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Written by | Duoke

Source | Bedo Finance

Recently, Shanghai Automotive Industry Corporation (hereinafter referred to as "SAIC Group" or "SAIC") released its latest production and sales report. The report shows that SAIC Group's automobile production and sales in July 2024 have fallen to varying degrees, and its cumulative sales so far this year have also fallen by double digits.

If we continue to extend the timeline, we can see that after SAIC Motor’s “golden age” in 2018, its performance and sales have continued to decline. The downward trajectory of its operating indicators, like the prophecy of Ragnarok in Norse mythology, heralds the end of its glory and prosperity.

But it is clear that SAIC Motor is unwilling to settle for mediocrity. After a change in senior management, the "new coach" Wang Xiaoqiu led SAIC to launch efficiency-enhancing and cost-reducing measures, and actively promoted the reform of the marketing system to stimulate innovation. Can SAIC Motor, which is at the crossroads of reform, move towards a new world like a myth?

1. BeingBYDOvertaking, production and sales have hit a bottleneck since this year

According to the announcement of SAIC Motor, SAIC Motor's vehicle production so far this year is 2.0508 million, down 18.64% year-on-year; vehicle sales are 2.0784 million, down 15.92% year-on-year. However, the company said that its cumulative terminal deliveries reached 2.452 million vehicles, and terminal deliveries in July increased by 5.1% month-on-month.

However, it should be pointed out that SAIC Group's monthly vehicle production in July 2024 was approximately 237,500 vehicles, a decrease of 42.57% from 413,600 vehicles in the same period of 2023; vehicle sales were 251,500 vehicles, also a decrease of 37.16% from 400,200 vehicles in the same period of 2023. The scale of production and sales has shrunk by nearly half year-on-year.

According to the data from the China Association of Automobile Manufacturers, the production and sales volume of China's automobile industry in July were 2.286 million and 2.262 million respectively, down 4.8% and 5.2% year-on-year respectively; but the overall production and sales volume so far this year have increased by 3.4% and 4.4% year-on-year respectively. From this perspective, SAIC's operating performance is obviously below average.

Among the many brands under SAIC Group, Shanghai GM's sales decline was the most significant, dropping sharply from 85,300 vehicles in July 2023 to 15,000 vehicles, a monthly year-on-year decrease of 82.42%.SAIC Volkswagen、SAIC-GM-WulingandSAIC MAXUSThe sales volume decreased by 18.18%, 31.72% and 23.34% respectively.

In comparison, BYD, SAIC Group's biggest competitor, sold 342,300 vehicles in July, a year-on-year increase of 30.60%. In June, BYD surpassed SAIC with sales of 341,600 vehicles to 300,500 vehicles. In other words, SAIC has lost the monthly sales championship twice in a row.

Although BYD's current total sales of 1.9553 million vehicles is still less than that of SAIC, the sales gap between the two has narrowed from 214,000 vehicles at the end of the first half of the year to 123,100 vehicles at the end of July. Some people in the industry even boldly speculate that BYD's sales this year may surpass SAIC, which has been the top domestic automaker for 18 consecutive years.

According to the China Passenger Car Association, the retail sales of new energy passenger vehicles in July reached 878,000, a year-on-year increase of 36.9% and a month-on-month increase of 2.8%. SAIC Motor's new energy vehicle production in July was 69,200, a year-on-year decrease of 21.10%, and sales were 71,100, a year-on-year decrease of 21.85%.

However, SAIC Group's high-end new energy brandZhiji AutoIts market performance is remarkable. With a monthly production of 3,046 vehicles, a year-on-year increase of 120.25% and sales of 4,180 vehicles, a year-on-year increase of 142.74%, Zhiji Auto's cumulative sales this year have reached 26,600 vehicles, a year-on-year increase of 131.34%.

SAIC Motors revealed that Zhiji Auto's terminal delivery volume for the entire series reached 6,017 vehicles in July, a year-on-year increase of 249%, achieving leapfrog growth.Zhiji LS6Regained the sales crown of "medium and large pure electric SUV"Zhiji L6It has firmly established itself as one of the top three sales of "mid-to-large pure electric sedans" in the 200,000 yuan class.

Bedo Finance learned that Zhiji Auto also recently released a blocked car poster on a social platform, with the caption "It's confirmed, released in August", indicating that its new car will be released soon. Many netizens speculated that the new car released by Zhiji Auto this time may be the new (modified) Zhiji LS6 extended-range model.

2. The wave of executive changes is coming

Shortly after releasing this not-so-impressive July production and sales report, SAIC Group accelerated the pace of senior management personnel changes, and several of its divisions with poor sales announced "changes in leadership" one after another.

On August 14, SAIC Group announced that Yu Jingmin, former secretary of the Party Committee and executive vice president of sales and marketing of SAIC Volkswagen, will serve as executive vice president of SAIC Passenger Vehicle; Zhu Yong, former executive director of the powertrain platform of the business planning and project management department of SAIC Passenger Vehicle, will serve as vice president of SAIC Passenger Vehicle.

At the same time, SAIC Volkswagen issued an announcement stating that SAIC Volkswagen General Manager Tao Hailong will concurrently serve as SAIC Volkswagen Party Committee Secretary; Fu Qiang, the former executive director of SAIC Volkswagen Brand Marketing, will replace Yu Jingmin as SAIC Volkswagen Sales and Marketing Executive Vice President and General Manager of SAIC Volkswagen Automotive Sales Co., Ltd.

SAIC-GM also had a change of executives. According to the decision of the Party Committee of SAIC Group, Lu Xiao, former executive vice president of Pan Asia Technical Automotive Center, replaced Zhuang Jingxiong as the general manager of SAIC-GM; Xue Haitao, former vice president of SAIC-GM-Wuling, replaced Lu Yi as the company's vice president, responsible for marketing-related work.

Such intensive personnel changes are rare in the industry, and this series of deployments can be traced back to the rotation of senior executives of SAIC Group in July this year. Bedo Finance learned that Chen Hong, the former chairman of SAIC Group who had worked for SAIC for 40 years, submitted his resignation application on July 8 due to retirement age.

According to the resolution announcement of the 23rd meeting of the 8th Board of Directors of SAIC Group, the board of directors elected former SAIC Group President Wang Xiaoqiu to "take over" Chen Hong as the company's chairman; and the position of SAIC Group President was taken by former Vice President Jia Jianxu, and his term of office was the same as that of this board of directors.

This large-scale personnel change is undoubtedly the work of the new leadership team of SAIC Motor, with Wang Xiaoqiu as the core. After reviewing the current management, Bedo Finance found that most of these new executives are born in the 1970s with rich experience in brand marketing or technology research and development, and most of them have worked in the company they are currently working for.

According to China Economic Net, SAIC Motor's new talent layout is aimed at creating a complementary combination of "technology + marketing". In other words, SAIC Motor plans to deploy and promote the construction of the innovation chain while operating the entire marketing chain, further promote the reconstruction of its automotive industry value chain, and once again launch an impact on the market high ground.

3. Performance continued to shrink, and sales fell short of expectations for many consecutive years

Behind SAIC's grand move to reshuffle its executives, its ambition and determination to break through the sales dilemma are obvious. In fact, after 46 years of ups and downs, SAIC has now reached a turning point in the development of new energy vehicles, and it is time to explore more diverse innovation paradigms.

According to previous financial reports, SAIC Group achieved a total operating revenue of 744.705 billion yuan in 2023, a slight increase of only 0.09% year-on-year, which is almost the same as the revenue scale in 2022; net profit attributable to shareholders was 14.106 billion yuan, a year-on-year decrease of 12.48%; net profit after deducting non-recurring items was 10.045 billion yuan, a year-on-year increase of 11.71%.

SAIC Motor's performance report can only be described as neither good nor bad, but the market is clearly not satisfied with this financial report. You know, SAIC's total operating revenue once exceeded 900 billion yuan at its peak, and its net profit reached 36.009 billion yuan, but its profitability today has almost dropped to the level of ten years ago.

Looking at the sales volume, SAIC Motor's total sales volume in 2023 is 5.0209 million vehicles, down 5.31% year-on-year, and it has not reached the sales target of 6 million vehicles. Bedo Finance found that since 2018, SAIC's business goals have been in vain for six consecutive years, and its overall sales have also fallen for five consecutive years.

Among them, the sales of SAIC Volkswagen, SAIC GM and SAIC-GM-Wuling, the "old three SAIC vehicles", will decrease by 8.01%, 14.45% and 12.31% respectively in 2023, with cumulative sales of less than 4 million vehicles. In 2018, the above three companies were still able to support SAIC Group's sales of more than 7 million vehicles with sales of 6.107 million vehicles.

In the financial report, SAIC Group readjusted its business plan formulation strategy, focusing on enhancing cost competitiveness to achieve an increase in sales volume and stable cash flow, striving to achieve annual vehicle sales of 5.45 million units in 2024, with total operating revenue expected to exceed 790 billion yuan and operating costs of around 700 billion yuan.

At SAIC Motor's "New Decade" technology conference, Li Jun, deputy director of SAIC Motor's Innovation Research and Development Institute, also emphasized that "the most important indicator of disruptive innovation is the reduction of system costs." This concept was soon implemented in many of SAIC's subsidiaries.

Take SAIC Volkswagen as an example. According to 21st Century Business Herald, less than a month after its general manager Tao Hailong took office, he led the company to start drastic reforms. SAIC Volkswagen re-evaluated the cost optimization potential in 2024 and planned to optimize more than 2 billion yuan of structural costs in 2024, in order to gain profits from the cost side in the industry's "price war".

SAIC Group, which has formed a systematic and modular industrial structure, does not lack the resources and strength to develop in a positive direction. How to combine the strategic determination of long-termism with the development momentum of reform and innovation on the basis of adhering to the general working principle of "seeking progress while maintaining stability, the key lies in progress" is the key step for it to move towards a new era.