Recent rumors have suggested that General Motors (GM) may be considering reducing its operations in China, with the possibility of selling the Buick brand to its joint venture partner, SAIC.
However, the challenges faced by the GM-SAIC partnership are not unique. SAIC, the parent company of MG, reported a 37.16% decrease in sales for July compared to the same month last year.
This downturn has impacted nearly all of SAIC’s major business units, including joint ventures, and includes a decline in sales of new energy vehicles (NEVs) despite the global trend toward electric vehicles over internal combustion engines.
The GM-SAIC joint venture has been particularly hard hit, suffering an 82.42% drop in sales for July and a 55.14% decrease year-to-date.
In comparison, SAIC’s other major joint venture with Volkswagen experienced a less severe decline of 18.18% in July, with a modest 1.53% dip in sales for the year so far.
SAIC’s passenger vehicle division, which encompasses the MG, Roewe, and Rising brands, experienced a 29.95% drop in sales for July and a 20.19% decline for the year to date.
Maxus, another SAIC brand, also faced challenges, with sales falling by 23.34% in July and 11.30% for the year.
On a more positive note, the IM brand, though small in volume, saw an impressive 142.74% increase in July sales, contributing to a 131.34% rise for the year so far.
The SAIC-GM-Wuling joint venture has become increasingly vital to SAIC’s overall performance. Although it saw a 31.72% drop in July sales, the joint venture has managed to post a 2.31% increase in year-to-date sales, with 646,009 vehicles sold, making it SAIC’s largest sales contributor, second only to Volkswagen.
SAIC’s challenges are not confined to the domestic market. The Indonesian branch of the Wuling joint venture and the Indian branch of MG both reported declines in sales for July and the year overall.
Although sales figures from these regions are relatively modest, the broader concern lies in the significant drop in exports and overseas sales, which fell by 15.77% in July and 9.65% for the year.
This points to deeper issues beyond the recent EU tariffs on electric vehicle imports.
One of the most troubling aspects of SAIC’s performance is the decline in new energy vehicle (NEV) sales.
Despite the broader Chinese market surpassing a 50% NEV retail sales penetration rate for the first time, SAIC saw a 21.85% decrease in NEV sales for July.
While there has been a 14.91% increase in NEV sales for the year to date, the penetration rate remains significantly below the market average, with NEV sales representing just 28.2% of SAIC’s total sales in July and an even lower 25.6% for the year so far.
SAIC’s difficulties are further highlighted by its financial performance. The 2023 annual report indicated a slight 0.72% increase in operating income, but net profit dropped by 12.48%, with overall sales declining compared to 2022.
This downward trajectory has persisted into 2024, with first-quarter operating income down by 1.95% and net profit decreasing by 2.48% year-on-year.
In response to these challenges, SAIC introduced a three-year action plan in 2023 focused on advancing new energy vehicle (NEV) development.
The company set an ambitious goal 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 a significant challenge in reaching this target. Additionally, the company is working to reverse the decline in internal combustion engine (ICE) vehicle sales, which is crucial for stabilizing its overall performance.
