The Chinese automotive industry is facing fierce competition, with a number of companies such as Nezha, Gaohe, Weimar, and Jiyue already collapsing. The latest to be exposed to operational difficulties is FAW Jilin, which has been in production stoppage for months and unable to pay its employees.
According to a report from “First Finance” on December 17, FAW Jilin Automobile Co., Ltd. has been out of production for several months.
An internal source from FAW Jilin disclosed to the media that the company halted production around June this year. Several employees have stated that salaries have not been issued since August and they are hoping for a discussion between FAW Group leaders and employees to provide appropriate solutions.
The report indicated that from 2017 to 2019, FAW Jilin’s sales were 56,000 units, 27,300 units, and 3,520 units respectively. The company has been operating at a loss for three consecutive years since 2016, with a total loss of 3 billion yuan. In the first half of 2019 alone, the company incurred a loss of 511 million yuan, with total assets of 3 billion yuan and liabilities of 3.358 billion yuan, resulting in insolvency.
In October 2019, FAW Jilin underwent a mixed ownership reform, with a capital increase project listed for trading on the Shanghai Property Rights Exchange to raise funds of 1.5 billion yuan. Following the capital increase, the proportion of new shareholders’ ownership stood at around 70%, while FAW Group’s ownership decreased to less than 30%.
In December of the same year, low-speed electric vehicle company Shandong Baoya New Energy Automobile officially increased its stake in FAW Jilin by 15 billion yuan, acquiring 70.5% of FAW Jilin’s shares and gaining operational control, resulting in FAW Group’s ownership dropping to 29.5%.
Following the completion of the structural reform, FAW Jilin resumed production at the beginning of 2021. At that time, FAW Jilin announced that its Senya brand would maintain a similar market positioning as the “FAW-Volkswagen Jetta” brand, targeting third- and fourth-tier cities as well as county-level markets.
In July of the same year, FAW Jilin introduced the new “Hongtu” product strategy, with the first product, Senya Hongyan, officially launched. The vehicle was positioned as a compact SUV priced at 69,900 yuan. However, after its market release, it was criticized for being “stuck in design levels of ten years ago” and lacking technological advancements.
A source close to FAW Jilin cited by “First Finance” pointed out that the company’s product development has not kept up with market trends and its progression in electrification has been slow. As competition intensifies, FAW Jilin has found itself in operational difficulties.
In the past two years, FAW Jilin has not disclosed its sales figures publicly.
Information on the official website shows that FAW Jilin’s current passenger car lineup includes gasoline vehicles such as Hongyan, Hongyan Pro, and new energy products Senya Hongyi EV and Honghu (range-extended hybrid).
FAW Jilin, formerly known as Jilin Light Vehicle Factory, merged with FAW Group in 1990. After renaming to FAW Jilin in 2004, it became a wholly-owned subsidiary of FAW Group. FAW Jilin primarily produces passenger cars, commercial vehicles, and special vehicles.