Facing unprecedented challenges in China's rapidly evolving auto market, GAC GROUP (02238, 601238) projects staggering first-half net losses between 1.82 billion and 2.60 billion yuan. This grim forecast marks the automaker's inaugural half-year deficit since going public, signaling profound transformation pains for an industry titan once dominant in the combustion-engine era.
Sales plummeted 12.48% year-over-year to 755,300 vehicles during H1, representing a 107,700-unit contraction. The downturn hit multiple divisions: GAC Honda sales cratered 25.63% (53,300 fewer units), GAC Trumpchi deliveries dropped 22.55% (42,600 units), while GAC Aion slipped 13.97% despite being the group's dedicated EV arm. Only GAC Toyota demonstrated resilience with a 2.58% uptick, contributing 45.63% of total group volume.
Chairman Feng Xingya's ambitious annual growth target of 15% now appears increasingly elusive. With merely 36.37% of production and 32.79% of sales goals achieved by mid-year, H2 pressures intensify dramatically. Management attributes losses primarily to disappointing new model launches and margin erosion amid brutal price competition.
Three underperforming vehicles epitomize GAC's strategic dilemma: - The Honda P7 sedan, priced aggressively at 199,900-249,900 yuan yet lacking standard autonomous features common in cheaper rivals, mustered just 745 units over three months. - Trumpchi Xiangwang S7 SUV managed only 7,268 sales in five months against formidable competitors like Li Auto's L-series and BYD's Tang. - Hyper HL premium EV struggled with 1,280 deliveries, hampered by cost-cutting suspension design despite its 269,800 yuan starting price.
Pricing missteps proved particularly damaging for GAC Aion's UT compact EV. Market anticipation evaporated when the advertised 69,800 yuan base model became effectively unavailable, pushing real entry prices to 83,800 yuan. Consequently, June sales reached just 5,346 units—dwarfed by Geely's 40,000-unit Xingyue and BYD's 30,000-unit Seagull.
Seeking redemption, GAC has pivoted toward Huawei collaborations. The recently launched Trumpchi Xiangwang M8 Kungan minivan, equipped with Huawei's Kungan autonomous system and HarmonyOS cockpit, commands a premium 359,900 yuan starting price—over 70,000 yuan above predecessor models. Though current sales data remains undisclosed, upcoming Huawei-partnered models include the Xiangwang S9 SUV with full-standard ADS4 autonomous tech and a new Huawang brand targeting premium segments by 2026.
This Huawei alliance represents GAC's calculated gamble to replicate Seres' profitability surge—where Huawei-powered AITO models propelled the automaker to 2.7-3.2 billion yuan H1 net profit. As GAC navigates evaporating margins and sluggish EV adoption (20.41% penetration rate), its capacity to leverage Huawei's tech cachet for premium positioning may determine whether China's automotive veteran can engineer a financial turnaround.