GAC Group 2025 Annual Report Analysis: Net profit attributable to parent company at a loss of 8.784 billion, operating cash flow with a net outflow of 15.026 billion

Operating Revenue: Down 10.43% Year over Year, Revenue Scale Falls Below CNY 100 Billion

In 2025, GAC Group achieved operating revenue of CNY 95.662 billion, down 10.43% from CNY 106.798 billion in 2024. For the first time, the revenue scale fell below the CNY 100 billion threshold. By business segment:

• Vehicle manufacturing revenue: CNY 69.01 billion, down 12.57% year over year; gross margin: -7.35%, down 9.53 percentage points from the prior year, making it the core drag on revenue decline.
• Parts manufacturing revenue: CNY 3.801 billion, up 8.05% year over year; gross margin: 8.05%, up 0.22 percentage points from the prior year, becoming one of the few segments that maintained growth.
• Trading and services revenue: CNY 18.67 billion, down 5.51% year over year; gross margin: 4.98%, down 2.51 percentage points from the prior year.
• Financial and other revenue: CNY 5.061 billion, down 1.90% year over year; gross margin: 22.49%, up 10.01 percentage points from the prior year, the segment with the highest gross margin.

Net Profit: First Annual Loss, Attributable Net Loss of CNY 8.784 Billion

In 2025, GAC Group’s attributable net profit was -CNY 8.784 billion, a sharp decline of 1166.51% from CNY 824 million in 2024. This was the first time since listing that the company posted an annual loss. Major reasons for the loss include:

1. Sales missed expectations: Full-year vehicle sales of 1.7215 million units, down 14.06% year over year, including 609.2 thousand units for the self-owned brand, down 22.83% year over year.
2. Increased asset impairment provisions: Asset impairment provisions for intangible assets and inventories increased compared with the same period last year. Meanwhile, GAC Honda advanced its new-energy transition, including provisions for impairment due to production-line adjustments and optimization and workforce optimization, which led to a decrease in investment income.
3. Cost pressure: Factors such as rising raw material prices and increased supply-chain costs squeezed profit margins.

Non-GAAP Net Profit: Loss Widens to CNY 9.863 Billion

In 2025, non-GAAP attributable net profit was -CNY 9.863 billion, down 126.67% from -CNY 4.351 billion in 2024, and the loss margin further expanded. The main reason the loss widened after excluding non-recurring items is that non-recurring gains and losses decreased year over year; in 2025, non-recurring gains and losses were CNY 1.079 billion, down sharply from CNY 5.175 billion in 2024.

Earnings Per Share: Turned from Profit to Loss, Basic EPS -CNY 0.85/share

In 2025, basic earnings per share were -CNY 0.85/share, down 1162.50% from CNY 0.08/share in 2024. Non-GAAP earnings per share were -CNY 0.96/share, down 128.57% from -CNY 0.42/share in 2024. EPS turned from profit to loss, reflecting a major decline in the company’s profitability.

Expenses: Total Expenses Slightly Down YoY, Clear Structural Diverentiation

In 2025, total expenses (selling + administrative + R&D + finance expenses) totaled CNY 11.313 billion, down slightly by 4.1% from CNY 11.795 billion in 2024. The expense structure shows clear differentiation:

R&D Investment: Total Exceeds CNY 7.7 Billion, Continuing to Step Up Core Technology

In 2025, total R&D investment was CNY 7.707 billion, up 2.66% from CNY 7.507 billion in 2024. Of this:

• Expensed R&D expenditures: CNY 1.639 billion, down 9.55% YoY;
• Capitalized R&D expenditures: CNY 6.068 billion, up 13.83% YoY.

R&D priorities focus on electrification and intelligentization:

• Rolled out the “Xingyuan Range-Extender” technology, deployed on the Haobai HL and Aion i60 models, earning the title of “World’s Top Ten Range-Extender Systems”;
• Released the intelligent technology brand “Xingling Zhixing” and the “Xingling Safety Guardian System”;
• Launched the new-generation multimodal interaction system ADiGO 6.0, mass-produced across multiple models; implemented 68 OTA upgrades during the year, with more than 700 added and optimized features;
• Obtained L3-level specific-scenario autonomous driving road test licenses in Guangzhou, and the new-generation Robotaxi co-developed with Didi Autonomous Driving was officially delivered.

R&D Personnel: Stable Headcount, Optimized Structure

In 2025, the number of R&D personnel was 7,982, accounting for 21.96% of the company’s total headcount. By educational background:

• PhD: 130 people, 1.63%;
• Master’s degree: 2,749 people, 34.44%;
• Bachelor’s degree: 4,259 people, 53.36%;
• Associate degree and below: 844 people, 10.57%.

By age structure:

• Under 30: 1,878 people, 23.53%;
• 30–40: 4,512 people, 56.53%;
• 40–50: 1,458 people, 18.27%;
• Over 50: 134 people, 1.68%.

Overall, R&D personnel show a younger profile and higher educational attainment, providing talent support for the company’s technological innovation.

Cash Flow: Operating Cash Flow Turns from Positive to Negative, Funding Pressure Becomes Prominent

In 2025, cash flow overall faced pressure, with the three major cash-flow categories showing differentiation:

At the end of the period, cash and cash equivalents totaled CNY 32.151 billion, down by CNY 15.133 billion from CNY 47.284 billion at the end of 2024, indicating a decline in cash reserves.

Potential Risks

2. Risk of Intensifying Market Competition: The competitive landscape in the auto industry is accelerating in restructuring; self-owned brands are rising strongly, and the share of joint-venture brands further declines. The company faces the risk that its market share could be squeezed.
3. Risk of Fluctuations in Raw Material and Key Component Prices: Upstream raw materials and key components continue to be priced at high levels, and price fluctuations for products such as lithium carbonate, copper, and aluminum are significant. Prices for key components such as storage chips increased substantially, and cost pressure continues to rise.
4. Risk of Industry Policy Adjustments: Starting in 2026, the vehicle purchase tax for new energy vehicles will be halved, and technical requirements will be tightened. If the company’s R&D lags or its supply chain fails to meet standards, leading models may not meet the new regulations, exposing the company to risks related to product switching and inventory pressure.
5. Risk of Uncertainty in the External Environment: International geopolitical risks are relatively high; trade protectionism is on the rise. Slower global economic growth and games between major countries lead to raw material price fluctuations and rising tariff costs, which continue to squeeze profit margins.
6. Risk of Pressure on the Company’s Operations: The company’s operating performance has declined for two consecutive years, and it posted a loss for the first time. Although it is advancing management reforms and process transformation, there is still room for improvement in areas such as product competitiveness, marketing reform and transition, cost control, and international expansion.

Compensation for Executives and Directors/Supervisors: Some Executive Pay Adjusted, Linked to Performance

In 2025, compensation for executives and directors/supervisors was linked to the company’s performance, and some executives’ compensation was adjusted:

• Chairman Feng Xingya: The total pre-tax compensation received from the company during the reporting period was CNY 0.9393 million, down from the compensation in 2024.
• General Manager Ge Xianqing: The total pre-tax compensation received from the company during the reporting period was CNY 1.2481 million. Because the term began in November 2025, compensation was prorated based on the actual term.
• Deputy General Manager: Gao Rui received CNY 1.2269 million pre-tax; Wang Dan received CNY 1.2184 million; Jiang Xiuyun received CNY 1.2270 million; Huang Yongqiang received CNY 0.1433 million; Chen Jia cai received CNY 0.3282 million. Among them, Huang Yongqiang and Chen Jiacai had terms of less than one year, and compensation was prorated based on the actual term.
• CFO Wang Dan: Pre-tax compensation was CNY 1.2184 million, at a level comparable to the deputy general manager.

Overall, compensation for executives and directors/supervisors is linked to the company’s performance, reflecting consistency between incentive compensation and performance appraisal.

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