Profit-taking turns into losses! GAC Group's revenue and profits both decline by 2025, with joint ventures and independent brands both under pressure.

On March 27, GAC Group (601238.SH, 02238.HK) released its 2025 performance report. During the reporting period, the group’s operating total revenue was RMB 96.542 billion, down 10.43% year over year; net profit attributable to shareholders was -RMB 8.784 billion, plunging 1166.51% year over year; and net profit attributable to shareholders after deducting non-recurring items was -RMB 9.863 billion, down 126.67% year over year. Earnings per share were -0.85 yuan, lower than the 0.05 yuan consensus forecast from institutions.

In response to the shift to losses, GAC Group explained that during the reporting period, due to factors including intense competition in the auto industry and rapid restructuring of the industrial ecosystem, although the company’s vehicle sales improved quarter over quarter starting from the second quarter, full-year vehicle sales did not meet expectations. At the same time, to respond to rapid changes in the market, the company adjusted by increasing sales investment.

Worth noting, GAC Group’s product mix also saw critical changes. In 2025, the group’s total vehicle sales were 1.7215 million units, and terminal sales were 1.8135 million units. Among them, sales of energy-saving and new energy vehicles were 0.8882 million units, accounting for the first time exceeding 50%, up by about 6 percentage points compared with 2024.

“Panyu Action” launched one year ago: demand decision efficiency improved by 85%

At the end of 2024, GAC Group launched the three-year “Panyu Action” reform. By the end of 2025, the company’s independent brand had completed integrated operational control across R&D, production, supply and sales finance and accounting. It introduced business processes of DSTE (from strategy to execution), IPD (integrated product development), and IPMS (integrated product marketing and sales), forming a product development model driven by the “market + technology” twin engines.

After one year of reform, multiple efficiency indicators improved. Data show that GAC Group’s product planning efficiency increased by 30%, product project approval review efficiency increased by 67%, demand decision efficiency increased by 85%, and the new-vehicle development cycle shortened to 18 to 21 months. However, improvements in efficiency indicators have not yet been reflected at the financial level. In 2025, GAC Group’s revenue fell 10.43% year over year, and net profit attributable to shareholders showed a loss of RMB 8.784 billion. The financial report indicates that declining gross margin, increased selling expenses, and R&D spending remaining at a high level are the main reasons for the loss.

Auto analyst Tian Li, in an interview with a reporter from Huaxia Times, said that this loss-making financial report is not unexpected given the current industry environment. “In the past year, the price war across the passenger vehicle industry has basically never stopped—from A-segment cars all the way to high-end markets above 300,000 yuan—traditional automakers’ profit margins have been continuously squeezed. GAC’s problem is that it has been bearing the dual pressure of both the decline in joint-venture performance and increased independent-brand investment. This kind of ‘pressure from both ends’ situation is not common in the industry.”

Meanwhile, the “pushing forward strategic transformation in wartime conditions,” emphasized by GAC Group’s chairman Feng Xingya in his speech, is also reflected financially in high expense spending. During the reporting period, selling expenses increased 8.75%. Management expenses decreased 5.39%, but R&D investment reached RMB 7.707 billion. More importantly, the group’s direct and indirect costs paid for “organizational effectiveness reshaping, process redesign, BU pilots, and personnel optimization” were all reflected in the current-period statements, further aggravating the loss. Of the loss of RMB 8.784 billion, it includes asset impairment charges for intangible assets and inventories recognized due to factors such as sales not meeting expectations, product mix adjustments, and optimization of the joint-venture product lines. Objectively, this is a thorough “financial big cleanup,” clearing away some historical burdens so the company can move forward lightly in the future.

In Tian Li’s view, when any large automaker undertakes systemic transformation, it is unavoidable in the short term to pay a financial price. Organizational adjustments, personnel optimization, and process reengineering—these costs will be reflected in the same period. The key issue is whether the efficiency gains brought by the reform can ultimately translate into product competitiveness and market share.

In addition, organizational changes within GAC Group are also being advanced in parallel. In December 2025, GAC Group launched an independent-brand BU pilot. By March 2026, the three major BUs—Haobin E’an, Trumpchi, and the powertrain—completed formation and obtained independent operating permissions across R&D, production, supply and sales, and finance. After the formation of the Haobin E’an BU, January 2026 sales were 21,600 units, up 171.63% year over year.

As for the joint-venture segment, GAC Toyota’s full-year sales were 756,000 units, up 2.44% year over year. Sales of energy-saving and new energy models grew 27.27% year over year, and the sales share increased to 62.2%. The Binzhi 3X developed led by the local team achieved over 80,000 units in full-year sales and won the joint-venture new energy sales champion for six consecutive months. However, the profit contribution from the joint-venture segment has clearly declined in the financial reports. Affected by the overall contraction of Japanese-brand market share in China, unit profit margins for GAC Toyota and GAC Honda have been compressed significantly. To promote its transition to new energy, GAC Honda adjusted and optimized production lines and accounted for impairment losses, and also optimized its workforce. As a result, the joint-venture segment not only cannot “fund” itself, it has started “bleeding” on its own.

Regarding R&D, as of the end of 2025, GAC Group’s cumulative independent R&D investment exceeded RMB 62 billion, and patent applications were over 24,900. But in terms of converting technological investment into market competitiveness, GAC’s independent brands still face challenges. Data show that sales of GAC’s independent brands were 609,200 units, down 22.83% year over year. Among them, GAC E’an sold 290,100 units, down 22.62% year over year. Its core growth engine in 2025 not only failed to take over, but instead became the main driver of the sales decline. The gross margin of the vehicle manufacturing industry was -7.35%, down sharply by 9.53 percentage points year over year. The price war in the independent segment and cost pressures are evident. In the 150,000 to 250,000 yuan price range, E’an faces fierce competition from brands such as BYD, XPeng, and Leapmotor. Terminal prices of the main models have loosened. Solid-state batteries are expected to be installed in small batches in 2026, but the industry generally expects that achieving large-scale commercialization of solid-state batteries will still require 3 to 5 years, making it difficult to drive sales materially in the short term.

Overseas sales up 48%: a target of 250,000 units in 2026

Judging from the data, internationalization has become an important growth point for GAC Group in 2025. During the reporting period, GAC’s independent-brand overseas terminal sales were nearly 130,000 units, up about 48% year over year. Over the full year, it launched 5 new models and 4 mid-cycle facelift models. It also opened up 16 markets, including Brazil, Poland, and Australia. By the end of 2025, the company’s business covered 87 countries and regions worldwide, and it had cumulatively built 630 outlets.

Overseas sales growth is encouraging, but the scale of 130,000 units still lags behind leading independent brands. In 2025, automakers such as BYD, Chery, and Geely all had overseas sales exceeding 500,000 units. GAC’s independent brand’s volume in overseas markets remains in the second tier. Overseas KD factories and channel building are still in the investment phase, and GAC’s overseas business had not yet become profitable in 2025.

From its specific deployment, GAC Group is advancing a localized layout in overseas markets. Thailand, Brazil, and Europe are its core markets, and globally it has already arranged 5 overseas KD factories. However, Europe’s policy environment regarding additional tariffs on Chinese electric vehicles has uncertainty, which may affect the pace of GAC’s expansion in Europe.

In 2026, GAC Group plans to achieve overseas sales of 250,000 units for its independent brand, nearly doubling compared with 2025. This target places high demands on overseas supply-chain assurance, localized operations, and channel-management capabilities. Achieving a doubling growth on the base of 130,000 units in 2025 is a challenge not to be taken lightly.

In terms of product layout, GAC Group partnered with Huawei in March 2025 to build a high-end intelligent electric vehicle brand called Qijing. In March 2026, the first model, the new-generation intelligent shooting-brake GT7 positioned in the 300,000-yuan tier, has already been opened for blind orders and is scheduled to launch in June. The second large-sized SUV is planned to be introduced within the year. On the channel side, the Qijing brand plans to roll out 300 stores by the end of May, covering 76 cities. In the vehicle swap segment, GAC has partnered with CATL, becoming the first automaker to collaborate across the full ecosystem of “chocolate” battery swapping. However, in the 300,000-yuan tier market, there are already models such as Lynk & Co 001, NIO ET5T, and Tesla Model Y. Whether the Qijing brand can open a foothold in a highly competitive high-end market remains to be tested by the market.

In county-level markets, the company plans to add 600 full-brand experience stores in the first half of 2026, covering over 90% of county-level markets nationwide. However, whether channel deepening can effectively drive sales depends on the pace at which new-energy vehicle consumption demand is released in county-level markets. Currently, the coverage rate of charging facilities in county-level markets remains relatively low, and there is a gap in the acceptance of new-energy vehicles between consumers in third- and fourth-tier cities and those in first- and second-tier cities.

In the field of flying cars, GAC’s high-altitude brand multi-rotor flying car GOVY AirCab has received nearly 2,000 intent orders, and mass production and deliveries are expected by year-end. For the intelligent robotics business, the fourth-generation product GoMate Mini plans for small-batch mass production in 2026. Both business segments are in the early stage of investment. There are still uncertainties in areas such as flying-car airworthiness certification, airspace management, and commercial operations under policy frameworks, so they are unlikely to contribute revenue in the short term.

Public information shows that in January to February 2026, GAC Group’s cumulative sales were 203.1 thousand units, up 3% year over year. Sales in January to February were heavily affected by the Spring Festival factor, so the full-year trend still needs to be observed in the subsequent months. Tian Li said, “The industry elimination round has already entered the deep-water zone. In the next two to three years, more traditional automakers will face similar financial pressure. Whether GAC’s success or failure largely depends on whether the new brand can establish a firm foothold, whether overseas markets can form scale, and whether cost control can be carried out in practice. If any of these three links goes wrong, it could affect the overall pace of the transformation.”

(Source: Huaxia Times website)

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