What about SAIC： SAIC-GM became the first joint venture car to fall？

Cai Zhongshe Wang Weifang/Wen

It is also a drop of more than 80%. The August sales released by SAIC (600104) show that the sales of SAIC-GM (hereinafter referred to as "SAIC-GM") continue to "avalanche". As one of the two main sales forces of SAIC Motor, SAIC-GM has fallen into a loss.

Caizhong News found that on September 7, SAIC released production and sales data, and in August, the company sold 258,000 vehicles, down 39.14% year-on-year. In the first eight months, the company sold 2.336 million vehicles, a year-on-year decrease of 19.31%.

Whether monthly or cumulative sales, SAIC has shown an accelerated downward trend, especially since the second half of the year.

One of the "culprits" leading to this result is the cliff-like decline in sales of SAIC-GM. In July and August, the sales volume of SAIC-GM dropped by more than 80%. Prior to this, only in February, which was disturbed by the Spring Festival, SAIC-GM had such a big decline.

Since the second quarter, the decline of SAIC-GM’s sales volume is basically the next step every month. In April, the decline was close to 40%, in May it was close to 60%, and in June it exceeded 70%. In the last two months, the decline was more than 80%.

As of August, the cumulative sales volume of SAIC-GM was 256,000, a decrease of 58.92%. In contrast, in the first four months of 2023, even though it has dropped by more than 10%, SAIC-GM sold 266,000 vehicles.

As a direct result of the decline in sales, SAIC-GM began to lose money. In the first half of 2024, SAIC-GM realized a net profit attributable to its parent company of-2.275 billion yuan. This is the first time that SAIC has suffered a semi-annual loss since it announced the semi-annual profit of SAIC-GM.

SAIC-GM and SAIC-Volkswagen Automobile Co., Ltd. (hereinafter referred to as "SAIC-Volkswagen") are the "right arm" of SAIC’s vehicle profitability. In 2016, SAIC-GM achieved a record net profit of 16.948 billion yuan, and its sales in 2017 reached a record 2.006 million vehicles. After that, SAIC-GM began to go downhill, with both sales and net profit declining.

The sales volume of SAIC-GM is gradually declining. In 2023, the company managed to keep the sales performance of one million vehicles, with an average annual decrease of about 170,000 vehicles. The net profit attributable is a jump, and the lowest in 2023 is only 2.543 billion yuan. Sales volume is half of the original peak, and net profit is only 15% of the peak.

In terms of sales volume, joint ventures such as Volkswagen, Toyota, Honda and GM are undoubtedly the most important in the market. Major joint venture car companies are suffering from sales pressure, and SAIC-GM is the one with the most obvious decline. According to the current sales results, SAIC-GM’s annual sales volume is about 400,000 vehicles, and the utilization rate is about 20% compared with the production capacity of 1.908 million vehicles. How can SAIC-GM survive?

SAIC-GM is just a microcosm of SAIC’s performance. The performance of SAIC Volkswagen, another more important joint venture of the company, is also declining.

In the first eight months of 2024, SAIC-Volkswagen sold 678,000 vehicles, a year-on-year decrease of 4.81%. In 2019, the net profit of SAIC-Volkswagen’s homecoming exceeded 20 billion yuan. In 2021, it was still in the early 10 billion yuan. In 2023, it has fallen to 3.132 billion yuan, and the landslide can’t stop.

In 2018, the net profit attributable to SAIC exceeded 36 billion yuan, and in 2023 it has dropped to less than half of 14.106 billion yuan.

The joint venture plant is mainly fuel vehicles, and the current proportion of new energy vehicles has exceeded half. In July, the national retail penetration rate of new energy passenger cars exceeded 50% for the first time, and continued to expand to 53.9% in August. New energy vehicles have become the mainstream, and fuel vehicles have become a "minority".

SAIC has also performed in new energy vehicles. In the first eight months of 2024, the company sold 619,000 new energy vehicles, a year-on-year increase of 11.4%. In 2023, the company sold 1.123 million new energy vehicles, an increase of 4.61%.

Caizhong News found that in 2023, the national sales of new energy vehicles increased by 37.9%, and the retail sales of new energy passenger cars increased by 35.3% from January to August 2024. SAIC obviously underperformed the market.

In the layout of new energy vehicles, SAIC joined Alibaba and Shanghai State-owned Zhangjiang Hi-Tech to set up Zhiji Automobile, with an initial registered capital of 10 billion yuan. In April 2022, the first car was delivered, with 5,000 cars sold that year, and in 2023, Zhiji Automobile sold 38,253 cars.

As of August, the cumulative sales of Zhiji Automobile reached 31,229 vehicles in 2024, which was much doubled, and the sales volume was close to the annual level in 2023. But for SAIC, which has sold more than 2.3 million vehicles in the first eight months, such achievements are a drop in the bucket.

The decline in sales of joint venture vehicles can’t be stopped, and the growth rate of new energy vehicles is far behind the broader market. SAIC needs to come up with countermeasures to solve the current predicament.