Text | Dong Wuying
In recent years, new energy is sweeping the automotive circle. In 2023, the annual sales of new energy vehicles in China will be close to 10 million, and the penetration rate will also increase to 31.6%. Under the general trend of new energy, traditional fuel vehicle companies have carried out new energy transformation and achieved certain results.
In the process of transformation, some car companies have experienced a painful period of transformation. GAC Group, which is actively transforming, has entered this stage. In the first quarter of this year, GAC Group's sales, revenue and net profit all declined significantly.
As a domestic automobile company that is in the first echelon of the industry in the era of fuel vehicles and new energy vehicles, how will GAC Group break the situation in the face of transformation pains?
Sales were sluggish, and revenue and net profit both declined in the first quarter
In the era of fuel vehicles, GAC Group is one of the most concerned car companies in the capital market. At that time, the GAC Group had already formed a good situation of walking on two legs: GAC Toyota and GAC Honda contributed huge profits to the group in the joint venture, and the sales of its own brand GAC Trumpchi continued to increase. In October 2017, the market value of GAC Group's A-share market once exceeded 200 billion, second only to SAIC, the industry leader.
With the advent of the new energy wave, GAC Group is actively carrying out transformation. However, from 2023 onwards, GAC Group has entered a painful period of transformation.
In the first quarter of this year, GAC Group's revenue scale and net profit both declined. According to the financial report, GAC Group's operating income in the first quarter was 21.346 billion yuan, a year-on-year decrease of 19.12%; net profit was 1.220 billion yuan, down 20.65% year-on-year. If calculated according to the net profit after deducting non-recurring gains and losses, its net profit in the first quarter even fell by 52.08%.
The decline in performance was directly attributable to the decline in sales of automobiles under the GAC Group's brands. According to the March production and sales report, in the first three months of this year, the cumulative sales of GAC Group's automobile brands were 409,700 units, a year-on-year decrease of 24.11%.
In fact, in 2023, GAC Group has already experienced a decline in profits.
In 2023, GAC Group will achieve cumulative sales of 2.505 million vehicles, a year-on-year increase of 2.92%. The revenue scale reached 128.757 billion yuan, a year-on-year increase of 17.48%. However, its net profit that year was 4.429 billion yuan, a year-on-year decrease of 45.08%, and the decline in non-net profit also reached 52.31%.
In the view of GAC Group, in 2023, the mainland economy will continue to recover steadily, the domestic auto market will be generally stable and achieve positive growth, and the production and sales of automobiles will hit a record high.
In this case, although GAC Group's sales still increased year-on-year, the business structure has changed dramatically: the profitable joint venture fuel vehicle business has cooled, and the sales of GAC Toyota and GAC Honda have declined; Sales of domestic brands hit a record high, but the pull on profits was insufficient.
The joint venture is cold, and the independent brand has not yet driven profits
In the era of traditional fuel vehicles, joint ventures occupy an important position. However, with the rise of domestic new energy vehicles, the market for joint venture fuel vehicles has gradually cooled.
In 2023, GAC Toyota's sales will be 950,000 units, a year-on-year decrease of 5.47%; The operating income was 152.869 billion yuan, a year-on-year decrease of 6.52%. Guangqi Honda's sales volume was 640,500 units, a year-on-year decrease of 13.66%, and its operating income was 93.528 billion yuan, a year-on-year decrease of 18.75%. Due to the pressure on the sales of joint venture vehicles, GAC Group's investment income in 2023 will be 8.660 billion yuan, a year-on-year decrease of 39.5%.
In the first quarter of this year, the sales of "GAC Liangtian" showed a further decline. GAC Toyota's cumulative sales in the first quarter were 156,100 units, a year-on-year decrease of 29.07%; Guangqi Honda's cumulative sales were 117,000 units, a year-on-year decrease of 21.74%.
However, the decline in sales and revenue caused by joint ventures was partially offset by the high-growth domestic brand business.
In 2023, the sales volume of GAC Passenger Vehicle (GAC Trumpchi is a brand) will reach 406,500 units, a year-on-year increase of 12.12%; Revenue reached 57.446 billion yuan, a year-on-year increase of 20.16%. GAC Aion's sales reached 480,000 units, a year-on-year increase of 77.02%; Revenue reached 53.234 billion yuan, a year-on-year increase of 37.54%. On the whole, GAC's own brand business will have a revenue scale of more than 110 billion yuan in 2023, which will become the biggest boost to the slight growth of GAC Group's revenue in 2023.
It is a pity that GAC Group's current fast-growing self-owned brand business has not yet become the main contributor to profits.
According to GAC's official statement, "GAC Trumpchi has continued to expand its profitability in the first half of 2023 since it achieved profitability in 2022, and its profit in the fourth quarter of 2023 increased to double digits, an increase of 1.6 percentage points year-on-year."
The exact amount of profit was not disclosed. However, thanks to the decline in lithium carbonate prices and the adjustment of product structure, the cost has been optimized, and with reference to the accounting method of new forces, GAC Aion's gross profit margin will turn positive in 2023, reaching 3.32%.
However, according to the estimation of Orient Securities, in 2023, the profit and loss of GAC Group's own brands, including GAC Passenger Vehicle and GAC Aion, will be -5.09 billion yuan, which is still in a state of loss, but the loss margin will shrink by 25.0% year-on-year.
At present, GAC's own brand business, especially GAC Aion, is still a long way from profitability.
With the intensification of competition in the new energy vehicle market, the sales of Aion's main models have also been affected this year. In the first quarter of this year, the total sales volume of the Aion brand was 48,900 units, a decrease of 37.60% from the same period in 2023. Under the fierce market competition, the wholesale sales of Aion's main model Aion S in the first quarter were nearly halved, which affected Aion's progress towards profitability to a certain extent.
As a result, the decline in sales of high-profit joint ventures and the lack of profitability in high-growth independent brand businesses have become the main reasons for GAC Group's transformation pains.
In the painful period of transformation, GAC's three major solutions
At present, GAC Group is going through the painful period of transformation through three major measures: going overseas, high-end and ecological layout.
For GAC Group, exports are an important step to gain new growth in performance. In terms of joint ventures, GAC Toyota exported more than 20,000 vehicles throughout the year, and Wuyang-Honda's annual export sales of electric bicycles increased by 205% year-on-year.
In terms of its own brands, in 2023, GAC's own brand will sell about 55,000 units in overseas markets, and has completed the market layout in 41 countries and regions, with 236 overseas sales and service outlets. At the same time, GAC Group is increasing overseas production capacity, GAC International's assembly plant in Malaysia is scheduled to achieve mass production of the first model within the year, and GAC Aion's assembly plant in Thailand is expected to achieve mass production in the third quarter of 2024.
In 2023, GAC Group's revenue in overseas regions will reach 5.521 billion yuan, a year-on-year increase of 76.45%. At the same time, the profit level of export business is higher, and the gross profit margin of GAC's overseas business will be as high as 13.75% in 2023, much higher than the gross profit margin of 4.88% in the Chinese mainland market.
In addition, high-end is also an important layout that GAC Group is promoting.
In the self-owned brand business, GAC Trumpchi and GAC Aion are both positioned in the mass market, with the main sales models between 100,000 and 200,000 yuan. In 2023, GAC Group will promote the independent operation of the Haobo brand, open the dual-brand matrix of "AION + Hyper", and enter the high-end new energy vehicle market. During the reporting period, the Haobo brand successively launched three new models: the pure electric supercar Haobo SSR, the first pure electric B-class sedan Haobo GT and the pure electric B-class SUV Haobo HT, with current starting prices of 1.286 million yuan, 219,900 yuan and 213,900 yuan respectively.
Xiao Yong, deputy general manager of GAC Aion, said in an interview that Haobo will go faster than Aion on the road of internationalization. At the same time, Haobo has been equipped with the "double 800V" technology to solve the problem of battery life and charging is in the leading position in the industry, and its intelligent driving level is at least in the first echelon of the industry.
At the same time, GAC Group is accelerating its ecological layout to improve the overall user experience.
This is especially true in the area of energy replenishment. In the 2023 annual report, GAC Group said that it will focus on the goal of building a "power + battery" smart energy ecology, build an integrated full-chain energy ecological layout from upstream mineral resources to downstream charging and swapping stations, continue to expand the energy replenishment network, and plan to add 5,000 fast charging terminals and 30 battery swap stations within the year.
On May 8, GAC Group and NIO announced that they had reached a strategic cooperation on battery charging and swapping, under which the two parties will carry out all-round and multi-level in-depth strategic cooperation in the fields of battery standards, R&D and customization of battery swap models, battery asset management and operation, and battery swap service network construction and operation involved in the battery swap industry, and promote the interconnection of their own charging platforms, which will also bring more development opportunities for GAC Group's new energy vehicles.
At present, GAC Group is experiencing short-term transformation pains and trying to break the situation through exports, high-end and a complete ecosystem. In the increasingly competitive automobile market, whether GAC Group can successfully break through is still to be verified by the market.