SAIC: Eventful "Autumn"

Car K-line

2024-06-26 08:55Posted in Beijing Automotive Creators

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01 SAIC Motor will hold a general election on June 29, 2024, but the current 22 members of the board of directors and the board of supervisors will terminate their terms of office, and at the same time issue an announcement on the postponement of the general election.

In 025, SAIC Motor sold 332,000 vehicles, down 17.1% and 7.7% month-on-month respectively, setting a record for the production and sales report with the most serious decline and the most sluggish sales in the past decade.

03Due to the sluggish production and sales of SAIC-GM and SAIC Passenger Vehicles, SAIC Motor sold a total of 1.526 million units in January ~ May, a year-on-year decrease of 8.37%.

04 At the same time, SAIC's cumulative sales of new energy vehicles in January ~ May were 368,000 units, which is still far from the target of 3.5 million units in 2025.

05 Wang Xiaoqiu, the new chairman of SAIC, is about to take over from Chen Hong, and Jia Jianxu is promoted to president, which has aroused the market's attention to the future development of SAIC.

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Introduction: SAIC's "baton" fell to the ground.

According to SAIC's announcement, 22 members of the current board of directors and board of supervisors will terminate their terms of office on June 29, 2024.

However, at the last moment of the general election, SAIC not only failed to prepare a final list of personnel, but issued an announcement to postpone the general election, and handed over a production and sales report with the most serious decline and the most sluggish sales in the past 10 years.

"Image source: SAIC Motor's press release"

Is this a foreshadowing for the new head to "turn the tide"? Or is SAIC really having a hard time?

1) The group's production and sales dilemma hit the highest decline in the past decade

SAIC Motor has been firmly seated as the champion of China's automobile production and sales for 18 years, and it is likely to change hands.

According to SAIC's production and sales report, the group's sales in May were 332,000 units, down 17.1% and 7.7% m/m, respectively.

What is the level of such sales in the industry?

"Image source: SAIC Motor Production and Sales Express"

Compared with BYD, which is close behind, it is only 429 units ahead! A month ago, the gap was 47,000 units, and a year ago, in the same period, it was 161,000 units!

In January ~ May this year, SAIC Motor sold a total of 1.526 million vehicles, a year-on-year decrease of 8.37%. BYD's lead has shrunk to 255,000 units from 663,000 units a year ago.

Quite dramatically, on the same day that SAIC Motor issued the production and sales announcement, it simultaneously pushed the May "Production and Sales Express" on its official WeChat public account, in addition to the 332,000 "vehicle wholesale sales" mentioned in the announcement, it told people in the largest font that the terminal delivery volume was 347,000 units.

The next day, SAIC's share price fell again and recorded a rare "five consecutive declines" performance in recent times.

If it is said that BYD's rapid approach is more caused by a variety of external factors, then what is more worrying is that SAIC Motor has come up with the worst sales in the past ten years during the critical period of "changing the commander".

Looking at the production and sales reports of previous years, SAIC's sales in May this year were not even as high as the same period in 2012 (368,000 units), and the year-on-year decline of 17.1% in monthly sales was also the highest in the same period of the previous year.

The collapse of the faucet does not mean that the market is sluggish.

According to data released by the China Association of Automobile Manufacturers, China's auto sales in May increased by 2.5% and 1.5% respectively year-on-year. Among the sales of 19 major automobile companies counted by "Automobile K-line", SAIC is the only car company that has fallen year-on-year and year-on-year in a single month.

A year ago, at the SAIC Workers' Congress, Jiang Jun, CEO of Zhiji Automobile, Wu Bing, General Manager of SAIC Passenger Vehicle Company and CEO of Feifan Automobile, and other senior executives signed a "military order" on the spot, promising that by 2025, SAIC Motor's annual sales of new energy vehicles will reach 3.5 million units.

Chen Hong, chairman of SAIC, left a bold statement at that time that "if Loulan is not broken, it will never be returned".

Today, a year later, SAIC's cumulative sales of new energy vehicles in January ~ May are 368,000 units. Over the next year and a half or so, that number needs to be increased to nearly tenfold!

In China, the production and sales of the Roewe brand have declined, and the inventory of dealers is high; Overseas, in the face of the EU's upcoming temporary tariffs, SAIC MG launched the 38.1 peripherals "at the request of netizens", which can only win a wave of traffic on the Internet, but it is difficult to solve the worries.

At the critical moment of the high-level handover, the "baton" that SAIC Group fell to the ground is not only the root of monthly production and sales.

2) Chen Hong didn't do a good job, how many points can Wang Xiaoqiu do?

With the flick of a finger, the 10-year term expired.

On the day of the announcement of the postponement of the general election, SAIC's share price fell 1.39%.

In the capital market, the 10 years of Chen Hong's tenure are full of controversy.

Skeptics believe that SAIC Group's market value management, profitability level, and production and sales scale are all disappointing. Proponents believe that during the epidemic during Chen Hong's last term, SAIC at least stabilized the overall situation.

It's just that this "overall situation" is in jeopardy in the "general trend". It is undoubtedly a very difficult challenge for the new board of directors.

Up to now, within the scope of the 22 listed Chinese passenger car listed companies registered in the "Automobile K-line", SAIC ranks 5th with a market value of 162.6 billion yuan (once approached 380 billion yuan in 2017), not only behind BYD, Xiaomi Group, Great Wall Motor, followed by Cialis, and SAIC Group The gap is only 12 billion yuan.

At the 2020 shareholders' meeting, investors were very dissatisfied with SAIC's market value performance as poor as BYD's. At that time, Chen Hong had just started his last term, but he did not expect that after a year, people did not see the improvement of SAIC in terms of market value, but lost the title of "most profitable" listed company in China's auto industry.

Until 2023, SAIC's net profit attributable to the parent company hit a new low in nearly 10 years, and in the first quarter of 2024, revenue, net profit attributable to the parent company, and non-net profit deducted will all grow negatively.

Looking at the production and sales trend of SAIC in the past 10 years, it can be found that 2018 is not only an inflection point for the rise and fall of production and sales, but also from this year, SAIC Group's production and sales have been inverted for 3 consecutive years, and there has been a decline for 5 consecutive years.

Entering 2024, SAIC-GM and SAIC Passenger Vehicle will become the two major burdens dragging down the overall performance of SAIC Group.

According to the production and sales report, SAIC-GM's sales in May were only 38,000 units, down 58.3% and 22.7% month-on-month, respectively, which is the fifth consecutive month of year-on-year sales decline since SAIC-GM entered 2024. As a result, its cumulative sales in January ~ May fell by 44.3% year-on-year, compared with the level of nearly 360,000 units in the same period last year, and even failed to reach the level of 200,000 units.

For SAIC-GM, more worrying than sales is its production volume.

According to the production and sales report, SAIC-GM's production in May was only 36,000 units, a year-on-year decline of 61.2% and 15.7%, and a cumulative decline of 49.69% in January ~ May.

At the same time, SAIC Passenger Vehicle has also failed to reverse the decline since the beginning of the year. Sales in May were 54,000 units, down 26.2% and 14.1% m/m, respectively. The cumulative sales in January ~ May were 280,000 units, a year-on-year decrease of 17.2%.

It is worth mentioning that in the May 2024 "Auto Dealer Inventory" survey results released by the China Automobile Dealers Association, two of the three brands with the highest inventory depth are from SAIC, namely Roewe with an inventory depth of 2.24 and SAIC-GM Buick with an inventory depth of 2.12.

Perhaps the rumors of SAIC-GM's 30% layoff of employees have yet to be verified, but its annual capacity utilization rate is only 53%, which is impressive in SAIC's financial report.

In the past ten years, Chen Hong has indeed been a rare listed car company executive who can retire smoothly in the same era, but the problem left for the next chairman is no simpler than when other car companies change their leadership.

Views of AutosKline：

Prior to this, it had been a mystery whether the new chairman of SAIC was selected internally or parachuted from outside.

The day after the announcement of the postponement of the general election, Wang Xiaoqiu, president of SAIC, took over from Chen Hong as the new chairman of SAIC, and Jia Jianxu, vice president of the group, will be promoted to the position of president.

"Image source:"Shanghai release" official account ""

On June 21, the official account "Shanghai Release" pushed a title titled "Shanghai Municipal Management Cadres Announced Before Their Appointment!" The content shows that the source is the Organization Department of the Municipal Party Committee, and the content shows that Wang Xiaoqiu and Jia Jianxu "intend to be appointed to the main positions of the municipal management enterprise", and many people judge that the rumors are true. On the same day, SAIC's share price stopped falling and recovered, rising 0.21%.

This can reflect the subtle attitude of the capital market towards the new chairman and president of SAIC to a certain extent, and because Wang Xiaoqiu has reached the age of 60, according to relevant regulations, except for special factors, the upper limit of retirement age will be reached after three years. As a "post-70s", Jia Jianxu is currently 46 years old.

Therefore, some people regard such a personnel arrangement as a three-year transition period given by SAIC to Jia Jianxu, who is "in the right year". At that time, that is, in 2028, it will be the first year after the expiration of the current SAIC-GM contract, and there are still two years left before the expiration of the SAIC-Volkswagen contract.

Therefore, perhaps in the next two terms, "independent brands, new energy, and overseas markets" will be the "new troika" of SAIC.

Returning to the initial question, SAIC changed its leadership, and people are looking forward to seeing the new management team bring more positive changes, lead the giant ship to find its course, sail out of the whirlpool, and manage the market value of listed companies. "Losing the baton" in the relay race will indeed lead to a temporary downfall, but it is definitely not a direct loss of the whole race.

On the field, the essence of winning or losing is probability; For any listed company in China's automotive industry, this represents the responsibility of an enterprise.

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