Source of this article: Times Finance Author: Wu Kai
Recently, six major A-share listed car companies have successively announced their performance reports for the first quarter of 2024. On the whole, the performance and sales of private car companies have increased significantly, while the performance of SAIC Group and GAC Group is less than expected.
In the first quarter of 2024, the domestic auto market is particularly complex. This year's Spring Festival coincided with the mid-season of February, and the homecoming season catalyzed the demand for car purchases by some consumers, pushing the retail sales of the domestic passenger car market to reach 2.035 million units in January, a year-on-year increase of 57.4%, achieving the expected good start. However, with the arrival of the Spring Festival, the auto market entered the off-season in February. Later, in March, the recovery of the consumer market and the wait-and-see sentiment triggered by a new round of price cuts affected market sales from different angles.
Photo by Times Finance.
Overall, the cumulative sales of domestic passenger cars from January to March this year were 4.832 million, a year-on-year increase of 13.2%. Domestic brand automakers such as Changan Automobile, BYD, Great Wall Motor, Chery Automobile and Geely Automobile contributed most of the increase. Among them, the sales growth of A-share listed car companies such as BYD, Great Wall Motor, and Cialis is particularly significant.
The growth in sales of A-share listed car companies such as BYD also continued to be positive for their performance. Based on the performance data of six A-share listed car companies in the first quarter, BYD and Great Wall Motor, two private listed companies, achieved substantial growth in revenue and profits, and Cialis even turned losses into profits. Private car companies have shown stronger vitality.
Private car companies are forging ahead
Among the six A-share listed car companies, three private car companies performed well in the first quarter.
In the first three months of this year, BYD, Great Wall Motor, and Cialis all saw significant growth in car sales, reaching 626,000, 275,000, and 114,000 respectively, a year-on-year increase of 13.44%, 25.11%, and 172.16%.
Data source: enterprise announcement, Times Finance Mapping.
The sales of cars in Sailis have increased considerably, mainly due to the hot sales of the AITO Wenjie brand. In September and December last year, Huawei successively released two new cars, the M7 and M9, and provided them with support for intelligent driving, chassis and other software and hardware, as well as sales channels. After its launch, the M7 was sought after by lowering its pricing, while the M9 gained market attention with its luxury positioning and gained a place in the competition with models such as the Ideal L9.
However, at present, the car sales of Cialis are too dependent on the AITO brand, which sold 85,842 cars in the first three months of this year, contributing 75.2% of Cialis car sales. On the contrary, its own brands such as Landian, Ruichi, and Fengguang under Cialis have not received corresponding support from Huawei, and their total sales volume is inferior to AITO.
More and more cars are being sold, and the performance of the three car companies is also more impressive.
Data source: enterprise announcement, Times Finance Mapping.
In the first quarter of this year, BYD's revenue reached 124.94 billion yuan, ranking second among domestic car companies, and its net profit reached 4.57 billion yuan, ranking first among the six A-share listed car companies. At the same time, BYD's revenue and net profit in the first quarter both rose four times year-on-year.
As BYD's auto sales growth has stabilized, its revenue and net profit growth are also shrinking. Compared with the same period in 2023, BYD's revenue and net profit increased by 3.97% and 10.62% respectively. If BYD's auto sales growth slows down, its revenue and net profit growth may continue to shrink.
In contrast, the sales base of Great Wall Motors and Cialis Automobiles is smaller, and the performance growth rate brought by the sales increase is more impressive. The former's revenue and net profit in the first quarter of this year were 42.86 billion yuan and 3.23 billion yuan respectively, a year-on-year increase of 47.6% and 1752.6%; The latter's revenue and net profit in the same period were 26.56 billion yuan and 220 million yuan respectively, with a year-on-year increase of 421.8%, and the net profit turned losses into profits.
Great Wall Motor said that the growth in revenue and profit in the first quarter was mainly due to the increase in vehicle sales and the increase in single vehicle revenue in the reporting period. Since 2023, Great Wall Motor has been committed to increasing its revenue per vehicle and optimizing its sales structure. However, the percentage increase of 1,752.6% was mainly based on a low base in the same period last year.
In the first quarter of 2021 and the first quarter of 2022, Great Wall Motor's net profit has exceeded 1.6 billion yuan. However, in the first quarter of 2023, its net profit plummeted by 89.34% to 170 million yuan, which shows that the recovery growth in 2024 is particularly prominent.
The growth of joint venture brands is sluggish
Compared with the performance of private car companies, many A-share state-owned car companies grew sluggishly in the first quarter.
SAIC has long been the largest car company group in China in terms of car sales, with many joint ventures and independent brands. However, the sluggish growth of joint venture brands and sluggish sales of independent brands have gradually become the development status quo of SAIC Group.
In the first quarter of this year, SAIC sold a total of 834,000 vehicles, overpowering the fierce BYD and ranking first in the industry. However, compared with BYD's growing car sales, SAIC's car sales have declined since 2023, and they also fell by 6.4% year-on-year in the first quarter of this year, compared to 891,000 units in the same period last year.
SAIC Motor has the highest car sales within the SAIC Group, including SAIC Volkswagen, SAIC-GM, SAIC-GM-Wuling, and SAIC Passenger Vehicle, all of which are joint venture brands. In the first quarter of this year, the group's overall automobile sales declined, mainly due to the year-on-year decline of 40.04% and 17.27% respectively in the sales of SAIC-GM and SAIC-Motor's passenger vehicles; At the same time, independent brands such as SAIC Zhiji are still in the growth stage, and the sales scale lags behind the above-mentioned brands.
GAC Group's market performance in the first quarter needs to be improved.
In the first quarter, GAC Group's automobile sales were 410,000 units, a year-on-year decrease of 24.11%, making it the most significant sales decline among the six car companies. In the first quarter, the sales of GAC Honda, GAC Toyota, and GAC Aion fell by 21.74%, 29.07%, and 37.60% respectively, and GAC passenger car sales increased slightly by 2.25%.
Data source: enterprise announcement, Times Finance Mapping.
The poor market performance was transmitted to the operating level, and the performance of SAIC Group and GAC Group in the first quarter was relatively inferior - SAIC Group's revenue was 143.07 billion yuan, a slight decrease of 1.95% year-on-year; net profit was 2.71 billion yuan, down 2.48%. GAC Group's revenue in the first quarter was 21.35 billion yuan, down 19.12% year-on-year; net profit was 1.22 billion yuan, down 20.65% year-on-year.
The poor performance of the two state-owned automakers in the first quarter may be related to the sluggish growth of joint venture brands. According to data from the China Automobile Dealers Association, the cumulative share of domestic self-owned brand car sales in the first quarter of this year was 55%, a significant increase of 5.4 percentage points compared with the same period last year. On the contrary, the sales of German, Japanese and American joint venture brands continue to shrink. This is a challenge for state-owned auto groups, which mainly sell joint venture brands.
Changan Automobile, another A-share listed state-owned enterprise, had a more mixed performance in the first quarter, with its car sales increasing by 13.87% year-on-year to 692,000 units, and revenue also increasing by 7.14% year-on-year to 37.02 billion yuan, but net profit fell by 83.4% year-on-year to 1.16 billion yuan. In the same period last year, Changan Automobile's net profit was as high as 6.97 billion yuan.
On the whole, Changan Automobile is a fast-growing automobile group directly under the central government or state-owned car companies, and its own brand performance is very outstanding. In the first quarter, Changan Automobile's own-brand vehicle sales reached 589,000 units, accounting for more than 85% of the group's vehicle sales.
In 2023, Changan Automobile's revenue will exceed 100 billion yuan and its profit will also exceed 10 billion yuan, and both will achieve substantial growth. Under this growth trend, the sharp decline in net profit in the first quarter of this year may have other factors: Changan Automobile said that the company's investment income in the first quarter of this year fell by more than 9% year-on-year, mainly due to the impact of the acquisition of Shenlan Automobile Technology Co., Ltd. in the same period last year.
Where to thrive?
The first quarter has passed, and the next market competition will be more intense.
If in 2023, car companies can effectively seize the market with prices lower than the average price. However, under the current trend of general price reduction in the industry, low-price competition is no longer a good strategy for most car companies. This is without taking into account the pressure on the management of enterprises caused by low-price competition.
Therefore, with the rapid development of electrification and intelligent technology, many car companies have put R&D at the core and have begun to significantly increase R&D investment, in order to launch more technologically advanced models.
In the first quarter of this year, most A-share listed car companies have increased their R&D investment significantly. For example, SAIC Group's R&D expenditure in the first quarter was 3.95 billion yuan, Great Wall Motor's R&D expenditure in the same period was 1.96 billion yuan, and Changan Automobile's R&D expenditure in the same period was 1.54 billion yuan. In addition, the R&D expenditure of Cialis in the same period also increased significantly from 350 million yuan in the same period last year to 950 million yuan in the first quarter of this year, an increase of nearly 3 times.
BYD was the A-share listed car company with the highest R&D investment in the first quarter, with R&D investment of 10.61 billion yuan, more than the sum of the other five car companies. The only company that saw a decrease in R&D spending was GAC Group. Its R&D expenses in the first quarter were 380 million yuan, down from 400 million yuan in the same period last year.
Another development direction of domestic car companies is the overseas market, which still has significant room for growth and has become a major area for independent brands to seek development.
In recent years, SAIC, Great Wall Motor, BYD and other car companies have accelerated the layout of overseas markets and began to enter Europe, Southeast Asia, Latin America, Japan and other regional markets on a large scale. Especially in the European and Japanese markets, domestic automobiles have launched an offensive against mainstream car companies such as German, French and Japanese.
While selling products overseas, Great Wall Motors and BYD have also begun to make localization attempts to build factories. According to public information, up to now, SAIC, BYD, and Changan Automobile have announced the construction of vehicle production plants in Thailand; Great Wall Motor and BYD have built factories in Brazil.
The successive rush to overseas markets has created broad development opportunities for the mainland auto industry and car companies. According to data from the General Administration of Customs, after the export volume of mainland automobiles increased by 57.4% year-on-year to 5.221 million units in 2023, the export volume of mainland automobiles increased sharply again in the first quarter of this year, reaching 1.32 million units, and the value of exported automobiles in the quarter increased to 178.9 billion yuan.
Among them, in the first quarter of this year, the overseas sales of SAIC, Changan Automobile (its own brand), BYD, and Great Wall Motor reached 227,000, 109,000, 98,000, and 93,000 respectively.
Although there are still many challenges for mainland independent brands to go overseas, such as the extremely high tariffs imposed by the United States on Chinese electric vehicles recently. However, the development of the new energy vehicle industry is becoming an important opportunity for domestic cars to go overseas, and on the contrary, going overseas is also a great opportunity for the development of Chinese auto brands. This deserves the attention of domestic car companies.