SAIC Motor's "thrilling" rebound: profit surges by 506%, how substantial is the value?

In the long history of China’s auto industry, SAIC Motor has long held the “profit king” throne. Relying on its two joint ventures—SAIC Volkswagen and SAIC General Motors—widely viewed as “profit cash cows,” it once lived a relatively comfortable life. However, after a sharp “profit plunge” in 2024, when net profit fell to just RMB 1.6666 billion, SAIC’s 2025 performance delivered what appeared to be a “shocking” answer.

Yesterday (April 2), SAIC Motor released its 2025 annual report. According to the financials, in 2025 SAIC’s total operating revenue reached RMB 656.24B, up 4.57% year over year; meanwhile, net profit attributable to shareholders of listed companies surged 506.45% to RMB 10.11B. Judging purely by the numbers, this is a stunning “V-shaped” reversal.

But once you peel away the numerical shell, that more than RMB 10 billion profit hides an “alternative way of making money.” Of that RMB 5.19B profit, a large amount comes from non-recurring gains and losses. For example, gains from the disposal of non-current assets alone totaled RMB 4.04 billion. Combined with fair value changes in financial assets, plus the effect of an extremely low base in 2024, this victory bears a strong imprint of profit management.

Gains from the disposal of non-current assets refer to the money a company makes by selling the “assets” it has held for the long term, including factories, land, equipment, subsidiary equity, long-term investments, and more. As for financial products such as the stocks, funds, and bonds a company holds—even if there is no trading—any unrealized gain or loss on paper is called fair value changes in financial assets. These two “non-recurring gains” are a common tactic used by many automakers to polish profits when their core business is not performing well, by selling off assets or financial investments.

In 2024, SAIC’s gains from the disposal of non-current assets were as high as RMB 13.43B, while its net profit attributable to the parent company for the year was only RMB 1.6666 billion—meaning the core business was actually suffering significant losses.

Although independent brands represented by IM Motors and MG are trying to “cover the gap,” the sales structure of the two former joint-venture pillars—SAIC Volkswagen and SAIC General Motors—has suffered irreversible collapse. At the same time, as a leading player in China’s automotive exports overseas, SAIC’s overseas sales growth rate in 2025 suddenly fell to 3.1%, forming a sharp contrast with BYD’s doubling growth, which far outpaced SAIC.

In 2025, SAIC partnered with Huawei through “Aijie,” promoted a younger management bench, and shut down and restructured loss-making assets in an attempt to treat the disease aggressively during the winter.

An uneven relay: a “runaway” joint venture and an “upcoming” independent brand

SAIC Motor’s profit recovery in 2025 was not driven by a rebound in its core business; it relied on selling assets and financial reshuffling to create accounting prosperity. A closer look at the financial report shows that SAIC sold equity in subsidiaries—for example, transferring 100% equity of SAIC Volkswagen Joint Automotive Conversion Co., Ltd., transferring 51% equity of Shanghai Motor Vehicle Recycling Service Center Co., Ltd., and undergoing a judicial reorganization of SAIC Hongyan.

At the same time, it also disposed of long-term equity investments. The “investment income” line item was as high as RMB 7.42B, up 87.15% year over year. SAIC explained that “the main reason is that investment income from associates and joint ventures increased year over year,” which suggests SAIC may have sold part of the equity in some joint-venture companies or associate companies.

Meanwhile, regarding the disposal of fixed assets, SAIC Volkswagen and SAIC General Motors shut down and restructured some older plants. For instance, after SAIC Volkswagen’s Anting plant No. 1 was closed, the sale of land and factories or a sale-and-leaseback arrangement generated disposal gains.

These one-off “cutting meat” actions are not about making money by selling cars.

Strip away the 506% growth figures, and what you see is a traditional giant caught in a bind between continuously depreciating value of fuel-car assets and ever-increasing spending on electrification.

The “optical illusion” behind the surge in profits is essentially the extremely low base in 2024. In 2024, SAIC General Motors and its controlling subsidiaries accrued large amounts of asset impairment provisions, which directly drove net profit attributable to the parent company plummeting to RMB 1.6666 billion. As a result, the RMB 10.1 billion profit in 2025 looks extremely exaggerated in year-over-year comparison.

In reality, the profit scale of RMB 10.1 billion has not even returned to the RMB 14.1 billion level seen in 2023, let alone reaching the peak moments of the past. Looking at non-GAAP profit after deducting non-recurring items, in 2025 it was RMB 1.02M. Although it represents a major improvement compared with the loss situation in 2024, it is only just regaining momentum.

Second, SAIC Volkswagen and SAIC General Motors are undergoing the painful process of “fighting for survival with one arm severed.” Sales data reflects this harsh reality directly: in 2025, SAIC Volkswagen sold 535k vehicles, down 10.81% year over year. Although SAIC General Motors saw a 22.99% year-over-year increase in 2025 to 535k units, this was built on the premise that 2024 “fell into the bottom,” and its absolute scale is already cut in half compared with its peak period.

Even more worrying is capacity utilization. According to the financial disclosures, SAIC Volkswagen’s designed production capacity is as high as 1.92 million vehicles, but during the reporting period it produced only 1.06M, causing capacity utilization to fall to 55%. SAIC General Motors, meanwhile, had only 37% capacity utilization. This means that nearly half of the production lines of these former “money printers” are idle.

For example, after SAIC Volkswagen’s Anting plant No. 1 was shut down, some equipment was relocated to Changsha, Ningbo, and other places; SAIC General Motors’ Shenyang Beisheng plant was activated by Geely.

The depreciation pressure brought by low capacity utilization is a sword hanging over traditional joint-venture automakers. SAIC’s solution is to “adjust capacity”—freeing up some idle capacity from Volkswagen and GM to produce under the independent brand “Aijie.” While this “cage-swap” approach can lower costs, it also signals the complete end of the golden era for joint-venture brands in the Chinese market.

According to data from the China Association of Automobile Manufacturers, in 2025 the industry-wide passenger vehicle capacity utilization rate is about 55%, while the capacity utilization rate for fuel vehicles is even lower. SAIC Volkswagen’s capacity utilization is around the industry average; Chang’an Ford and Beijing Hyundai are even lower, at only 25%-30%. To actively transform and improve efficiency and quality, SAIC Motor shut down or converted low-efficiency fuel-vehicle plants to release capacity to independent brands and new-energy vehicles.

At the same time, SAIC’s independent brands are doing everything they can to “cover the gap,” but the gap in profitability is enormous.

In 2025, SAIC’s independent brands (including passenger vehicles, Maxus, IM Motors, and Wuling) sold 2.93M vehicles, up 21.6% year over year, and their share of the group’s total sales increased to 65%. This means the structural turning point for SAIC shifting from “joint-venture-driven” to “independent-driven” has already arrived.

However, this “covering the gap” is brutal. Although SAIC-GM-Wuling contributed 1.62M units, its products have low unit prices and mainly plays a “volume” role. Although IM Motors’ sales grew 23.68% to 81k units, its scale still lags behind the leading new forces. On a profitability basis, it achieved single-month profitability in December 2025, but there is still a long road before achieving sustained and stable profitability.

In contrast, the one truly holding up the flag of profits is its component giant, Huayu Automotive, whose net profit reached RMB 7.2 billion. A somewhat awkward reality has been exposed: brand value-added for complete vehicles is being eroded by price wars. SAIC is currently relying more on “internal circulation” across its industrial chain—upstream and downstream—to maintain its “respectable” position.

The Aijie brand, SAIC’s collaboration with Huawei, launched its first product, H5, into the market in September last year. Although it quickly entered the 150,000 to 200k RMB tier, Huawei’s halo means profit is being diverted. For SAIC, this is both a shortcut to quickly acquire intelligence and a compromise under the pressure of real sales for the old “soul” theory. Independent brands have taken over the sales relay baton, but they have not yet picked up the profits relay baton.

An “emergency brake” overseas and a bet on a “technology foundation”

The joint-venture predicament in the domestic market is an “old ailment,” while the slowdown in overseas growth is a new challenge SAIC faced in 2025. As a pioneer in China’s vehicle exports, SAIC has topped the export rankings for consecutive years, but the overseas data released in 2025 has sent dangerous signals.

Export growth has sharply slowed, and its leading position is under serious challenge. The financial report shows that in 2025 SAIC’s exports and overseas base sales were 81k vehicles, up only 3.09% year over year. While this number remains large, compared with the explosive momentum in 2024 and earlier, it is almost flat. By contrast, BYD’s overseas sales first broke the one-million-unit threshold in 2025, with a year-over-year increase of as much as 145%.

Looking in detail, while MG’s sales in Europe exceed 300k units and it remains the “best-selling Chinese brand in Europe,” its growth rate is clearly constrained by Europe’s anti-subsidy investigation into Chinese electric vehicles and tariff barriers. To respond, SAIC has tried to bypass some restrictions with hybrid models such as MG3 HEV and pushed local production in places like Indonesia and India. However, geopolitical friction is raising the bar for overseas expansion. In addition, “revenue from other regions” in the financial report increased 15.6%. Although this is higher than domestic figures, compared with the earlier trend of doubling growth whenever before, SAIC’s “overseas giant ship” really does need to find a new propulsion engine.

Fluctuations in cash flow also implicitly suggest risks in financial business and tightness in real operations. In 2025, SAIC’s net cash flow from operating activities was RMB 34.3 billion, down sharply 50.47% from RMB 69.27 billion in 2024. SAIC’s financial report explains that it was due to changes in the size of vehicle loan business carried out by the subsidiary “SAIC Finance.”

In 2025, as the “price war” in the auto industry intensifies, to stimulate sales, automakers often reduce the barrier to buying cars by increasing financial penetration. Changes in the loan scale at SAIC Finance indicate that to digest inventory or stimulate end-customer consumption, SAIC may be taking on more financial risk or fronting more funds.

When the money made from selling cars is not enough to cover the funding cost of the financial loan business, the financial business ends up dragging down overall cash flow. A net inflow of RMB 34.3 billion may still be solid, but compared with the sharp halving in the decline rate, SAIC’s pockets are not as roomy.

Faced with this predicament, SAIC is betting on a “technology foundation” and “cost reduction and efficiency improvement.” In 2025, SAIC’s total R&D spending was RMB 21.7 billion. Although the absolute figure remains large, R&D spending as a proportion of revenue was only 3.36%. This ratio is not only far below BYD’s 7.8%, but even lower than that of some new-energy-focused automakers.

SAIC also places heavy emphasis in its financial report on its “seven major technology foundations,” including solid-state batteries and the Galaxies full-stack solution. In particular, mass-production deployment of semi-solid-state batteries on the MG4, and the integration of the solid-state battery “pilot line,” are described as its final barrier in the electrification race. But the question is whether these technologies can translate into real market pricing power, the way BYD’s blade batteries and DM-i have. At present, SAIC’s technology appears more “defensive,” used to catch up with industry standards rather than “offensive” innovation that disrupts them.

In addition, SAIC is squeezing out profits through extreme “cost reduction.” Deregistering the commercial-vehicle business unit, SAIC Hongyan entering judicial reorganization, closing loss-making direct stores… These “cutting-to-the-bone” operations, while leading to a significant increase in asset impairment losses, also discard historical burdens. This kind of “financial big bath” may make the 2025 statements show a temporary “rebound,” but it clears obstacles for healthier development in the future.

SAIC in 2025 is like a critically ill patient undergoing a major surgery in the ICU. The surge in net profit results from the low base combined with the joint effect of asset disposals and the closure of loss-making businesses—not from a true recovery of “muscle.”

The real challenge lies in 2026 and beyond. Independent brands must evolve from “sales contributors” to “profit contributors.” The overseas market must find openings within trade barriers to regain speed. And investment in solid-state batteries and intelligentization must create brand value-added like joint-venture brands did back then. The goals proposed by SAIC Motor Chairman Wang Xiaoqiu — “5 million in sales and RMB 700 billion in revenue” — mean that in 2026 it must move further beyond the current baseline.

After stripping out the RMB 4 billion gains from non-current asset disposals and the fluctuations in financial assets, has SAIC’s core business truly formed a foundation at the bottom? Under the encirclement by BYD, Geely, and even Huawei’s ecosystem, the era when SAIC once relied on Volkswagen and GM to “win by lying back” has already come to an end permanently. Now SAIC is fighting a tough positional war to secure an entry ticket to the second half of the new energy era.

(Source: 21st Century Business Herald)

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