Niu Sacrifices Margins for Volumes

Still, it was not a bad year, and Niu has a foundation from which to build upon.

First, the numbers

For FY 2024, Niu reported revenues of RMB 3288m (USD 455m). This was a 24% improvement from revenues of RMB 2652m (USD 367m) in 2023. However, Niu’s revenues are still 11.2% lower than the 2021 peak.

Vehicle sales were 759k in China and 165k in international markets. Note that Niu does not differentiate between scooters (seated scooters), motorcycles, mopeds, electric cycles, and kick scooters while reporting sales numbers. So, the numbers are a mix of all product lines, though we estimate that the U, N, and M-series of scooters account for more than 80% of all sales in international markets.

The numbers represented a 26% improvement in sales numbers in China and a 51% increase in sales in international markets. As Niu enters new markets and expands its range, the sales mix continues to improve in favor of international markets.

However, as volumes increased, Niu has been unable to preserve margins. Quarterly and annual trends indicate that the company’s average price per scooter (APS) has reduced significantly from RMB 3736 to RMB 3557, a 4.8% reduction. This drop has impacted Gross margins, and Niu’s Gross Margins for FY 24 dropped to 15.2% from 21.5% a year back.

Niu reported a net loss of RMB 193.2 million, compared to a net loss of RMB 271.8 million in 2023. The net margin was (5.9%), the third year in which Niu has reported a negative net margin. However, the company improved its net margin from last year, when it had a (10.3%) net margin.

Products Front

Niu has constantly kept the tempo by introducing new products and upgrading the existing range. However, there is a big gap between the Chinese and International ranges, with the international markets getting new products many quarters after it has been introduced in China.

For example, Niu’s SQi moped has yet to be introduced in international markets.

Then, last year, Niu introduced the NX Hyper in the Chinese market. It is a beast of a scooter with a 29 kW in-wheel motor and is energized by three portable batteries, each of 2 kWh, in a set-up similar to the Segway-Ninebot E300SE. The NX Hyper is yet to reach Europe.

In the last year, Niu has been working on expanding its network in China. The company opened 900 new stores, mainly in Tier-3 cities.

On the international front, the company has been working on establishing direct distribution operations in Germany, Italy, France, and the United States. These are some of the biggest markets for Niu.