"In the third quarter, multiple listed automakers saw declines in net profit, but Guangzhou Automobile Group saw the largest decline."

@ New technological knowledge Original

Guangzhou Automobile Group's sales have fallen for 9 consecutive months, with net profit attributable to shareholders falling 97.34% year-on-year!

On October 30, Guangzhou Automobile Group released its third-quarter report for 2024, showing that both revenue and net profit attributable to shareholders declined in the first three quarters. Specifically, the net loss in the third quarter was 1.396 billion yuan, a year-on-year decrease of 190.40%, marking the worst performance in the company's 14-year history since listing. It is worth mentioning that SAIC Motor, which also relies heavily on joint venture vehicles, is also facing a grim situation, with both revenue and net profit attributable to shareholders declining in the first three quarters.

Guangzhou Automobile Group attributed the profit decline to factors such as a year-on-year decline in automobile sales during the reporting period, increased business and political investments, decreased profits, one-time expenses for optimizing redundant capacity in joint ventures, increased exchange losses due to exchange rate fluctuations, and a comprehensive decrease in net profit. SAIC Motor attributed its decline mainly to the shrinking gasoline vehicle market, unprecedentedly fierce price wars, reduced sales revenue, decreased gross margins, and reduced cash inflows.

Both companies mentioned the key point of "declining automobile sales." For Guangzhou Automobile Group, sales have fallen year-on-year for 9 consecutive months. SAIC Motor's sales in the first nine months of this year fell 21.56% year-on-year. With the rapid development of new energy vehicles, the era of joint ventures has come to an end.

01.

Sharp Decline in Net Profit

Guangzhou Automobile Group's third-quarter report for 2024 shows that revenue in the third quarter was 28.233 billion yuan, a year-on-year decrease of 21.73%, with a net loss of 1.396 billion yuan, a year-on-year decrease of 190.40%. For the first three quarters, the company achieved revenue of 74.04 billion yuan, a year-on-year decrease of 24.18%, and net profit attributable to shareholders of 120 million yuan, a year-on-year decrease of 97.34%. Multiple listed automakers experienced declines in net profit in the third quarter, but Guangzhou Automobile Group saw the largest decline.

According to Guangzhou Automobile Group's September production and sales bulletin, the company sold a total of 1,335,050 vehicles from January to September this year, a year-on-year decrease of 25.59%. Among them, new energy vehicle sales totaled 282,444 vehicles, a year-on-year decrease of 28.30%.

Notably, over 60% of Guangzhou Automobile Group's vehicle sales still come from its two joint venture brands, GAC Toyota and GAC Honda.

Sales of all four automakers under Guangzhou Automobile Group have declined. In the first nine months of 2024, GAC Honda sold 309,200 vehicles, a year-on-year decrease of 29.06%; GAC Toyota sold 517,900 vehicles, a year-on-year decrease of 24.49%; GAC Trumpchi sold 277,000 vehicles, a year-on-year decrease of 6.41%; and GAC AION sold 226,700 vehicles, a year-on-year decrease of 35.4%.

Last year, Guangzhou Automobile Group sold a total of 2.505 million vehicles, surpassing the 2.5 million mark for the first time. At that time, the group was confident and set a target for 2024 of a 10% year-on-year increase in sales, which would exceed 2.7555 million vehicles. As of the end of September this year, Guangzhou Automobile Group had only completed about 48% of its annual sales target.

Unlike the sharp decline in sales for Guangzhou Automobile Group, China's automotive industry has performed well overall in the first three quarters of this year. According to statistics from the China Association of Automobile Manufacturers, China's automobile production and sales both exceeded 20 million vehicles from January to September this year.

In June this year, Zeng Qinghong, chairman of Guangzhou Automobile Group, addressed the competent authorities at a public forum, stating that when the market share of new energy vehicles reaches 50%, measures should be studied and promoted to ensure equal rights for gasoline and electric vehicles. By July, the retail penetration rate of domestic new energy vehicles had reached 51.1%, an increase of 15 percentage points from the same period last year.

According to Roland Berger's predictions, the size of China's passenger vehicle market will reach 27.1 million vehicles by 2030, with a penetration rate of 75%, and will climb to 30.9 million vehicles by 2035, with a penetration rate of 90%. It is possible that only one out of every ten consumers will choose a gasoline vehicle.

Given the current market conditions, there is not much time left for Guangzhou Automobile Group.

02.

Internal Reform

For a long time, Guangzhou Automobile Group's profits have relied heavily on joint venture automakers. A significant decline in investment income is an important reason for the drop in Guangzhou Automobile Group's profits. According to the third-quarter report, investment income from associated and joint venture enterprises fell from 7.07 billion yuan in the same period last year to 2.26 billion yuan.

A few days ago, Guangzhou Automobile Group announced that it would transform the management mode of its independent brands from strategic control to operational control, implement related organizational reforms, establish an efficient and flexible market-oriented mechanism and organizational system, further reduce operating costs, and improve management efficiency and operating levels.

In addition, after three failed auctions, the GAC Fiat Chrysler Automobiles Changsha plant was once again put up for auction, with a starting price of 90% of the previous failed auction price, or about 1.103 billion yuan. Compared to the starting price of 1.915 billion yuan at the first auction on July 20, 2024, this is almost a 50% reduction.

GAC Fiat Chrysler Automobiles was jointly established by Guangzhou Automobile Group and Stellantis Group in March 2010 with a total investment of approximately 17 billion yuan. Unfortunately, competition in China's automobile market has intensified. GAC Fiat Chrysler Automobiles declared bankruptcy in November 2022, and its fixed assets were auctioned online, with some assets being auctioned more than 10 times since October 2023.

Recently, Guangzhou Automobile Group plans to transfer all its equity in a new energy bus company jointly established with BYD. According to the transfer information, Guangzhou BYD New Energy Bus Co., Ltd. was established in 2014. At that time, BYD lagged behind Guangzhou Automobile Group in sales and performance, but now the situation has changed in various aspects for both companies.

It is worth mentioning that Guangzhou Automobile Group exported a total of 95,000 vehicles in the first three quarters, a year-on-year increase of 112.0%. Meanwhile, the group is accelerating its layout in key markets such as Southeast Asia. However, many domestic automakers are also exploring the Southeast Asian market, and Guangzhou Automobile Group still faces tremendous pressure in exports.