have emerged from Nezha Automobile's Tongxiang factory: full payment of employee wages for July has been made; by mid-August, approximately over 300 employees were on duty within the Nezha Automobile Tongxiang plant.

Over the course of Neta Auto's hundred-day restructuring journey, from debt declaration to creditor meetings, from investor recruitment to partial recovery, one can see Neta Auto's efforts to survive the crisis. However, the road ahead remains fraught with challenges. Whether true restructuring and recovery can be achieved still depends on the subsequent injection of funds, the implementation of agreements, and the gradual rebuilding of market confidence.

Assets and Challenges: Nezha's Two Sides of Fire and Ice

As a car manufacturer that was once among the top in the new forces in terms of sales, Neta Auto possesses a certain level of brand strength and owns valuable assets such as production qualifications, factories, and overseas channels. However, even with these advantages, Neta's restructuring journey still faces extremely severe challenges in the current context of accelerated reshuffling in the new energy vehicle industry.

From the perspective of asset value, the "dual qualifications" held by Nezha Auto are one of its most valuable scarce resources. Since 2023, the approval of qualifications for new car manufacturing enterprises has gradually tightened, and acquiring existing qualifications is undoubtedly a major shortcut for capital to enter the new energy vehicle field.

Image Source: Neta Auto

In addition to production qualifications, Neta Auto also possesses high-quality production resources. The three major production bases in Tongxiang, Zhejiang; Yichun, Jiangxi; and Nanning, Guangxi have a combined annual production capacity of 300,000 units. The Tongxiang, Zhejiang factory is Neta Auto's first smart production base, officially put into production in 2018. The Yichun production base, constructed with Industry 4.0 standards, is a "full-ecosystem smart factory" that started production in 2022. The Nanning base is positioned as an export KD parts base. These modern manufacturing facilities not only have large-scale production capabilities but also involve international layout, providing a foundation for rapid production ramp-up.

In terms of market layout, Neta Auto has multiple dealership stores nationwide, with most located in third- and fourth-tier cities as well as county-level markets. Meanwhile, Neta Auto focuses on models priced between 100,000 to 200,000 RMB. The market layout and product positioning have, to some extent, created a synergistic effect.This kind of market accumulation cannot be easily replicated by new entrants.For companies intending to enter the new energy vehicle sector, Neta Auto's existing model platform can be quickly reused through technical upgrades, effectively saving development time and cost investment.

Additionally, the overseas business segment is also a highlight of Nezha Auto's assets. Since starting its international expansion in 2022, Nezha Auto's overseas dealerships have covered regions such as Southeast Asia, the Middle East, South America, and Europe, and have established a certain brand presence in the Southeast Asian market. For example, in 2023, Nezha Auto ranked third in the sales of new energy passenger vehicles in the Southeast Asian market and first among emerging forces, capturing 10.5% of the market share in Southeast Asia.

Image Source: Nezha Auto

In addition, Nezha Auto has also established KD (knock-down) assembly plants in Thailand and Indonesia. The Thailand plant will begin large-scale production in March 2024, with an annual capacity of 20,000 units. The Indonesian plant also officially commenced localized mass production in June 2024.KD Factory Nanning export KD parts production base, Neta Auto has a relatively complete layout in Southeast Asia.。

In 2022, Neta Auto's overseas sales were approximately 3,500 vehicles. After a year of strategic planning, in 2023, Neta Auto's overseas sales exceeded 20,000 vehicles, a year-on-year increase of 567%. In the first half of 2024, when the domestic market was tending towards a downturn, its overseas sales still reached about 18,000 vehicles, a year-on-year increase of 154%, ranking first in new power car companies' export volume for six consecutive months.

There is no doubt that these overseas assets of Neta Auto hold strategic value for international capital attempting to enter the Asian market.

However, the path to restructuring faces significant challenges that cannot be underestimated. The first issue to address is the high level of debt, with 5.1 billion yuan in claims and 460 million yuan in unpaid wages to employees. These debts not only impose a heavy financial burden on Nezha Auto but also directly affect its market reputation and supply chain stability.

The recent interruption of connected vehicle services has further exacerbated the brand trust crisis of Neta Auto. On September 11, many Neta car owners received notifications to purchase data on their own, and several owners reported that their vehicles had been offline for several days before receiving the message.

The management of Hozon New Energy and the service provider Lenovo Connect have differing opinions on this matter: the management claims that since taking over the company in June, they have been actively fulfilling the "Installment Payment Agreement" and "Telematics Service Agreement" signed by both parties. However, Lenovo Connect unilaterally terminated the service without prior notice. On the other hand, the service provider states that Neta Auto has long been in arrears with service fees due to operational issues, and after several months of negotiations without resolving the outstanding payment issue, they decided to suspend the network service.

To ensure the subsequent use by Nezha car owners, Lenovo Connect has launched the "Nezha Car Owner Data Protection Plan," allowing car owners to purchase data services independently. The basic remote car control package is priced at 5.9 yuan/month, while the basic + entertainment package is priced at 29.9 yuan/month.

Currently, Neta Auto has over 400,000 owners, and the reputation of these more than 400,000 owners is an important asset for the continuation of the Neta brand. If owners' daily after-sales and maintenance needs cannot be met and their related rights and interests are not guaranteed, it will lead to the spread of negative emotions among owners. The negative evaluation of the brand by the owners will quickly erode the brand value that Neta Auto has accumulated over the years and may directly affect its restructuring process.

From a positive perspective, Nezha Auto possesses quality resources such as dual qualifications, production capacity, brand, and overseas expansion. However, it also faces challenges like substantial debt and a reputation crisis. In the context of increasingly fierce competition in the new energy vehicle industry, balancing various interests and restoring market confidence may become the key factors determining the success or failure of Nezha Auto's restructuring.

The industry's reshuffling accelerates: How much room is left for Nezha to survive?

In the current market environment of the new energy vehicle industry, characterized by capital withdrawal, policy decline, and intense market competition, the survival and development space for Neta Auto will be further compressed.

According to a person close to Nezha Auto, investors had already started to tighten their investment scale for Nezha Auto before its restructuring. At the beginning of this year, Hozon New Energy held a shareholder communication meeting to discuss the ongoing Series E financing, which was seen as the last opportunity Nezha Auto could strive for. The planned scale of this round of financing was 4 to 4.5 billion yuan, with the share transfer to be completed by the end of February 2025, but it was not realized as scheduled.

In addition to the decline in capital market confidence, the prelude to industry reshuffling is also gradually unfolding, which adds greater survival pressure to Nezha Auto, which is already struggling.

Several top executives from automotive companies have stated that the number of major players in the future Chinese automotive market will shrink. Aggressive estimates suggest there will be fewer than five, while conservative estimates predict between 8 and 10. In this trend of industry consolidation, financial strength and profitability will be the key factors determining whether a company can remain in the game.

Since 2023, industry consolidation has accelerated: on one hand, car companies like Neta, WM Motor, HiPhi, and Jiyue have successively exited or undergone restructuring; on the other hand, Geely has integrated Zeekr, and Dongfeng has consolidated its three brands—Fengshen, Aeolus, and Nano—into Dongfeng Aeolus Technology. This trend indicates that Neta's current predicament may be just the prelude to a profound reshuffle in the new energy vehicle industry.

For emerging automakers like Nezha, capital has had a significant impact on their fate from the early stages of their establishment to the present. As the capital frenzy in the new energy vehicle industry subsides, the continuous "burning money" model may face unsustainable challenges. This is precisely why new automakers such as NIO, XPeng, and Leapmotor regard profitability as a key indicator.

Image Source: Nezha Auto

Take Nezha as an example. Once upon a time, it also had its moments of glory. In 2020, targeting the A-class car market, Nezha launched the Nezha U and Nezha V models successively, quickly opening up the consumer market and achieving a leap in sales from 15,000 units in 2020 to 152,000 units in 2022 with these two products. However, as the small car market gradually became saturated, Nezha began to seek a breakthrough in brand elevation but encountered strategic missteps in the process.

Compared to Leapmotor, which also started with small cars and sought brand upgrades, considering the current situation of both companies, Nezha's choice was evidently wrong. Since 2021, Leapmotor has focused on the family market, launching the C series models one after another. At that time, however, Nezha chose to target the relatively niche market with its sporty sedan Nezha S and the two-door, four-seat sports car Nezha GT. According to sources close to Nezha Auto, there was a "one-man decision" phenomenon during the decision-making process for the GT model.

As a direct result of this product strategy, the sales of Nezha Auto in 2023 dropped to 127,000 units, a decrease of approximately 16% year-on-year; in 2024, it further plummeted to 65,000 units, nearly halving year-on-year.

In summary, the reasons for Nezha's step-by-step approach toward the cliff, aside from product development missteps and management chaos, also include the failure of the IPO and difficulties in raising funds.

As early as 2020, Neta Auto had already initiated the application process for listing on the STAR Market and planned to go public there in 2021, but there was no follow-up. In 2022, it was reported that Neta Auto planned to list in Hong Kong, but this plan ultimately did not materialize.

Sales decline and unsuccessful IPO have further increased Nezha Auto's financial pressure. According to the prospectus submitted by Nezha Auto to the Hong Kong Stock Exchange, the cumulative loss from 2021 to 2023 amounted to 18.4 billion yuan; the gross profit margins for the three years were -34.4%, -22.5%, and -14.9%, respectively. By the end of 2023, Nezha Auto had cash and cash equivalents of 2.84 billion yuan, with total current assets valued at 14.1 billion yuan, but total liabilities exceeded this figure by about 2 billion yuan.

Neta Auto is currently at a critical juncture in its restructuring, and a successful restructuring might offer a chance for a comeback. The reasons for Neta Auto's gradual decline include product strategy mistakes, internal management chaos, repeated IPO delays, and ongoing losses—these are all lessons learned through hardship. Fortunately, Neta still has cards to play; its foundation in lower-tier markets, established brand assets, over 400,000 units in possession, and overseas market assets could all become leverage for a successful turnaround.

The reality of the overall market is also harsh, with giants like BYD and Geely launching aggressive offensives, and leading brands of new forces have already established their foothold. Coupled with the accelerated industry reshuffle and increasingly cautious investments, for Nezha to truly return to the table, it needs not only a clear product strategy but also to restore confidence in the capital market—this path is bound to be challenging.