After being the leader of domestic car companies for 18 years, SAIC Motor Corporation's throne is about to be lost. Recently, the sales volume of car companies in May has been released. SAIC Motor Corporation maintains its first position on the list with wholesale sales of 332,000 vehicles. However, challengers have already arrived at their doorstep. BYD follows closely behind with a slight gap (330,500 vehicles). This new energy "overlord" is still aggressively pushing forward. Institutions predict that it is expected to surpass SAIC Motor Corporation in multiple dimensions in the second quarter. A new king is about to be born, and the history of the domestic automobile industry dominated by joint ventures will be rewritten, leaving little room for SAIC's "detour". However, SAIC Motor Corporation is not willing to give up. Starting last year, this top car company pressed the button for transformation and going abroad, and this year, it is further researching and developing cutting-edge technology and increasing product updates to try to counter the younger generation's moves.
Recently, car companies have released their sales volumes for May. SAIC Motor Corporation ranks first on the list with sales of 332,000 vehicles. However, challengers have already arrived at their doorstep. BYD follows closely behind with a slight gap (330,500 vehicles).
This new energy "overlord" is still aggressively pushing forward, and institutions predict that it is expected to surpass SAIC Motor Corporation in multiple dimensions in the second quarter. A new king is about to be born, and the history of the domestic automobile industry dominated by joint ventures will be rewritten, leaving little room for SAIC's "detour". SAIC Motor Corporation is responding to this challenge. Starting last year, the company has been transforming and expanding overseas. This year, it is further investing in cutting-edge technology research and increasing product updates to stay ahead of the younger generation.
However, SAIC Motor Corporation is responding to this challenge. Starting last year, the company has been transforming and expanding overseas. This year, it is further investing in cutting-edge technology research and increasing product updates to stay ahead of the younger generation.
"Top dog in self-owned brands" and "top dog in joint ventures" are battling behind the scenes. This is a microcosm of the struggle between traditional car companies and new generation brands for control of the car market. In the end, only those who follow the market trend will have the greatest chance of success.
Great changes.
Wang Chuanfu has long had his sights set on the top spot in the Chinese auto market.
Even before May's sales figures approached those of SAIC Motor Corporation, BYD's financial data had already begun to catch up. In the first quarter, BYD recorded revenue of CNY 124.9 billion, while SAIC Motor Corporation recorded revenue of CNY 143.1 billion in the same period.
According to institutions such as Citigroup, BYD's second-quarter sales growth is expected to exceed 55% compared to the previous quarter, and revenue is expected to exceed CNY 187.4 billion. At that time, it is highly likely that it will comprehensively surpass SAIC Motor Corporation.
It's hard to imagine just six years ago that a former second-tier Chinese domestic car maker could challenge the king of the auto industry. Back then, holding both the top joint venture brands, SAIC-Volkswagen and SAIC-GM, SAIC Motor Corporation recorded an impressive sales volume of 7.05 million vehicles in 2018, outpacing its competitors. That year, BYD was still less than one-tenth its size, with annual sales of only 520,000 vehicles.
Back then, holding both the top joint venture brands, SAIC-Volkswagen and SAIC-GM, SAIC Motor Corporation recorded an impressive sales volume of 7.05 million vehicles in 2018, outpacing its competitors. That year, BYD was still less than one-tenth its size, with annual sales of only 520,000 vehicles.
In March of the same year, SAIC Motor Corporation's market capitalization also climbed to a peak of CNY 439.9 billion, 2.5 times that of BYD. Today, the situation has changed dramatically. SAIC Motor Corporation's market capitalization has fallen to CNY 163.2 billion, less than one-quarter of BYD's and equal to that of Li Auto Inc.
In a few short years, SAIC Motor Corporation's sales volume and market capitalization have not been as satisfactory. Behind this is the failure of the company's "pillar" to switch smoothly with the times. As China's largest automotive production and sales group, SAIC Motor Corporation has relied on its three joint venture brands, SAIC-Volkswagen, SAIC-GM, and SAIC-GM-Wuling, to drive sales volume and profit in the past two decades.
As China's largest automotive production and sales group, SAIC Motor Corporation has relied on its three joint venture brands, SAIC-Volkswagen, SAIC-GM, and SAIC-GM-Wuling, to drive sales volume and profit in the past two decades.
Today, only Wuling has barely maintained its position, while Volkswagen and GM have both experienced a steep decline. Last year, the three brands sold a total of 3.619 million vehicles, down around 6.1 million from 2018.
In the first 5 months of this year, SAIC-GM sold 199,000 vehicles, a year-on-year decrease of 44.25%. SAIC-Volkswagen sold 430,000 vehicles, a year-on-year increase of only 5.5%, but still close to being halved compared to its peak.
Under fluctuating sales volumes, SAIC Motor Corporation's profit level has also resonated. Last year, the company's net profit attributable to shareholders was CNY 14.11 billion, a decrease of 40% from its peak in 2018. By breaking it down, SAIC-Volkswagen and SAIC-GM, the two companies that once served as the "profit cows", contributed profits that decreased by 50% to 60% year-on-year.
The group's sales volume and profit have returned to their levels more than a decade ago, and the good times of relying on joint ventures to make a profit have passed.
In response to the challenge, it has taken strong action to address its "reliance on joint ventures syndrome". According to its financial report, SAIC-Volkswagen and SAIC-GM's long-term equity investment balances each decreased, with the former (CNY 10.208 billion) only half of its peak in 2018; the latter (CNY 9.504 billion) has also decreased by about CNY 6 billion compared to its level in 2018.
This means that SAIC Motor Corporation is adjusting the balance of its resource allocation and is shifting its focus to self-owned brands, new energy, and overseas markets, which are SAIC's "new three driving forces".
However, they have not taken over successfully yet. In the first five months, SAIC passenger vehicle sales volume fell by nearly 20%, totaling 280,000 vehicles. Although Zhiji had a year-on-year growth rate of 1.2%, its base was low, with a total sales volume of less than 40,000 vehicles last year. Product structure, 10-30 billion yuan products operating income of 401/1288/60 million yuan respectively.
At the same time, SAIC's overseas market, which is known for its MG brand, has also started to encounter bottlenecks. According to data from the China Association of Automobile Manufacturers, SAIC slightly declined to 366,000 vehicles in the first five months of this year under the background of the industry's overall export growth, being surpassed by Chery (435,000 vehicles).
Faced with the great changes in the industry, SAIC Group has to speed up the "bone-scraping" process.
City defense.
In commercial history, many giants who once dominated eventually fell silent, and the changes in industry trends were outlined behind them.
SAIC's dilemma is not difficult to understand. In the era when joint venture cars were king, the industry has always had the rule of "small model changes every three years and major model changes every seven years," but in recent years, BYD has led the new energy revolution, and Huawei, Ideal, and others have taken the iteration speed to the new height of "small changes every six months." This has become the tactics of electronic products and internet companies. Joint venture car companies, whose decision-making mechanisms and business responses are relatively slow, are unable to keep up with this rhythm.
SAIC Volkswagen's general manager Jia Jianxu bluntly stated, "Our development is still a chain relationship, so many things are slow. In two years, technology has been updated, and in three years, it will be completely updated, which will be five or six years behind."
SAIC Group Chief Engineer Zu Sijie also told Wall Street News that the concept of consumer electronics has entered the traditional automotive industry.
In the new competition system, SAIC lacks not only speed, but also the elder brother's difficulty in coping with the internal price spiral of independent brands around cost, efficiency and market. Last year, SAIC's overall vehicle business gross margin was only 5.79%, and there was little room for price cuts.
SAIC has been held back by problems such as "the large ship is difficult to turn around," but the market has already forced it to the point of no return.
At the end of May, SAIC unveiled new-generation technology "weapons", such as solid-state batteries, powertrains, full-stack software architecture, and new electronic architecture, to catch up with players such as Huawei and Xiaomi on the technical level.
Zu Sijie pointed out that SAIC has learned a lot from consumer electronics products and "establishing a technology foundation is to adapt to the transformation of traditional cars to new tracks, and the development speed of models has been reduced from 48 months to the current 18 months."
SAIC Zero Bundle CEO Li Jun added, "Our research and development system, research and development process, and research and development tool chain support the iterative cycle of whole vehicle products close to Moore's Law of semiconductors."
Under the grip of hardcore technology, SAIC wants to launch an offensive together with joint ventures and independent brands, intending to stage a comeback.
On May 20th, SAIC signed a contract with Audi and SAIC Volkswagen to jointly research and develop the "Intelligent Digital Platform." Zu Sijie pointed out that this is a sign of the joint venture companies of SAIC entering a new stage. At the same time, Zhiji, which was originally promoted by SAIC brands, and the "joint venture king" SAIC Volkswagen have both stated that they will accelerate the pace of iteration.
The leader of the car market has launched a counterattack, and it still has many chips in its hands, such as nearly 200 billion yuan of abundant "funds", and the state-owned enterprises can gradually open up their hands to lay out new energy, all of which give the giant the confidence to rise again.
SAIC also knows that this is a long battle. It is meticulously recalculating and readjusting its internal brand resources. Among them, Chevrolet, Fei Fan and other brands temporarily "left behind" in the joint venture and independent sequences will be operated with light assets within the group to concentrate more energy on attacking the main brands. In addition, some insiders of SAIC disclosed to Wall Street News that the group is also preparing a higher-positioned brand than Zhiji to recapture the high-end luxury market.
This seemingly endless struggle between "old money" and "new money" is becoming more and more exciting. The "give and take" between the two sides may continue for a long time.
Among them, Chevrolet, which is known for its joint venture brands, and Fei Fan, which is temporarily "left behind" in the independent sequence, will be operated with light assets within the group to concentrate more energy on attacking the main brands. In addition, some insiders of SAIC disclosed to Wall Street News that the group is also preparing a higher-positioned brand than Zhiji to recapture the high-end luxury market.
Short-term changes do not represent the end of the industry, but what can be determined is that this heart-wrenching industry revolution has made the big brothers change their attitudes, humbly learning from the new generation, and showing more respect for the market and consumers.
There are countless auto brands that were once obscure on the global market. If SAIC wants to stay until the end of the increasingly competitive industry shuffle, they too must master the rhythm of counterattack.