In the latter half of 2024, SAIC-GM, the automotive joint venture between SAIC Motor Corporation Limited and General Motors, is set to step out of an Intensive Care Unit (ICU) phase that has plagued its operationsThe company is on a mission to reclaim its position as a leader in the joint venture landscape within the highly competitive Chinese automotive market.

The year leading up to this transformation was particularly challenging for SAIC-GMAccording to General Manager Lu Xiao, the company faced "the darkest hour" in its operational history, marked by a significant decline in market share, dwindling sales numbers, and mounting pressure on the management team"Last year was one of the toughest yet for us due to intense competition and a slump in sales," Lu reflected during a communication conference held on January 13. Yet, rather than succumb to despair, the company signaled its intent to initiate a counteroffensive starting this year.

Entering the first half of 2024, SAIC-GM struggled with fluctuations in sales, ultimately reporting only 225,600 units sold—nearly a 50% decrease compared to the previous year

Three primary challenges contributed to this downturnFirstly, the company set overly ambitious operational targets for 2023, resulting in excessive inventory that necessitated a reduction in wholesale volume, directly impacting short-term profitabilitySecondly, the painful adjustments required for the ongoing transformation towards electric and intelligent vehicles incurred substantial costs—approximately 70 billion yuan—but had yet to yield significant operating revenue, which further affected profit marginsLastly, SAIC-GM found itself out of sync with market rhythms and consumer demands in several critical areas including product technology, marketing strategies, and operational efficiency.

These intertwined issues, compounded by the aggressive strategies of domestic brands, pushed SAIC-GM into a downward spiral.

In light of these circumstances, a leadership overhaul occurred in early August 2023, with the new management team promptly executing a series of strategic initiatives aimed at revitalizing the company

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This included measures to reduce inventory by 200,000 units and a committed upgrade of key models with initiatives like “fixed pricing” to protect the market positions of flagship products, such as the Buick MPV family, the Envision Plus, the Buick LaCrosse, and the Cadillac XT5.

These actions created breathing room for SAIC-GM, providing visible signs of a potential recovery.

By the end of 2023, the company reported annual sales of 673,000 units, despite falling short of expectations and previous year figuresHowever, the second half of the year showed significant improvement, reflected in a rebound trend that saw sales rise to 73,000 units in December aloneMoreover, the company’s new energy vehicle sales exceeded 105,000 units for the year, marking a 56% increase compared to the previous yearRemarkably, the fourth quarter also saw the company return to profitability.

With sales rebounding, dealer confidence in the market has begun to resurface

A month ago, SAIC-GM formalized agreements with 33 major automotive dealership groups across the nation, planning the establishment of 54 new dealerships in 40 cities in preparation for a rollout of upcoming models.

However, despite these initial signs of recovery, Lu Xiao emphasizes that the journey is far from overThe year 2025 will present further challenges, with intensified competition aheadThe joint venture era for automotive brands is quickly gaining urgency, leading to a more ruthless elimination processLu hinted that the company’s transformation would delve into deeper waters moving forward.

This year, SAIC-GM is set to unveil a new generation of integrated vehicle architecture tailored specifically for the Chinese marketThe upcoming models across its three main brands will be developed on this advanced platform, which includes a 6C supercharging battery co-developed with CATL, the high-efficiency 900V platform, smart cabin enhancements backed by AI, comprehensive autonomous driving capabilities, and integrated L3 autonomous driving functionalities.

Lu Xiao is forthright in declaring that SAIC-GM aims to shift from being a follower in intelligent vehicle technology to situating itself among industry frontrunners

This bold declaration highlights the company’s ambition to directly compete with emerging market players.

The plan for the coming three years is to launch 12 new models, all of which will be electric vehicles spanning pure electric, plug-in hybrid, and extended-range variantsThis new lineup will cover a variety of segments including sedans, SUVs, and MPVs.

The aggressive push by SAIC-GM comes in response to shrinking timelines for joint ventures in the competitive automotive arenaData indicates that aside from FAW Toyota, which achieved a minor growth of 5.9%, other joint venture brands have all faced varying degrees of decline last yearA senior executive from a competing joint venture described the fundamental dynamics in China's automotive market as having undergone a significant transformation.

During the era dominated by internal combustion engine vehicles, while joint venture brands reigned supreme, homegrown manufacturers still found niches in the market

In stark contrast, the current landscape, governed by the era of smart vehicles, hints at a zero-sum game emerging among market playersThe executive elaborated that in this atmosphere, leading brands are not only unwilling to cede market share but also actively seek to absorb competitors.

In this increasingly volatile environment, the lines between right and wrong are blurred; only victory and defeat matterIn market segments nearing saturation, fierce pricing wars dominate, prompting newer manufacturers to seize the moment, capitalizing on opportunities to consolidate their positionsThe rapid increase in domestic brand penetration rates, which soared past 50% last year, stands as a testament to this fierce competitive landscape.

Fortunately for SAIC-GM, support from its major shareholders has fortified its transformation effortsPaul Jacobson, CFO of General Motors, stated that restructuring in China is in the final stages, with the ambitious goal of achieving profitability by 2025. He expressed confidence in SAIC-GM's capability to undergo this restructuring without requiring additional capital.

When asked about the prospects for renewing the partnership between the two entities, Lu Xiao hinted that all stakeholders should stay tuned, noting that both shareholders have maintained close communications, a development that benefited from the company's rebound in the latter half of last year

Behind the scenes, SAIC-GM has experienced intense internal reshaping, with the new management team implementing comprehensive adjustments across product planning, organizational structure, core team dynamics, and operational costs.

Lu Xiao believes that SAIC-GM, with its nearly three-decade history, possesses a cohesive and robust systemHe insists that breaking through internally will allow the company to replicate successful models this year, calling this capability one of its core competitive advantages that new entrants cannot easily imitate.

Currently, Lu disclosed that the company has established a comprehensive plan looking ten years ahead, with strategic product mapping already underwayAs SAIC-GM regains its direction amidst competition chaos, it embarks on a high-stakes battle aimed at reaffirming its brand statureMoving forward, the company recognizes that speed will be critical in determining its market success.