In 2024, BYD carved a path through the market with aggressive pricing strategies, not only pushing joint venture brands to the brink but also putting many independent brands in a tight spot.

In response, Great Wall Motors felt deeply dissatisfied but helpless. Although Chairman Zeng Qinghong of GAC Group stepped forward and bluntly opposed this disorderly competition, his voice was swiftly drowned out by the hustle and bustle of the market.

Unable to change the external environment, GAC Group has turned inwards, embarking on a journey of self-redemption.

"We cannot change the direction of the wind, but we can adjust the angle of the sail to adapt to the new voyage." Feng Xingya, General Manager of GAC Group, struck to the heart of the matter with these incisive words. He knows well that GAC cannot sit idly by; it must take action or risk being swept away by the tide of time.

Therefore, starting from the fourth quarter of 2024, GAC Group embarked on a path of "self-transformation".

GAC Group first announced reforms to its management model and organizational structure, swiftly relocating its headquarters to Panyu Automobile City to work closely with its brand production lines. At the Guangzhou Auto Show, GAC Group capitalized on the momentum, announcing the three-year "Panyu Action" initiative, pledging to recreate a "new GAC" through four major reform measures and five guarantees.

GAC Group aims to achieve sales of 2 million independent brand vehicles by 2027, accounting for over 60% of the Group's total sales.

"Profit Cows" Gradually Losing Weight

Once upon a time, GAC Group relied on its two major profit engines, GAC Toyota and GAC Honda, to rake in substantial profits, even when its own Trumpchi brand struggled.

However, the glory of the joint venture brands has faded, and the "profit cows" are gradually losing weight. While independent brands desperately need a boost, they unfortunately face a downward trend. GAC Group is in a "painful transition" period, shifting from the glory of joint ventures to the revitalization of independent brands, and reform is imperative.

GAC Group's production and sales report paints a grim picture.

In October, GAC Group sold 185,800 vehicles, a year-on-year decrease of 17.23%. Among them, the combined sales of the two independent brands, GAC Trumpchi and GAC Aion, totaled approximately 73,300 vehicles, accounting for only 39.45% of GAC Group's total sales. Although the two joint venture brands, GAC Toyota and GAC Honda, still accounted for over 60% of GAC Group's sales, their sales also declined sharply. GAC Toyota's cumulative sales dropped by 24.49% year-on-year, while GAC Honda fell by 29.06% year-on-year.

GAC Group's financial statements reveal an even more alarming situation.

In the third quarter, the Group's revenue was 28.5 billion yuan, a year-on-year decrease of 21%, with a net profit of -1.4 billion yuan. The non-GAAP net profit attributable to shareholders of the parent company was -1.5 billion yuan, resulting in a net sales profit margin of -0.67% and an inventory turnover period of 67 days.

This means that although GAC Group's main business is still operational, its profitability has severely deteriorated, leading to overall losses from car sales. For a well-established state-owned enterprise with a complete product line, this is undoubtedly a fatal blow.

Joint venture brands are lagging, and independent brands cannot support the Group's sales and profits. This underscores that GAC Group's current business model is no longer viable in the current market competition. GAC Group must generate its own momentum or face the stark choice between life and death.

Can Independent Brands Really Be Supported?

To save itself, GAC Group has also begun tightening its belt to support independent brands.

Currently, GAC Group is determined to push through reforms. It has not only relocated its headquarters from Guangzhou to Panyu to be closer to its brand production lines but also had its management team switch from suits to work clothes, demonstrating its strategic resolve.

Simultaneously, GAC has established three new departments: Product Headquarters, Finance Headquarters, and Procurement Headquarters, to fully propel the development of independent brands.

Feng Xingya further stated that starting from January 1, 2025, GAC Group will fully complete its reforms, merging or dividing various functional departments according to actual conditions to ensure that Aion operates relatively independently while maximizing organizational consolidation, streamlining processes, enhancing efficiency, and reducing costs.

At the Guangzhou Auto Show, GAC Trumpchi unveiled the Trumpchi S7, GAC Aion introduced the AION UT global strategic model, and the Hyperion brand launched the six-seat SUV Hyperion HL model. In the next three years, GAC's independent brands will intensively release 22 all-new models, covering all mainstream new energy power forms such as pure electric, extended-range, and plug-in hybrid. Notably, the main models of Aion and Hyperion, which focus on pure electric vehicles, will all be equipped with GAC's range extension technology.

However, when consumers mention Trumpchi, they are more likely to think of the label "China's MPV Expert"; when mentioning Aion, they are more likely to envision the ubiquitous ride-hailing cars on the streets; as for Hyperion, many consumers, like GAC, are confused about the brand's current positioning.

Although these three brands have their unique characteristics, they lack sufficient market competitiveness. Especially with SAIC, Changan, Geely, and other groups continuously launching new products, the presence of these three GAC Group brands in the market is weakening.

Meanwhile, GAC has once again partnered with Huawei. In addition to Trumpchi, Aion, and Hyperion, GAC Group will create a brand-new high-end smart new energy vehicle brand with a positioning similar to that of AITO. With this move, the prices of Hyperion and Aion will likely rise, and whether they can continue to be profitable will be a greater test of GAC's leadership.

One Step Behind, Always Behind

Faced with the rapid changes in the intelligent connected vehicle and new energy vehicle markets over the past year, GAC Group has been "slow to get on the train," as Feng Xingya acknowledged.

This slowness is also evident in sales figures. Last year, only 20% of the 3.1792 million vehicles sold by GAC Group were new energy vehicles.

In the first three quarters of this year, GAC Trumpchi's sales declined by 6.4% year-on-year; despite high expectations in the new energy field, GAC Aion's sales peaked in 2023 but have since declined by a staggering 35.4% year-on-year; the Hyperion brand has yet to make a significant impact on the market.

Although GAC Group has recognized its issues and implemented swift reforms, it still lags far behind leading independent brands such as BYD and Geely. As GAC Group stands at a critical juncture for survival, it must find new ways to generate its own momentum. The previous model of supplementing independent brands with joint ventures urgently needs to change.

While GAC Group is actively rescuing itself amidst market challenges, it still faces many uncertainties in the future. On one hand, market competition is intensifying, with major automakers actively launching new models and technologies to compete for market share. On the other hand, consumer demand is constantly evolving, and GAC Group needs to continually adapt to market demands and launch products that meet consumer needs.

Due to GAC Group's weakening position, the title of "First City of Automobiles in Guangzhou" has become a relic of the past, illustrating that the automobile market is dynamic and that past glories are fleeting. If automakers cannot adapt to fierce market competition, they are destined to become another transient figure in the long river of history, swallowed by the tide of time.