AutoBeta(AutoBeta.net)08/20 Report--

General Motors, which is in the trough, has spread a lot of rumors in the Chinese market and become the focus of public opinion again.

According to foreign media reports, GM will negotiate with partner SAIC to reduce production capacity in China in the future and start a new round of layoffs. In addition, GM is hesitant to sign a joint venture agreement with SAIC, which expires in 2027. More surprisingly, GM may sell the Buick brand to SAIC, while Chevrolet will withdraw from the Chinese market.

In response to the above news, SAIC GM's new general manager Lu Xiao said in an interview that speculation about "GM's sale of Buick to SAIC and Chevrolet brand withdrawal from China" are rumors. In the future, SAIC GM will continue to adhere to the 'multi-brand, differentiation' development strategy, and simultaneously develop new and old tracks. " According to Lu, SAIC GM will maintain the continuity of its current transformation strategy and continue to empower the three major brands Cadillac, Buick and Chevrolet based on more new energy technologies and smart technology of "oil and electricity". More new products that meet the needs of local consumers have been launched one after another.

Lu Xiao is not shy about the problems faced by SAIC GM as a joint venture, but he made it clear that the structure of SAIC GM's three major brands will remain stable. As for how to get out of the current predicament, Lu Xiao, who has a background in research and development, stressed that more local and advanced technology, as well as faster landing, are the key to reshaping SAIC GM's competitiveness in both short-term and medium-and long-term plans. Lu Xiao revealed that GM recently had an in-depth communication with SAIC on SAIC GM's current challenges. The two sides not only reaffirmed their firm confidence in SAIC GM's future development, but also reached consensus on how to continue cooperation and investment, future product planning, optimizing resource allocation and other issues.

GM also responded to rumors that it would overhaul its operations in China, saying that GM's partnership with SAIC and its commitment to promote the long-term development of the joint venture remained unchanged. GM will continue to provide Chinese consumers with the best products and technologies and make product plans for the future. In order to achieve its long-term development goals, GM and its joint venture partner SAIC are working more closely than ever to achieve profitability and sustainable development. The reply also quoted Paul Jacobson, GM's chief financial officer, as saying at an investor meeting last week that "China is a high-quality asset for us now and in the future". GM said: our partnership with SAIC and our commitment to promote the long-term development of the joint venture remain unchanged. We will continue to provide Chinese consumers with our best products and technologies and make product plans for the future.

With its three major brands, Buick, Chevrolet and Cadillac, SAIC GM was once at the head of a joint venture brand for competitive models launched in different price ranges. As a result, the Chinese market has become GM's main source of profit and the largest sales market. In 2017, SAIC GM sold 2 million vehicles for the whole year. Since 2018, SAIC GM sales began to decline. Due to the lack of competitiveness of the main models and the backwardness of new energy transformation, SAIC GM has less and less influence in the Chinese market, with sales falling by 12.13% in 2022 and 14.45% in 2023.

After entering 2024, as independent new energy vehicles accelerate to erode the joint venture brand market, the market share of SAIC GM and other joint venture manufacturers continues to decline. According to SAIC sales, SAIC GM sold 240500 vehicles in the first seven months of 2024, down 55.14% from a year earlier, making it the largest decline in sales under SAIC. In response to the phenomenon of dealers closing stores and withdrawing from the network caused by the decline in sales, Lu Xiao said that SAIC GM has taken a series of rapid and effective measures this year to change the production and marketing correlation model and strengthen the business policy support to dealers. The aim is to relieve the pressure on the channel and achieve a balance between volume and profit. Lu Xiao said that with joint efforts with dealers, SAIC GM has effectively reduced inventory for several months in a row. "the sharp decline in sales concerned by the outside world is mainly the decline in wholesale volume to dealers. SAIC GM's terminal retail has stabilized at nearly 50,000 vehicles per month, showing a steady upward trend."

Retail figures show that Buick sold 26503 vehicles in July, Cadillac sold 8203, and Chevrolet was dismal at 3301. From the perspective of the overall auto market, the market share of joint venture brands also continues to shrink, with retail sales of independent brands rising to 1.03 million vehicles year-on-year in July, while retail sales of mainstream joint venture brands fell to 480000 vehicles.

With the rapid rise of independent car companies on the one hand and rising penetration of the new energy market on the other, SAIC GM is facing a similar dilemma for most joint venture car companies. Of course, SAIC GM is also actively laying out under the surging wave of electrification. According to the plan unveiled by SAIC GM at this year's Beijing Auto Show, 10 new energy vehicles are expected to be launched from 2024 to 2025 to clear dealer inventory and repair and upgrade the sales network before the new cars arrive on the market. is a complex but critical terminal strategy.

In addition, SAIC GM has also replaced the management team.

On August 9, SAIC General Motors announced that Lu Xiao, former deputy general manager of the Pan Asia Automobile Technology Center, had succeeded Zhuang Jingxiong as general manager of SAIC GM after the decision of the party committee of SAIC Group. Wang Conghe, former deputy general manager of Pan-Asia Automotive Technology Center, took over the post of Executive Deputy General Manager of Pan-Asia Automotive Technology Center. Cai Bin, former assistant president of SAIC Group, rejoined SAIC General Motors as party committee secretary of SAIC General Motors. At the same time, Xue Haitao, former deputy general manager of SAIC GM Wuling, replaced Lu Yi as deputy general manager of the company, responsible for marketing related work.

With the rapid rise of independent brands and the intensification of market competition, joint venture brands are generally facing challenges. For SAIC General Motors, accelerating the electrified transformation will be its next important issue. SAIC GM's status quo is also a microcosm of the vast majority of joint ventures, including Changan Ford, Beijing Hyundai, Yueda Kia, Dongfeng Nissan and Dongfeng Peugeot. In contrast, although SAIC GM has also encountered short-term difficulties, it is not hopeless. It has technology, brand, research and development capabilities, and is constantly accelerating the transformation of electrification. Of course, in this context, SAIC GM may also undergo a series of adjustments, such as streamlining products, suspending production and sales of products with low sales, and accelerating the research and development of new energy vehicles and launching new models adapted to the Chinese market. In addition, when the joint venture contract is renewed, both shareholders should also examine the direction of the second half of the joint venture company. It is obvious that simple contract renewal will not solve the current problem.

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