Guangzhou Automobile Group Co., Ltd. (GAC Group) saw a decline in its operating income, net profit attributable to shareholders, and gross profit margin in the first half of this year, with the net profit attributable to shareholders dropping by 267.39% year-on-year. This marks the second consecutive half-year period of losses for the group.
According to the “GAC Group 2025 Interim Report” released recently, the group’s operating income for the first half of the year was 42.166 billion yuan (RMB, the same below), a 7.95% decrease compared to the same period last year. The net profit attributable to shareholders was -2.538 billion yuan, a 267.39% year-on-year decrease, and the gross profit margin was -1.73%, down by 8.45 percentage points compared to the previous year.
This is the second consecutive half-year of losses for GAC. In the second half of 2024, GAC’s net profit attributable to shareholders was -693 million yuan. Looking at its adjusted net profit attributable to shareholders, GAC has been in a loss-making streak for 5 consecutive quarters.
The main factors contributing to the losses, as stated in the interim report, are the intense competition in the mainland automobile industry and the rapid upgrade in demand structure leading to a decline in car sales.
An article from Tencent Car “High Beam” on September 8 also points out that the direct cause of the group’s losses is the inability to sell cars.
The “GAC Group 2025 Interim Report” shows that in the first half of the year, GAC Group produced and sold a total of 801,700 vehicles and 755,300 vehicles, a decrease of 6.73% and 12.48% year-on-year, respectively.
The decline in sales has resulted in inventory backlog. According to “High Beam,” GAC Group had a inventory turnover days of 69.7 days in the first half of this year, with 46,400 vehicles in backlog out of a production volume of 801,700 vehicles, while its annual effective production capacity is 2.89 million units, meaning nearly half of the production capacity is idle.
At the same time, in the whole vehicle manufacturing business, GAC Group’s gross profit margin in the first half of the year decreased by 8.08 percentage points year-on-year to -7.03%. Based on this calculation, for each self-owned brand car sold, GAC Group is experiencing a loss of about 6,767 yuan.
While revenue is declining, GAC Group’s sales expenses have not decreased but increased by 120 million yuan compared to the same period last year. The “GAC Group 2025 Interim Report” explains this increase is mainly due to the introduction of new vehicle models and an increase in related advertising expenses during the reporting period.
“High Beam” reveals that it’s not just GAC Group facing pressure, traditional Chinese car companies are also under strain. In the first half of this year, the net profit attributable to shareholders of SAIC, Great Wall, Geely, and other established car manufacturers all experienced year-on-year declines. Meanwhile, among the listed car companies in the same loss-making situation, new players such as NIO, XPeng, and Jidu are still striving for efficiency, while BAIC Blue Valley, focusing on new energy, carries a heavy historical burden. Zotye and Haima have long been struggling on the market’s edge.