Does SAIC, once the first brother of domestic automobiles, still have a chance to revive its strength?

"If there is an old automobile company, as long as it is acquired, it can immediately obtain monetary funds of 136.6 billion yuan, and has an annual profit of nearly 10 billion yuan of automotive automated production plants, land, dealer system and brand. ”

The value of this kind of business is currently only worth 155.8 billion yuan! You heard it right, the market pricing given by the A-share market is so pessimistic. Many cited a series of reasons: SAIC's market share has been declining since 19 years, independent brands such as BYD and Cialis have seized the market for its joint venture brands, and SAIC is inefficient under the culture of state-owned enterprises......

Does SAIC still have a chance to break the game? This article will analyze it in detail.

SAIC's former glory is no more?

Warren Buffett once said, "In the business world, there is no eternal hegemon, only a challenger who keeps improving." ”

The same applies to SAIC. As one of the largest automobile groups in China, SAIC is undoubtedly the pride of the sky. It owns many well-known brands such as SAIC Volkswagen, SAIC-GM, SAIC Roewe, SAIC MG, SAIC-GM-Wuling, SAIC Maxus, etc., and occupies the dividends of the times of joint venture brands.

However, with the rapid increase in the penetration rate of new energy vehicles after 2018, SAIC's previous advantages have become the biggest obstacle to its transformation. SAIC Volkswagen's ID3 series word-of-mouth and sales fell short of expectations. There are two main reasons for this.

First, there is a clear mismatch between ID.3 and consumer demand. The EV was clearly designed and produced by Volkswagen using the experience of gasoline vehicles in the past, and its chassis and driving qualities were excellent. However, the immature performance of its in-vehicle system is in stark contrast to the consumption needs of electric vehicle users. Some riders even described the ID.3 as more like a semi-finished product, with its display often graying out, voice interaction functions in vain, and the performance of the car machine system is even worse than that of some fuel vehicles.

Secondly, the ID.3's overpricing and the choice of strong competitors were also key factors in its poor sales. As soon as it went public, its competitors were identified as strong players like Tesla, and the misplaced comparisons led to its overpricing. If Volkswagen can be more pragmatic, benchmark against domestic second-tier new forces such as Leap and Nezha, reduce car prices, and use Volkswagen's brand influence, its sales may not always hover between 1,000-2,000 units per month.

The failure of the ID.3 was a heavy blow to SAIC Volkswagen. Although Volkswagen launched the ID.4 and ID.6 series after the ID.3 failure, its performance is still not satisfactory compared to Chinese automakers such as Tesla, BYD and Wei Xiaoli. In addition to some praise for the chassis texture, the in-vehicle system and software issues that EV users value are still a pain point for Volkswagen. There have even been accidents such as car owners popping up advertisements in the car during driving.

Not only Volkswagen, but many of SAIC's brands have suffered Waterloo in recent years. SAIC Maxus and GM Buick's market share in commercial vehicles has been further eroded by BYD Denza, and its own brands Feifan Automobile and Zhiji Automobile have problems of competition and tepidity in the price band......

In short, SAIC's backwardness in new energy vehicles is not accidental, but the inevitable result of its market transformation and competitive pressure. However, as the saying goes, a skinny camel is bigger than a horse, and SAIC has strong strength and abundant resources, as long as it can face up to the problem and actively deal with it, I believe it still has a chance to revive its strength.

The key to breaking the game: correct attitude and break through expectations

The decline in SAIC's vehicle sales has only begun to slow down this year. This stems from the fact that the group's management has finally made up its mind to start the transformation and upgrading of new energy.

At this year's Shanghai Auto Show, SAIC Motor released the "Three-Year Action Plan for the Development of New Energy Vehicles": by 2025, SAIC's annual sales of new energy vehicles will reach 3.5 million, an increase of 2.5 times compared with 2022, with a compound annual growth rate of 50%, of which independent brands will account for 70% of the overall sales of new energy vehicles.

After the establishment of the three-year action plan for the development of new energy vehicles, the newly appointed vice president of the enterprise Jiang Jun and Wu Bing made a military order, although the outside world can not know the specific content of the "military order", but the realization of sales growth must be an important indicator of it, especially the collective force of its own brand, under the background of the rapid growth of SAIC passenger car sales, SAIC Motor Group is to place its hopes on the building in the future.

Under a series of reform measures, SAIC's sales this year have ushered in a certain improvement, and the performance of overseas markets can even be called a surprise.

According to the data, under the strong pull of the "new troika" of independent brands, new energy and overseas business, SAIC Motor sold 515,000 vehicles in November, a new high this year, achieving a year-on-year increase and continuing to maintain its leading position in the industry.

In the domestic auto market, new energy vehicles have become the growth engine of SAIC. According to the latest data, SAIC's new energy vehicle sales exceeded 150,000 units in November, a year-on-year increase of 16%, setting a new monthly sales record high, demonstrating a strong upward momentum.

Specifically, SAIC-GM-Wuling is still the champion of new energy vehicle sales within the group. In November, Wuling sold a total of 59,372 new energy vehicles, an increase of 66% month-on-month. Among them, Wuling Binguo and Wuling Hongguang MINI EV sold 34,573 and 23,518 units respectively, continuing to lead the market. In addition, more than 8,000 pre-orders for the new model Wuling Starlight have been placed, shouldering the important task of enhancing the brand image of Wuling.

SAIC Motor Passenger Vehicle also performed well in the field of new energy, selling 32,000 new energy vehicles in November, an increase of more than 10% year-on-year. The launch of the Roewe D7 family and the MG Cyberster in November has injected new impetus into the continuous growth of SAIC Motor's new energy segment.

SAIC Volkswagen also performed strongly in the new energy vehicle market. In November, Volkswagen delivered 15,600 new energy vehicles, a new record number of deliveries in a single month. Among them, the ID.3 was responsible for sales, and a total of 12,000 units were delivered, achieving positive month-on-month growth for the fourth consecutive month. Up to now, the cumulative sales of SAIC Volkswagen's ID. family have exceeded 200,000 units.

As a high-end brand of SAIC, Zhiji Automobile also achieved good sales performance in November. In the same month, Zhiji Auto sold a total of 8,703 units, of which 8,158 units were sold in Zhiji LS6, an increase of 125% month-on-month, becoming a popular item in the market. This achievement has a positive effect on enhancing the market awareness and brand image of the Zhiji brand.

SAIC Motor has shown strong potential in overseas markets. From January to November, SAIC's overseas market sales reached 1.067 million units, a year-on-year increase of 20.8%, which has exceeded that of last year, and its own brand sales accounted for more than 90%, continuing to lead Chinese auto companies. Among them, SAIC Motor sold 118,000 vehicles in overseas markets in November, a new high for the year, demonstrating its determination and strength to continue to expand overseas markets.

The MG brand has performed particularly well in overseas markets. As the "first global car of the Chinese", the MG4 EV has successfully landed in more than 80 countries around the world, and overseas sales continue to rise, achieving the feat of "breaking 10,000 per month". In the European market, the SAIC MG brand sold more than 220,000 units in the first 11 months of this year, doubling year-on-year. According to the statistics of the European Automobile Manufacturers Association (ACEA), SAIC has historically ranked among the top 10 car companies in the European auto market in terms of monthly sales, fully proving its competitiveness and brand influence in the international market.

SAIC, once a leader in China's automotive industry, occupies an important position in the market with its strong strength and extensive influence. However, in the past five years of transformation, the local state-owned enterprise has also experienced many twists and turns. Faced with the dual pressure of macroeconomic volatility and pessimistic sell-offs, SAIC's share price has fallen below its normal valuation, which undoubtedly casts a shadow over the company's future development.

SAIC's way to break the situation is to give up the arrogance of the past, correct its attitude of lagging behind the market, and actively transform new energy and explore overseas markets with the courage to break through. The combined effect of these measures can enable SAIC to redeem itself and regain its former glory under the pressure of market transformation and competition.

This article was originally published by Securities Star