Over the past week, rumors have circulated about General Motors (GM) in China, suggesting that the company might scale back its operations and potentially sell the Buick brand to its joint venture partner, SAIC.
However, the issues faced by the GM-SAIC partnership are not isolated, as SAIC (parent company of MG) experienced a 37.16% drop in sales in July compared to the same period last year. This decline has affected nearly all major business units, not just joint ventures, and includes a decrease in sales of new energy vehicles (NEVs) despite the global shift from internal combustion engines (ICE) to electric alternatives.
The GM joint venture was hit the hardest, with a staggering 82.42% drop in July sales and a 55.14% decrease for the year so far. In contrast, SAIC’s other major joint venture with Volkswagen saw a smaller decline of 18.18% in July, with only a minor 1.53% dip for the year to date.
SAIC’s passenger vehicle division, which includes the MG, Roewe, and Rising brands, saw a 29.95% drop in July sales and a 20.19% decrease for the year so far. Maxus, another SAIC brand, also struggled, with a 23.34% decline in July and an 11.30% reduction for the year. On the brighter side, the IM brand, although small in overall volume, saw July sales surge by 142.74%, reflecting a year-to-date increase of 131.34%.
The SAIC-GM-Wuling joint venture has become increasingly crucial for SAIC’s performance. Despite a 31.72% drop in July sales, the joint venture has managed to achieve a 2.31% increase in sales for the year so far, with 646,009 vehicles sold. This unit now represents the largest share of SAIC’s total sales, rivaled only by Volkswagen.
SAIC’s problems extend beyond domestic sales. The Indonesian branch of the Wuling JV and the Indian branch of MG both reported declines in July and for the year overall. While the sales figures from these regions are relatively small, the broader issue is the significant drop in exports and overseas sales, down 15.77% in July and 9.65% for the year. This suggests deeper challenges beyond the recent implementation of EU tariffs on electric vehicle imports.
Perhaps the most concerning aspect of SAIC’s performance is the decline in new energy vehicle sales. While the broader Chinese market saw NEV retail sales surpass 50% for the first time, SAIC experienced a 21.85% drop in NEV sales in July. Although there was a 14.91% increase in NEV sales for the year to date, the penetration rate remains significantly below the market average, with SAIC’s NEV sales representing just 28.2% of total sales in July and an even lower 25.6% for the year so far.
SAIC’s challenges are further underscored by its financial performance. The 2023 annual report revealed that while operating income increased by 0.72%, net profit fell by 12.48%, and overall sales were down compared to 2022. This downward trend has continued into 2024, with first-quarter operating income down 1.95% and net profit declining by 2.48% year-on-year.
In response to these challenges, SAIC implemented a three-year action plan in 2023 aimed at boosting new energy vehicle development. The company set an ambitious target of selling 3.5 million NEVs by 2025. However, with only 532,133 NEVs sold in the first seven months of this year, SAIC faces an uphill battle to reach its goal. The company is also striving to reverse the decline in ICE vehicle sales, which will be critical for stabilizing its overall performance.