With a net loss of nearly 2.6 billion yuan in half a year, can GAC Group stage a comeback?
Currently, the transformation of the automotive industry has entered the deep - water zone, and GAC Group has fully entered a 'wartime state'." A month ago, Feng Xingya, the chairman of GAC Group, made this statement at a forum, which was more like a declaration of a last - ditch battle.
A month later, GAC Group released its semi - annual report. After recording its first annual loss in 2024, this semi - annual report set a record of the first semi - annual loss in 20 years. In the first half of 2025, GAC Group achieved an operating income of 42.166 billion yuan, a year - on - year decrease of 7.95%. The net profit attributable to shareholders of the listed company was a loss of 2.538 billion yuan, compared with a net profit of 1.516 billion yuan in the same period of the previous year, turning from profit to loss. The non - recurring net loss was 2.945 billion yuan, compared with 338 million yuan in the previous year.
In fact, signs of 'blood loss' in GAC's profit side were already visible in 2023. Although its net profit for the whole year of 2024 was 824 million yuan, the actual non - recurring loss after deduction was as high as 4.35 billion yuan. In the first half of 2025, the company directly turned from profit to loss, with continuous decline in sales volume and operating income. The difficulty of 'an elephant turning around' was fully demonstrated in a series of weak data.
Can entering the 'wartime state', launching the three - year 'Panyu Action', transforming from strategic control to operational control, and reconnecting with Huawei lead this automaker, which is deeply trapped in the dilemma of 'the contraction of traditional fuel vehicles and the inability of new energy vehicles to support the overall situation', out of the performance quagmire and achieve self - breakthrough?
Joint - venture slowdown and self - owned brand obstacles
Affected by the intelligent upgrade and price war of domestic new energy vehicles, the market share of joint - venture non - luxury passenger cars has been continuously declining. Joint - venture brands, once regarded as 'cash cows' and contributing most of the profits to large automotive groups, are no longer in the limelight, and their profit contribution in the Chinese automotive market undergoing structural transformation has decreased. Currently, this pressure is very obvious on GAC Group.
Regarding its performance in the first half of the year, GAC Group admitted in its financial report that "affected by the superposition of multiple factors, the overall business performance in the first half of the year did not meet the expected target", and listed four reasons:
Firstly, the sales of several key new energy models launched by the company during the reporting period are still in the climbing stage, and have not reached the planned target. Many major models have seen a decline in revenue due to the price war.
Secondly, there is a structural mismatch between the existing sales system and the needs of new energy transformation. The sales channels are mainly dominated by the original 4S stores, and the construction of new channels such as direct sales, agency, and Internet lags behind the industry, and the efficiency improvement of the marketing system is slow.
Thirdly, it still takes time for the implementation of the integrated operation reform of self - owned brands to show results. During the reporting period, the company is still continuously promoting the improvement of new product development efficiency and cost control in various fields.
Fourthly, the company's overseas sales foundation is weak. There is still room for improvement in channel construction, product management, and operational coordination.
Fundamentally, the decline in sales volume is the main reason for the slowdown of GAC Group's profit. The production and sales report shows that GAC's cumulative sales volume in the first half of the year was 755,300 vehicles, a year - on - year decrease of 12.48%, only completing 32.84% of its annual sales target (a year - on - year increase of 15%, that is, 2.3 million vehicles). Except for GAC Toyota, which achieved a slight increase of 2.58%, GAC Honda, GAC Trumpchi, and GAC Aion decreased by 25.63%, 22.55%, and 13.97% year - on - year respectively.
The only growing brand under GAC Group, GAC Toyota, owes its growth to car - purchase discounts. This year, GAC Toyota launched car - purchase benefits such as 'fixed price' and 'lifelong warranty'. The official prices of two SUV models, the Venza and the Frontlander, were reduced across the board, with the former having a reduction of up to 44,000 yuan and the latter up to 39,000 yuan, which stimulated sales growth. However, GAC Honda, which also launched a fixed - price promotion, had a disappointing sales performance and was the brand with the most obvious sales decline under GAC, far exceeding the industry average.
In fact, since 2024, the sales and revenues of GAC Honda and GAC Toyota, the profit pillars that once contributed more than 70% of GAC Group's profits and mainly relied on fuel vehicles, have been continuously shrinking. The decline in sales volume led to a year - on - year decrease of 27.03% and 28.34% in the revenues of the two joint - venture companies respectively. In 2024, the investment income of GAC Group's associated and joint - venture enterprises plummeted from 8.349 billion yuan to 2.998 billion yuan, a decrease of 64.09%.
While the joint - venture business is slowing down, the growth of GAC Group's self - owned brands has encountered a bottleneck. Aion, once a dark horse with high hopes, has seen a decline after an initial high. Since the second half of 2024, although it has successively launched several 'low - price' models, its sales volume has not returned to growth. In 2025, Aion's decline has further intensified, with its monthly sales dropping to about 25,000 vehicles, and the year - on - year decline exceeding 20% for many months, far from its monthly sales level of 50,000 vehicles in 2023. In July, Aion's sales volume was 26,600 vehicles, a year - on - year decrease of 24.6%, and it has not yet emerged from the trough.
On the one hand, much experience in the automotive industry has proven that over - reliance on the B - end market makes it difficult to achieve long - term development, and a fixed brand label is not conducive to brand image and market expansion. On the other hand, with the increasingly fierce competition in the new energy vehicle market, self - owned brands such as BYD, Chery, and Geely have frequently launched more competitive new models, seizing a large share of the market. Compared with competitors in the same price range, Aion has no obvious advantages in core areas such as batteries and intelligent driving, making it difficult to attract consumers' interest.
Meanwhile, Aion's efforts to break into the high - end market have not been rewarded. The high - end brand 'Hyper' only sold 15,600 vehicles in 2024. Although it has achieved independent operation, it has failed to open up the high - end market and has been involved in many public opinion storms.
Another self - owned brand, GAC Trumpchi, has been a bit slow in the new energy transformation wave. Among the more than 10 models currently on sale, fuel vehicles account for the majority. The sales growth of new energy models mainly relies on MPVs with a relatively small market share, and it has weak growth in the more demanding SUV and sedan markets.
Betting on extended - range technology and reconnecting with Huawei
Does GAC still have a chance?
Reform has become the only way for GAC Group to save itself. At last year's Guangzhou Auto Show, GAC launched the three - year 'Panyu Action' and officially implemented operational control over its self - owned brands. The goal is to make the sales volume of self - owned brands account for more than 60% of the group's total sales volume by 2027, and to challenge the sales volume of self - owned brands to exceed 2 million vehicles.
At that time, the management said that reform, adjustment, and transformation were the only way for GAC. In order to 'let those who hear the gunfire make decisions', GAC moved its headquarters to Panyu, Guangzhou, established product, procurement, finance, and brand marketing headquarters, and introduced the IPD process to promote digital transformation.
"GAC is 'a son before a father', that is, the subsidiaries were established first, and then the parent company. So its development is different from other enterprises." At the Shanghai Auto Show, Feng Xingya mentioned that the reform was 'painful' and 'difficult'. Some reform effects are immediate, while some need to be consolidated for some time before the results can be seen. "So far, GAC's reform has mainly done four things - building an operational headquarters, implementing integrated operation of self - owned brands, introducing IPD (Integrated Product Development) to reconstruct the product development process system, and promoting cadre and personnel reform."
However, the consecutive dismal financial report figures in the first and second quarters seem to have poured cold water on the reform. Meanwhile, there have been widespread rumors about Aion, such as the explosion of employee stock ownership, the suspected obstruction of the IPO plan, the shrinkage of the valuation of employees' subscribed equity, and the recovery of equity investment funds and interest by Aion's senior executives after retirement. Although the official has stepped in to refute the rumors, behind the storm, it is difficult to hide the capital market's uneasiness about the group's reform and the trust and governance problems that GAC must face during the transformation process.
In addition, GAC, once self - proclaimed as a pioneer in new energy transformation, 'got up early but missed the bus'. On the one hand, the senior management admitted that there was a mistake in strategic judgment - "At that time, we did not accurately grasp customers' mileage anxiety and thought that extended - range and plug - in technologies were transitional routes, missing the opportunity of the rapid development of extended - range and plug - in hybrid technologies in recent years."
During the same period, BYD, Leapmotor, Li Auto, Wenjie, etc. occupied half of the new energy vehicle market with hybrid technologies. It was not until this year that GAC urgently adjusted its strategy, announcing the continuous introduction of multiple extended - range and plug - in models. Recently, it launched the 'Xingyuan Extended - Range' technology and launched the first model, the Hyper HL Extended - Range Edition, equipped with this technology.
However, the extended - range technology has already been quickly replicated by many automakers and has occupied consumers' minds. The pessimistic third - quarter guidance recently given by Li Auto confirms that the growth of the extended - range market is approaching its peak, and it is imaginable how difficult it will be for GAC's first extended - range product.
In addition to accelerating internal transformation, GAC is also seeking external empowerment and grasping the 'lifesaver' Huawei, trying to fight a last - ditch battle with Huawei's popularity and intelligent technology. The two sides have joined hands to establish Huawei - Aion Automobile, which will create innovative products targeting the high - end market of 300,000 yuan. The first model is expected to be launched in 2026. Recently, Aion increased its capital contribution to Huawei - Aion Automobile by 600 million yuan. After the capital increase, GAC Group directly holds 71.43% of the equity of Huawei - Aion Automobile.
In fact, GAC has a long - standing relationship with Huawei. In 2021, GAC joined Huawei's 'HI Mode', jointly defining and developing, and planned to create a mid - to - large - sized intelligent pure - electric SUV. However, it later vetoed the cooperation with Huawei. The cooperation project was changed from joint development with Huawei to independent development, and Huawei will continue to participate in the development and cooperation of the company's self - owned brand models as an important supplier.
This decision made GAC miss the opportunity to launch high - end intelligent models in cooperation with Huawei first. During this period, Wenjie, jointly developed by Huawei and SERES, and Avatr, jointly developed by Huawei and Changan, became well - known. Huawei's intelligent driving and intelligent cockpit have also become important considerations for consumers when buying cars. Recently, the first model of the Shangjie brand, jointly developed by Huawei and SAIC, the Shangjie H5, received more than 50,000 small orders within 18 hours of its pre - sale.
"At that time, because Aion had excellent sales, GAC rejected Huawei. Now, due to Aion's slowdown, GAC is reconnecting with Huawei. After parting ways with Huawei, although Aion had outstanding results in 2023, its sales growth has since entered a bottleneck period. Reconnecting with Huawei is one of Aion's choices. This can not only strengthen its product strength in areas such as intelligent driving and the Internet of Vehicles but also leverage Huawei's influence in brand and marketing." Some industry insiders analyzed.
However, times have changed. Although the two sides have reconnected, the current market environment is very different from the past. How Huawei - Aion Automobile can quickly establish differentiated advantages, how to grasp the rhythm of product launches, and how to make differences in service and channels are all significant challenges.
"We cannot change the wind, but we can change the sail and adjust its angle to adapt to the new voyage." Feng Xingya once said. Now that GAC has entered the deep - water zone of reform, it cannot afford to fail. Time will tell whether this big ship can ride the waves and rebound from the bottom.
This article is from the WeChat official account "Phoenix Auto", author: Phoenix Auto, editor: Zuo Maoxuan. Republished by 36Kr with permission.