With the decline in performance and the "soul theory" blocked, can SAIC regain its strength?
SAIC has long been regarded as a leader in China's auto industry, and its former chairman, Chen Hong, put forward the much-talked-about concept of "soul theory" during his tenure. This concept aims to emphasize that SAIC must master its own core technology and avoid over-reliance on external suppliers, so as to maintain the "soul" of the company. At that time, Chen Hong's "soul theory" was widely praised inside and outside the industry, and was considered to be an important strategic policy for SAIC to achieve independent innovation and maintain competitive advantage.
Time flies, and in the blink of an eye to 2024, SAIC's performance makes people sigh. According to the data released by the China Association of Automobile Manufacturers, SAIC Motor will have negative sales growth for 8 months in 2023, and the annual sales volume will decline by 5.31% year-on-year, which is the fifth consecutive year of decline. Despite its huge revenues, SAIC's profitability is far less than that of emerging automakers BYD and Li Auto.
SAIC's main brands, Zhiji Automobile and Roewe Motor, are also facing severe market challenges. Zhiji Auto used to be highly sought after with the concept of "Internet car", but in recent years, its product power and innovation have been significantly insufficient, and problems such as overtime culture have caused controversy on the Internet, which has greatly damaged the brand image. Although Roewe Automobile is positioned in the middle and high-end, it is also facing problems such as aging products and lack of new models, and its market share has been stagnant.
Industry insiders believe that the main reason for the decline in SAIC's performance is that it is overly dependent on joint venture models and the development of its own brands is weak. At the end of 2023, SAIC was hit hard by the "collision with the unqualified Passat", which further dragged down its performance. The fierce competition in the field of new energy vehicles, as well as the lack of internal management efficiency and innovation ability of SAIC, are all important factors that lead to its difficulties.
SAIC is facing many internal and external challenges in the current situation.
From the perspective of the external environment, the competition in the entire automotive industry is becoming increasingly fierce, and the rise of emerging car-making forces has brought a huge impact to traditional car companies. The new forces, represented by BYD and Li Auto, have quickly occupied market share with innovative product concepts and marketing models. Their flexible corporate culture and efficient decision-making mechanism enable them to respond quickly to market demands and launch new models that meet consumer tastes.
Due to the constraints of the system and mindset, the pace of innovation of SAIC and other established car companies is obviously lagging behind. Coupled with the fierce competition in the field of new energy vehicles, SAIC's development in this field is also facing many obstacles. How to embrace the new concept of new energy while maintaining its traditional advantages will be a major issue that SAIC must face.
Internally, SAIC's challenges are just as daunting. For a long time, SAIC has relied too much on joint venture models, and the development of its own brands has been weak, and its innovation ability has been insufficient. Self-owned brand products such as Zhiji and Roewe are seriously aging, and the launch of new models is lagging behind, making it difficult to meet the ever-changing needs of consumers.
SAIC's internal management efficiency is low, decision-making efficiency is not high, and there is a certain bureaucratic color, which also affects the innovation vitality of the enterprise to a certain extent. In addition, in recent years, SAIC has been questioned by public opinion due to issues such as overtime culture, and its brand image has also been damaged, which will undoubtedly further drag down its future development.
In the face of many difficulties, SAIC urgently needs to take decisive and effective reform measures in order to regain its former glory.
SAIC needs to re-examine the concept of "soul theory" put forward by Chen Hong. The essence of this concept is to emphasize that enterprises must master the core technology and retain their own "soul". However, in the process of practice, SAIC seems to have gone in the wrong direction and rejected the intervention of external forces too much, resulting in the limitation of its own innovation capabilities. SAIC Motor needs to adhere to the "soul theory" to carry out benign interaction and integration with external excellent resources, learn from advanced concepts and technologies, so as to enhance its core competitiveness.
SAIC must increase its efforts in independent innovation, especially in the field of new energy vehicles. It is necessary to give full play to its advantages in the traditional automotive field, and at the same time vigorously cultivate emerging technology talents, establish an innovation incentive mechanism, and encourage employees to innovate boldly. Only by mastering the core technology can SAIC truly have its own "soul".
SAIC needs to adjust its strategic layout and focus on its development priorities. For independent brands such as Zhiji and Roewe, it is necessary to increase investment and launch new models that meet market demand; For some brands and product lines that are sluggish, they can be appropriately compressed or stripped to concentrate resources. SAIC also needs to accelerate the pace of development of new energy vehicles and seize this development opportunity.
SAIC Motor urgently needs to deepen reform and improve its corporate governance mechanism. It is necessary to establish an efficient decision-making system and give enterprises greater autonomy; Optimize internal management processes and improve operational efficiency; Improve corporate culture and create a good working environment for employees. Only through all-round and in-depth reforms can SAIC regain its vigor and vitality and remain invincible in the future competition.