Produced by Zhineng Automobile
At the beginning of 2024, China's auto market continues to be mired in a fierce price war, and GAC Group's financial performance in the first half of 2024 shows a clear downward trend.
● The operating income was 45.808 billion yuan, a decrease of 25.62% over the same period last year.
● The net profit was 1.516 billion yuan, a year-on-year decrease of 48.88%.
● Net profit after deducting non-recurring gains and losses was -338 million yuan, a year-on-year decrease of 112.51%.
This time it was a real challenge.
Part 1
Price wars and deterioration of the market environment
Major car companies have competed for market share through price reduction promotions, resulting in a decline in the overall gross profit margin of the industry. GAC Group was also affected by this trend, with a gross margin of 6.35% in the second quarter, down 0.8 percentage points from the previous quarter.
The price war has put a lot of pressure on GAC Group's profit margins, especially the profitability of joint venture brands has been seriously affected.
GAC Group's profitability in the first half of 2024 has declined significantly,
● The net profit attributable to the parent company in the second quarter was only 296 million yuan, a decrease of 75.7% from the previous quarter;
● Net profit attributable to the parent company after deducting non-recurring gains and losses was -1.025 billion yuan, turning from profit to loss from the previous month.
Key reasons for declining profitability include:
● GAC Group's investment income in the second quarter decreased significantly, with investment income from associates and joint ventures declining by 89.4% quarter-on-quarter.
● The significant decline in sales of GAC Honda and GAC Toyota further affected the company's overall investment income.
First half of 2024:
● GAC Group's total sales of automobiles were 863,000 units, down 25.79% from the same period last year.
● The sales volume of new energy vehicles was 164,100 units, a year-on-year decrease of 30.61%.
The specific brand performance is as follows:
◎ The sales of GAC Honda and GAC Toyota were 207,900 and 336,000 respectively, down 28.28% and 25.80% respectively.
◎ GAC Passenger Vehicle's sales in the first half of the year were 188,900 units, a year-on-year increase of 0.44%;
◎ GAC Aion's sales volume was 126,300 units, down 39.65% year-on-year.
Although GAC Aion's sales performance is not good, GAC Aion's original annual sales target of 700,000 units, but only 18.05% has been completed, which is due to the saturation of the online car-hailing market and the fierce price war, and the slow development of new markets is also a problem.
In order to promote the internationalization of its own brands and the transformation of new energy, GAC Group has increased investment in marketing and after-sales service, and the establishment of Aion's Changsha plant and its supporting enterprises has also increased management expenses and depreciation and amortization, and the new costs have compressed the company's profit margins to a certain extent.
Part 2
How to break the international layout and future prospects
GAC Group is accelerating its pace of internationalization, but it is still slower than other major automotive groups.
◎ The highest Chery overseas in August sold 98,000,
◎ followed by SAIC sold 80,000 yuan,
◎ Geely and the Great Wall sold 45,000 and 40,000 respectively,
◎ BYD also sold 31,000.
The GAC Group did not disclose it, and the overall data is not high.
GAC Group has launched models such as the Trumpchi M8 in more than 20 countries including Mexico, U.A.E. and Kuwait, the AION Y Plus has also entered the Hong Kong and Nepal markets, and new plants in Malaysia and Thailand have been put into operation, gradually providing strong support for future overseas market expansion from 2024.
The GAC Group's comprehensive layout of its own brand NEV models will be gradually reintroduced in a variety of types, such as plug-in hybrid (PHEV) and REV (extended range electric).
Continue to optimize the cost structure and reduce unnecessary expenses, especially in marketing and administrative expenses, to improve overall profitability.
Accelerate the internationalization strategy, explore more emerging markets, and enhance the global influence of the brand.
brief summary
In 2024, the benefits of joint ventures will generally plummet, so from this year onwards, many companies will have to consider what to do in the future, and GAC Group is also an important object for us to observe.