Delving into Business Essence, Unveiling Enterprise Core

Author | Li Ping

'The year 2026 marks the inaugural year of the '15th Five-Year Plan' and serves as a pivotal juncture connecting the past and future of the three-year 'Panyu Initiative.' All cadres and employees must solidify their goals, implement precise strategies, and prioritize execution to fully drive the implementation and effectiveness of various tasks.'

On February 26, at GAC Group's 2026 High-Quality Development Conference, Feng Xingya, the Party Secretary and Chairman of GAC Group, outlined these requirements during his keynote speech. He explicitly stated that the group's automotive production and sales should rebound to the 2 million mark this year.

However, GAC Group (601238.SH, 02238.HK), which had just set its sales target, encountered a challenging start.

On the evening of March 2, GAC Group released a production and sales report indicating that February 2026 sales reached 86,500 vehicles, a year-on-year decrease of 12.43%. In the first two months of the year, the company's sales totaled 203,100 vehicles, a year-on-year increase of 3%.

Based on the 2 million production and sales target, GAC Group's sales growth rate for 2026 needs to reach 16.2%, significantly higher than the current sales growth of the group.

GAC Honda, a subsidiary of GAC Group, has become a significant drag on sales, with continuously declining sales in recent years and a drop of over 69% in the first two months of 2026, hitting a low point.

01

Challenging Start

GAC Group, which had just set a sales target of 2 million vehicles, faced a significant setback.

On the evening of March 2, GAC Group released a production and sales report showing that February 2026 sales reached 86,500 vehicles, a year-on-year decrease of 12.43%. In the first two months, the company's sales reached 203,100 vehicles, a year-on-year increase of 3%.

On February 26, GAC Group held its 2026 High-Quality Development Conference. Reports indicate that at the meeting, Feng Xingya, the Party Secretary and Chairman of GAC Group, explicitly stated that the group's automotive production and sales should return to the 2 million level this year, achieve positive growth in local production value, and continuously enhance operating efficiency.

Feng Xingya emphasized that this year marks the first year of the '15th Five-Year Plan' and a crucial year bridging the past and future of the three-year 'Panyu Initiative.' GAC Group must deeply advance the three major tasks of 'stabilizing joint ventures, strengthening independent brands, and expanding ecosystems.' The first model of Qijing Automobile will be launched in June, requiring meticulous product refinement and comprehensive brand building to ensure a successful debut. The entire group must expand its overseas market, focus on key regions, accelerate localized production, and achieve a scale leap of 200,000 overseas sales this year.

Feng Xingya pointed out that GAC has three favorable conditions for breaking through the impasse: first, a solid foundation, with years of in-depth cultivation, the group possesses a complete industrial chain layout, profound manufacturing heritage, and a diverse service ecosystem, with significant advantages in technology, production, and channels; second, a positive trend, with the group achieving a 'strong start' in sales in January this year, setting a positive tone for the year's development and further uniting the confidence and strength of all employees; third, supportive policies, with the state continuously optimizing the automotive industry's development environment and introducing measures to expand consumption, and party and government committees at all levels in provinces and cities attaching great importance to GAC's development and providing strong support.

In 2025, GAC Group's sales reached 1.7215 million vehicles, a year-on-year decrease of 14.06%, completing only about 75% of the 2.3 million target. Based on the 2 million production and sales target, the group's sales growth rate for 2026 needs to reach 16.2%.

Clearly, GAC Group has had a challenging start in 2026, and achieving the 2 million target will not be easy.

02

Severe Losses

In fact, for the former GAC Group, 2 million was just the 'passing grade.'

From 2017 to 2023, GAC Group's sales were 2.001 million, 2.1479 million, 2.0622 million, 2.0438 million, 2.1444 million, 2.4338 million, and 2.505 million vehicles, with year-on-year changes of 21.27%, 7.34%, -3.99%, -0.89%, 4.92%, 13.5%, and 2.92%, respectively.

In 2024, GAC Group's sales were 2.0031 million vehicles, a year-on-year decrease of 20.04%, but still exceeding 2 million vehicles for eight consecutive years.

As early as November 2024, GAC Group initiated the transformative 'Panyu Initiative,' which mainly includes creating an operational headquarters, implementing integrated operations for independent brands, introducing IPD to reengineer the product development process system, and advancing cadre and personnel reforms. GAC Group implemented operational control over its independent brands, with new departments responsible for the key account business of GAC Group's independent brands Trumpchi, Aion, and Hyper, and coordinating the marketing, vehicle sales, channel construction, after-sales service, and new media marketing of Trumpchi, Aion, and Hyper brands. The headquarters was relocated to Panyu Automotive City, where GAC Trumpchi, GAC Aion, and GAC R&D are located, focusing on the front lines.

However, amid a significant sales decline in 2025, GAC Group incurred its first loss since going public.

According to the latest annual performance forecast, for 2025, GAC Group expects to report a net profit attributable to shareholders of -8 billion to -9 billion yuan, turning from profit to loss year-on-year; non-recurring profit and loss net profit was -8.9 billion to -9.9 billion yuan, compared to a loss of 4.351 billion yuan in the previous year.

In response, GAC Group stated that during the reporting period, the automotive industry faced intense competition and rapid reconstruction of the industrial ecosystem. Although the company's automobile sales improved month-on-month from the second quarter, the annual sales did not meet expectations. To cope with rapid market changes, the company quickly adjusted and increased sales investment; affected by sales and adjustments in the product structure of independent brand new energy vehicles, the asset impairment provision for intangible assets and inventory is expected to increase compared to the previous year; simultaneously, some joint ventures accelerated their new energy transformation and optimized their production lines, leading to a further reduction in the company's investment income due to asset impairments at joint ventures. Combining these factors, the company's profit declined year-on-year.

03

GAC Honda Faces Chip Shortage

Currently, the biggest drag on GAC Group's sales is GAC Honda.

Founded on July 1, 1998, GAC Honda is a joint venture co-invested and operated by GAC Group, Honda Motor Co., Ltd., and Honda Motor (China) Investment Co., Ltd., with a share ratio of 50:40:10. GAC Honda Automobile Research & Development Co., Ltd. and GAC Honda Automobile Sales Co., Ltd. are wholly-owned subsidiaries of GAC Honda.

From 2014 to 2017, GAC Honda's sales were 480,100, 580,100, 638,800, and 705,000 vehicles, with year-on-year increases of 10.24%, 20.83%, 10.12%, and 10.37%, respectively, all exceeding 10% growth and showing consistent progress with 100,000-level increases.

From 2018 to 2020, GAC Honda's sales were 741,400, 785,000, and 805,800 vehicles, with growth rates dropping to single digits but gradually reaching peak sales.

In 2021, GAC Honda's sales experienced the first year-on-year negative growth since 2013.

In 2021 and 2022, GAC Honda's sales were 780,300 and 741,800 vehicles, with year-on-year increases of -3.17% and -4.93%, respectively, declining for two consecutive years.

In 2023 and 2024, GAC Honda's sales decline trend became more pronounced, with the company selling 640,500 and 470,600 vehicles, respectively, down 13.66% and 26.52% year-on-year. In 2024, the company's sales fell to the level of 2014.

In 2025, GAC Honda's sales reached 351,900 vehicles, a year-on-year decrease of 25.22%.

Entering 2026, GAC Honda seems to have 'given up,' selling only 4,558 vehicles in January, a significant year-on-year decrease of 69.86%; sales reached 9,220 vehicles in February, down 69.24% year-on-year.

Overall, GAC Honda sold only 13,800 vehicles in the first two months, a year-on-year decrease of 69.24%.

Previously, there was news that GAC Honda suspended production for two days at the end of December 2025 due to chip shortages. Honda also lowered its automobile sales target for the 2026 fiscal year due to lower-than-expected production. At present, GAC Honda's development has hit a low point: the star model Fit recorded zero sales in November, and the only pure electric model P7 in 2025 is also being cleared from inventory at reduced prices.

There is also news that GAC Honda originally planned to suspend production for five days from December 29, 2025, to January 2, 2026, but the resumption of work was postponed due to factors such as semiconductor shortages, with production including fuel vehicle models continuing to be suspended until the 16th.

Industry insiders pointed out that the chip shortage is just the trigger, and GAC Honda's real issues are demand collapse and lagging electrification. In the future, the company must leverage China's supply chain to reduce costs and then use Honda's brand value to regain premiums, which has also become the last window of opportunity for joint venture brands.

END

Layout | Wu Yue

Editor-in-Chief | Lao Chao

Images sourced from the internet