AutoBeta(AutoBeta.net)06/09 Report--

GAC GROUP has GAC MOTOR's own brand and a number of joint venture brands, and the joint venture car enterprises are mainly Japanese brands. According to the May sales report, only the two fields have bucked the trend and declined sharply, while GAC Fiat Chrysler's sales have halved, forming a sharp contrast.

It can be seen that in the domestic auto market continues to be in the doldrums, "Liangtian" has become the last support of GAC. Guangzhou Auto Honda sold 323000 vehicles in the first month, up 18.3 per cent from a year earlier, while Guangzhou Auto Toyota sold 255700 vehicles in the first month, up 25 per cent from a year earlier. By contrast, other brands have declined across the board.

Independent brand GAC MOTOR sold 27953 new cars in May, down 27% from a year earlier, with cumulative sales of 142823 units in the previous month, down 38.2% from 231099 in the same period last year. In addition, the biggest decline was Guangzhou Auto Fick, where sales of the Jeep brand remained in the doldrums. GAC Fick sold only 30672 vehicles in the first month, down 50% from a year earlier, while GAC-Mitsubishi fell 17.5% in the previous month.

China's automobile market environment began to show a turning point in the second half of 2018, new car sales continued to decline, consumers' depressed mood of buying new cars has not improved significantly, and brand manufacturers and dealers continue to be under pressure. In the face of an unfavorable situation, the consumption trend turns to be driven by brand power and product power, and the joint venture "Liangtian" has become the savior of GAC. From January to May, GAC GROUP's overall car sales were 810000, down 3.25% from a year earlier.

At the recent annual shareholders' meeting of GAC GROUP in 2018, GAC proposed a challenge of annual sales growth of about 6 per cent in 2019.

But the reality is that GAC is too dependent on Japanese brands such as Toyota and Honda, and the rest, including its own brands, have fallen across the board. It means that the growth is still mainly from Liangtian.

GAC GROUP plans to make efforts in five aspects: increase marketing efforts, make every effort to develop new products and improve product strength, improve customer satisfaction, increase revenue and reduce expenditure, reduce cost and increase efficiency, and improve brand strength.

GAC GROUP said that although car sales are declining as a whole, confidence in the consumer market is expected to gradually recover under a number of national measures to promote automobile consumption. In addition, there is still a large gap in the number of 1000-person cars between China and the developed countries, and the demand for replacement increases every year. Generally speaking, there is still a lot of room for growth in China's auto market in the future.

GAC MOTOR stalled due to both external and internal causes. In the early years, many independent brands caught up with the opportunity of rapid growth in the market, resulting in a sharp increase in sales and further expansion. But as market capacity reaches a peak, the pressure on brands becomes clear when they shift from growth to decline. In addition, independent brands are generally complained about by consumers about the quality problems, when a brand, a model frequent quality problems, so that consumers lose confidence, when the replacement cycle, consumers may no longer choose the brand, we can imagine the importance of word of mouth.

For example, Chuanqi GS4 sold 20, 000-40, 000 units a month, but now it sells only 6-7000 units a month.

We also note that recently, GAC MOTOR has accelerated the elimination of national five inventory cars, in addition to increasing concessions at the end of the market, but also sold to supplier employees at low prices. It can be seen that the general discount of GAC Qiguo five inventory cars has reached 6-8% discount, and even some models have gone to 5.5% discount.

Feng Xingya, general manager of GAC GROUP, once said, "negative growth means that it is difficult for manufacturers to achieve their goals last year, which virtually puts dealers under pressure of inventory growth, so adjusting inventory, reducing inventory, and removing inventory are still GAC GROUP's main tasks this year."

With a decline of more than 38 per cent, GAC MOTOR's stall is just a microcosm of the decline of independent brands. In fact, independent car companies with larger sales scale, including Geely Automobile, Changan Automobile, Shanghai Automobile and passenger cars, have all declined to varying degrees this year. The sixth national emission standard is coming, if the effect of the new policy to stimulate automobile consumption in the second half of the year is not obvious, the survival pressure on the majority of independent brands will increase.

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