As we step into 2024, the automotive industry is already looking aheadRecently, GAC Group has unveiled its sales targets for 2025 amidst a challenging environment that has seen a decline in the sales figures of both joint ventures and independent brandsSpecifically, GAC anticipates a total vehicle production and sales of 1.912 million and 2.003 million units respectively in 2024, reflecting a worrying 20.1% decrease in units sold year-on-yearYet, despite the intense competition and setbacks, GAC aims for an ambitious 15% increase in annual sales by 2025.
The goal for 2025 may seem aggressive when compared to the target of a modest 10% growth for 2024. However, on closer inspection, the quantities involved tell a different story
In 2023, GAC Group managed an impressive 2.505 million units soldAgainst that backdrop, the 2024 estimate stands at 2.003 million units, which indicates that the company faces an uphill battle to regain lost ground.
The ambition to achieve 230.35 million sales in 2025 from the current estimate of 2.003 million units sold presents a scenario where, even with substantial efforts, GAC would still be short of their previous performance by nearly 200,000 units.
The crux of this decline largely stems from the falter of popular joint venture brands associated with GACFor example, GAC Toyota, previously among the elite "Million Dollar Club" with annual sales exceeding one million units, has seen a concerning trend
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According to recent reports, GAC Toyota has experienced a consistent drop in monthly sales since February, totaling 660,900 units sold - a dramatic decline of 22.49% year-on-year.
For GAC Honda, the situation is even graverIt reported sales of only 390,700 units in the first 11 months of the year, down a staggering 30.38% from the previous yearThis makes GAC Honda the worst performer among GAC’s brands, forcing the group back to the drawing board.
Yet, these joint ventures are not the sole cause for concernGAC's independent brands are also feeling the pressureGAC Trumpchi, for instance, has seen its cumulative sales reach 356,500 units this year, reflecting a drop of nearly 4% compared to last year.
It is noteworthy that GAC Aean, another independent brand, has also struggled, reporting sales of 307,200 units in the first 11 months—down approximately 29.23%. However, hope persists with Aean’s Vice General Manager recently stating that the brand is poised to return to an upward trajectory.
The impact of declining sales poses a significant threat to GAC Group’s overall performance
Financial reports indicate a 24.18% decrease in revenues for the third quarter, amounting to 740.4 billion yuan, and a staggering 97.34% plunge in net profit, leaving only 12 million yuanThese figures emphasize the mounting pressure faced by GAC’s leadership.
Recognizing the urgency, GAC is not sitting idle; they are implementing major strategic changesAt the recently held Guangzhou Auto Show, GAC announced its new three-year reform initiative, dubbed the "Panyu Action," aiming to inject a minimum of 50 billion yuan into research and development for both electric and hybrid vehicles.
With this bold initiative, the manufacturer plans to roll out a total of 22 new models within the next few years, seven of which are targeted for launch in 2025, covering a wide array of energy solutions from fully electric to hybrid options
Furthermore, they have set a goal for their self-owned brands to account for at least 60% of total sales by 2027, aspiring to sell two million vehicles by then.
Additionally, plans are in place for GAC to establish a new high-end intelligent electric vehicle brand in collaboration with Huawei, focusing on product development and marketing strategies that utilize AI advancements in automotive technology.
The path forward is fraught with challenges; industry analysts emphasize the necessity for GAC to quickly create standout products that can capture consumer interest, while also enhancing their competitive edge in AI and autonomous driving to elevate user experience