Anxious GAC Group fully enters "wartime mode"

Author | Wang Xiaojun

Editor | Zhou Zhiyu

Under the spotlight, GAC Group Chairman Feng Xingya's voice resonated powerfully: "GAC has fully entered a wartime state!"

This resolute shout echoed in the venue of the 2025 China Automotive Forum, attempting to inject a dose of adrenaline into this giant mired in difficulties.

However, the chill of reality struck in a more brutal way on the same day. A cold performance forecast revealed that GAC expects a net loss of up to 1.82 billion to 2.6 billion yuan in the first half of the year—this marks the first mid-term loss recorded by the group since it began publicly disclosing performance in 2005.

The alarm bells are particularly jarring for those still immersed in GAC's past glory. Just a year or two ago, this southern automotive "dominant" was the envy of all. Its joint venture "cash cow" was still roaring, and its new energy pioneer Aion had once boasted monthly sales of 40,000, exuding confidence at the card table. However, the market shift came faster and more violently than expected.

Feng Xingya's declaration of "wartime" is not only a life-and-death inquiry for GAC as a company but also a soul-searching question for all traditional giants still clinging to the path dependence of the old era. As the tsunami of industrial revolution crashes down, the logic of market competition has been completely overturned, forcing all players to rediscover their coordinates amid the tumult.

There is no turning back on the path of transformation; GAC can only move forward.

Accelerating Counterattack with "Three Major Battles"

"Today, GAC has fully entered a 'wartime state.'"

Feng Xingya's declaration at the China Automotive Forum is not an empty slogan. This time, GAC aims to create a new GAC through the "User Demand Battle, Product Value Battle, and Service Experience Battle."

In terms of insight into and meeting user needs, GAC's approach is to start from the source, reconstruct the R&D system, integrate resources such as products, styling, and platform technology, and build a large R&D system "from user insight to product delivery."

Emphasizing user needs is GAC's reflection on its past misjudgment of the new energy development trend.

Feng Xingya stated that as early as 2014, GAC Group completed a major project under the national 863 program—"Key Technologies and System Integration for Electric Vehicles"—the "Research and Industrialization of Extended-Range Pure Electric Vehicles." However, at that time, its grasp of customers' range anxiety was not precise enough, believing that extended-range and plug-in technologies were transitional routes, thus missing the opportunity.

Now, GAC is fully committed to making up for this mistake. Starting from August this year, GAC will continuously introduce multiple extended-range and plug-in models, with the first model, the Haobo HL extended-range version, set to be launched and delivered soon. This marks a significant shift in GAC's technological route and a bow to and catch-up with market realities.

In terms of product value, facing the "second half of intelligence," GAC has fully equipped its Haobo, Chuanqi, and Aion models with intelligent assisted driving urban NDA, and this year will also roll out its first mass-produced L4 highly autonomous driving model In addition, GAC's high-performance Xingling electronic and electrical architecture, the intelligent driving system based on generative AI end-to-end architecture, the integrated cloud model intelligent agent, and core intelligent technologies such as intelligent chassis domain control have all achieved mass production, which will enhance the competitiveness of GAC's products.

Regarding product value, Feng Xingya also emphasized GAC's safety system. He introduced that GAC's "GAC Xingling Safety Guardian System" has built a full-link safety R&D, all-domain safety technology, and all-time safety assurance, equipping eight key systems with dual redundancy design.

The last point of transformation in the "three major battles" is the service experience.

Feng Xingya views the new forces as a mirror. He stated, "Today, some new force competitors have become industry benchmarks for customer experience, and they are also a mirror for us to return to the starting point and enhance our services."

Previously, GAC acknowledged in its performance forecast that "there is a structural mismatch between the existing sales system and the demand for new energy transformation, with sales channels mainly dominated by the original 4S stores, and the construction of new channels such as direct sales, agents, and the internet lagging behind peers, resulting in slow improvement in marketing system efficiency."

This time, in terms of service, GAC is fully introducing the IPMS (Integrated Product Marketing and Sales) system, with this as the core, to comprehensively deepen the "direct connection, direct service, direct sales" marketing golden triangle customer new experience. To build an integrated marketing service process system, GAC has also restructured the service process and fully introduced the NPS (Net Promoter Score) indicator management evaluation system.

At the same time, in the software field, GAC is learning from new forces to prepare for high-frequency OTA. Feng Xingya introduced that this year GAC has fully implemented a regular OTA classification upgrade system for major vehicle software versions, and in the future, continuous OTA upgrades will ensure agile iteration of vehicle software throughout its lifecycle.

Additionally, in terms of user outreach, GAC is also paying more attention to lower-tier markets. Feng Xingya stated that they have already seen the acceleration of electrification in China's third and fourth-tier markets, and therefore, GAC will accelerate the channel penetration in lower-tier cities to ensure that services reach consumers in towns of all levels.

With the launch of the "three major battles," GAC's counterattack in the first battle will officially begin.

From Glory to Crisis: GAC's Honor and Predicament

Behind GAC's declaration of a "wartime state" is the increasingly severe operational issues, with sales declining year by year. The performance forecast for the first half of 2025 shows that GAC expects a net loss of 1.82 billion to 2.6 billion yuan.

On one hand, the joint venture brands that were once the pillars of GAC's sales are shrinking. Last year, GAC Group's sales were only 2.0031 million vehicles, hitting a new low in nearly five years, a year-on-year decrease of 501,900 vehicles, a drop of 20%. The sales of GAC Honda and GAC Toyota, the two major joint venture pillars, are at historically low levels compared to previous years.

On the other hand, the performance of independent brands is also poor. The production and sales report for June 2025 shows that GAC Aion declined by 22.6% year-on-year, becoming the brand with the largest drop within the group. This former new energy star, which once sold 40,000 vehicles a month, is no longer shining.

Guohai Securities pointed out that in 2024, the layout of "two Tian" in the new energy vehicle market is relatively lagging, and the sales of joint venture products are under pressure amid the rise of independent brands. GAC Group's electrification transformation still needs to accelerate This South China automotive giant has written an astonishing legend.

In 1997, GAC Group started with a debt of 2.9 billion yuan, struggling to survive amid doubts that "Guangzhou cannot develop an automotive industry."

The following year, it restructured Guangzhou Peugeot and introduced Honda. The joint venture GAC Honda (formerly known as Guangzhou Honda before 2019) once created the miracle of "GAC speed"—"producing, making profits, and distributing dividends in the same year." GAC thus entered the fast lane of development.

After 2000, GAC Group continuously expanded its joint venture landscape, establishing joint ventures with Toyota, Hino, Fiat Chrysler, and Mitsubishi. It formed a joint venture camp centered around GAC Honda, GAC Toyota, and GAC Mitsubishi, establishing a complete automotive production base in Guangzhou.

For a long time thereafter, GAC rode the wave of China's economic boom, benefiting from the popularity of "two Toyota" models.

During this phase, GAC also began to focus on its own brands. After several years of preparation, in 2010, GAC's "Trumpchi" series officially launched, achieving sales of 17,000 units that year.

By 2017, GAC welcomed a shining moment: the group's production and sales exceeded 2 million units for the first time, a year-on-year increase of 21%, with market share rising to 7%. The self-owned brand Trumpchi created an industry-renowned "Trumpchi speed"—sales skyrocketed from 17,000 units in 2011 to 508,000 units in 2017, with an average annual growth rate of 76%.

In the following years, as the momentum for new energy vehicles surged, GAC also had its own new force—Aion. In its early years, Aion's momentum was strong, with sales climbing steadily, and by 2022, it had become a star company valued at nearly 100 billion.

Even in 2023, Aion was thriving, with sales exceeding 40,000 units in most months, ranking among the top three "BAT" in China's new energy vehicle sales. GAC also achieved annual sales of 2.505 million units, with operating revenue exceeding 100 billion yuan.

However, by 2024, the story took a swift turn.

Targeted Solutions, Initial Results

In the face of the crisis, GAC did not sit idly by. Even before Feng Xingya announced a "wartime state," a series of self-rescue actions had already been underway. These transformation efforts are gradually showing results, laying the foundation for GAC's fight for survival.

At the end of last year, GAC launched a three-year "Panyu Action" plan. The goal of this plan is to achieve over 60% of total sales from self-owned brands by 2027, challenging self-owned brand sales of 2 million units (including 500,000 units in overseas markets).

The core of the "Panyu Action" is to clarify the positioning of self-owned brands and integrate operations while strengthening the construction of overseas markets.

Previously, GAC stated in its performance forecast that "the overseas sales foundation is weak, and there is still room for improvement in channel construction, product management, and operational coordination." This stands in stark contrast to the rapid growth of overseas businesses of competitors like Chery and BYD.

On the technical front, based on the technological accumulation of the past decade, GAC quickly adjusted its model and technology route layout, rapidly investing in new products. In addition to the Haobo HL extended-range version launched in August, the new brand "Huawei Automotive," in collaboration with Huawei, has also planned two new vehicles covering pure electric and extended-range power, expected to be launched in 2026 The cooperation with Huawei is one of the transformations made by GAC.

In November 2024, GAC and Huawei took a substantial step forward in their collaboration. The two parties jointly invested 1.5 billion yuan to establish Huawei-Wang Automotive Technology Company. In March of this year, Huawei-Wang Automotive was officially registered, marking the entry of the cooperation into the fast lane.

This collaboration is seen by GAC as a key to technological breakthroughs. Additionally, GAC Trumpchi has announced that it will deepen cooperation with Huawei to launch three new series of mid-to-high-end SUVs, MPVs, and sedans, all equipped with Huawei's advanced driving intelligent assistance technology. This multi-level cooperation provides GAC with strong external support in the race for intelligence.

These adjustments have already shown preliminary results. Data from June 2025 indicates that the sales of several brands under GAC have increased month-on-month.

GAC's transformation dilemma occurs at a historic turning point in China's automotive industry. According to the latest data from the Passenger Car Association, the market share of new energy vehicles in China surpassed 50% for the first time in the first half of this year, reaching 50.2%. This figure means that electric vehicles have shifted from being an alternative to becoming a mainstream choice, completely reshaping the market landscape.

The target of 2 million sales for independent brands by 2027 has been set, with only two and a half years remaining to achieve this goal. At the same time, the next two and a half years are considered to be the most intense period of competition in the Chinese automotive industry.

Analysts at Soochow Securities believe that GAC's increased investment amid intensifying competition will impact current profits. The cooperation with Huawei is accelerating, and considering the company's joint ventures are gradually bottoming out, the group's reforms are speeding up, and the company should enjoy a higher valuation.

GAC's "wartime state" is a microcosm of the deep transformation of China's automotive industry. What GAC hopes for the most is to become an automotive company that can cross the fire line in this life-and-death transformation.

There is no turning back in the transformation; it is a fight to the death.

GAC's "wartime state" is a reflection of the collective transformation of traditional automotive companies in China. In this life-and-death race, whether it can cross the fire line with its massive scale and determination for thorough reform tests the wisdom of its management. The market expects not just a simple "New GAC," but a truly powerful competitor that adapts to the new era