AutoBeta(AutoBeta.net)07/20 Report--

SAIC expects sales to decline for the first time in 14 years in 2019, by about 7 per cent, and for the first time since records began in 2006, according to people familiar with the matter. The group set a sales target of 7.1 million vehicles for the whole of 2019, while SAIC adjusted its sales target to 6.54 million vehicles, 8 per cent less than the original target because of falling demand in the car market.

SAIC's two joint ventures, SAIC Volkswagen and SAIC GM, are also expected to decline, with SAIC Volkswagen's sales expected to adjust to 2 million in 2019 and SAIC GM's sales to fall to 1.82 million.

SAIC sold 7.052 million new cars in 2018, up 1.8 per cent from a year earlier. Among them, SAIC-Volkswagen sales increased by 0.1% over the same period last year, ranking first in the country in terms of vehicle sales, ranking first in the passenger car market for four consecutive years. SAIC GM sold 1.97 million vehicles, down 1.5 per cent from a year earlier, accounting for 27.94 per cent of SAIC's total sales.

SAIC-Volkswagen was not immune to the grim situation of the entire Chinese car market in the first half of this year. SAIC's total sales in the first half of the year were 2.937 million vehicles, down 16.6 per cent from a year earlier. SAIC-Volkswagen sold 1.02 million vehicles, down 9.9% from a year earlier, while SAIC GM sold 958000 vehicles, down 12.9% from a year earlier.

As for the above description, SAIC plans to maintain its market share if the overall car market declines this year.

Chinese cars grew for the first time in a year in June, but as the "sixth National Day" is about to be implemented, major car dealers have launched a sharp discount promotion to reduce inventory.

After July 1, new cars purchased by consumers may not be licensed in some areas, so dealers will have to clean up the models before then. As a result, the increase in retail sales of cars has been driven, but it is clear that this growth is not sustainable. The China Association of Automobile Manufacturers believes that sales in the first half of the year were lower than expected, and the passenger car market is expected to decline for the second year in a row, showing negative growth. At the beginning of this year, the association predicted that the market would stop growing and expected car sales in 2019 to be 28 million, the same as in 2018, a growth rate of 0%.

SAIC is not the only one affected. Geely Automobile Holdings Co., Ltd. issued a profit warning last week and expects Geely's net profit to fall by about 40% year-on-year by June 30, 2019. This is mainly due to the larger-than-expected decline in overall car sales in the Chinese market and the group's initiative to reduce the total inventory of dealers, which has a negative impact on the group's sales and profit margins in the same period.

Geely sold about 651700 cars in the first half of this year, down about 15 per cent from a year earlier. To this end, Geely also announced a reduction in its 2019 sales target, reducing its original annual sales target of 1.51 million vehicles by 10 per cent to 1.36 million.

Another carmaker, Great Wall, cut its full-year sales target. Great Wall warned that it expected first-half profits to fall by about 59 per cent and cut its full-year sales forecast to 1.07 million vehicles, 11 per cent lower than originally expected. Previously, Great Wall had set a sales target of 1.2 million vehicles in 2019.

2019 is destined to be a sad year for many car companies. SAIC's cut in its full-year sales target is the latest sign of a deterioration in the global auto market. Weak economic growth and huge investments in electrification and self-driving are prompting carmakers to cut jobs, cut costs and seek mergers or alliances, whether in China, the US or Europe.

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