AutoBeta(AutoBeta.net)08/27 Report--

On August 27, SAIC disclosed its results for the first half of 2020. According to the report, SAIC's operating income in the first half of the year was 271.52 billion yuan, down 25.39% from the same period last year; the net profit belonging to shareholders of listed companies was 8.394 billion yuan, down 39.01% from the same period last year.

SAIC's sales declined significantly, falling 30.24% in the first half to 2049116 vehicles. Its three joint venture brands SAIC-Volkswagen, SAIC-GM and SAIC-GM Wuling are the main sources of profit for SAIC Group. The year-on-year decline in sales failed to prop up the "profit paradise".

Specifically, the cumulative sales of SAIC-Volkswagen, SAIC-GM and SAIC-GM Wuling in the first half of the year were 577385, 556206 and 531040, respectively, down 37.18%, 33.31% and 28.69%. The cumulative sales of SAIC passenger cars and SAIC Chase in the first half were 241475 and 68030 respectively, up-22.52 per cent and 8.45 per cent year-on-year.

SAIC, as the first auto company in China by sales, began to show a sharp decline in its performance in 2019. According to the data, SAIC's sales fell 11.5% to 6.238 million vehicles in 2019, operating income fell 6.53% to 843.324 billion yuan, and net profit fell 28.9% to 25.603 billion yuan.

In 2020, SAIC showed great pressure under the influence of COVID-19, facing severe performance challenges when sales ranked first. On April 30, SAIC reported that first-quarter car sales fell 55.71 per cent to 679000 vehicles, revenue fell 47.08 per cent to 105.9 billion yuan and net profit fell 86.42 per cent to 1.121 billion yuan.

SAIC's sales performance has dropped again and again, which has attracted the attention of senior officials in Shanghai, requiring SAIC to study the existing problems, including brand, quality and sales. At the same time, relevant departments in Shanghai will increase their support for SAIC's nine major brands and a number of new cars.

Due to the pressure of sales performance brought by the market, SAIC began to implement a number of rescue policies, including the official reduction of SAIC Volkswagen Skoda models. The five major enterprises of SAIC Group have launched programs such as 50% discount on car purchases, car price concessions, cost subsidies, purchase tax-free, zero down payment, and so on. SAIC GM has returned to the four-cylinder market. SAIC GM Wuling "stall economy" seeks a recovery in sales.

Until June, SAIC GM Wuling and SAIC Chase were the only major brands of SAIC Group to achieve growth, while SAIC Volkswagen and SAIC GM still fell 7 per cent, while SAIC passenger cars fell 3.48 per cent.

The decline in the performance of more than one company in 2020 is inevitable. For SAIC, how to reduce the performance decline space is still the top priority. We should start with SAIC-Volkswagen and SAIC-GM "profit cow" joint ventures to restore sales growth. At present, the situation of SAIC in the market is still not optimistic, nearly 40% of the profit decline has been higher than the overall market average, SAIC is still facing greater performance pressure in the second half of the year. SAIC said in the financial report that the epidemic is still spreading around the world, the risk of instability and uncertainty of the economic situation is still large, and global industrial chain cooperation is facing challenges.

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