In 2025, China's automotive industry achieved production and sales of 34.531 million and 34.4 million vehicles, representing year-on-year growth of 10.4% and 9.4%, respectively. The penetration rate of new energy vehicles surpassed the 50% threshold for the first time, while the market share of domestic passenger vehicle brands approached 70%.
Amid record-high production and sales, rising new energy vehicle adoption, and robust export growth, the industry has also entered a period of significant adjustment. Intensifying price competition coupled with high research and development expenditures has continued to pressure profit margins, leading to a pronounced divergence in the operational performance and financial metrics of listed automakers.
Among major A-share and H-share listed automakers, GAC GROUP reported operating revenue of 96.542 billion yuan, a decline of 10.43% year-on-year, making it the only company to report a year-over-year decrease. Its net profit attributable to shareholders was -8.784 billion yuan, turning from profit to loss and plummeting by 1,166.51% year-on-year. Both the magnitude of the loss and the rate of decline ranked highest among its peers, resulting in the weakest full-year performance.
This "double worst" report card stems from the combined challenges of a steep sales decline in its joint venture brands and worsening operational losses in its self-owned brands.
From a gross margin perspective, GAC GROUP's profitability is concerning. The company's full-year gross margin was -1.33%, down 7.13 percentage points year-on-year. The gross margin for its vehicle manufacturing business specifically fell to -7.35%, making GAC the only major traditional automaker among listed peers to see its gross margin turn negative.
A horizontal comparison with listed industry peers shows this figure lags behind the 8% to 13% gross margins of leading domestic automakers like Great Wall Motor and Geely Auto, and is significantly lower than the 13% to 30% levels reported by companies such as Seres and new energy vehicle makers like Xiaomi and XPeng.
On the sales front, GAC GROUP's total sales volume for 2025 was 1.7215 million vehicles, a decrease of 14.06% year-on-year. Most of its major brands experienced sales declines. GAC Honda's annual sales were only 351,900 units, down 25.22% year-on-year, marking a fifth consecutive annual decline since 2021. GAC Trumpchi's cumulative annual sales were 319,200 units, down 23.02%. GAC Aion's annual sales were 290,100 units, down 22.62%. These three major segments weakened simultaneously. GAC Toyota was the only brand to achieve year-on-year growth, with annual sales of 756,000 units, a slight increase of 2.44%.
Within the joint venture segment, GAC Honda's decline has been particularly severe, and the situation has continued to deteriorate into 2026.
According to GAC GROUP's production and sales report, GAC Honda's single-month sales in April 2026 were only 5,100 units, a sharp year-on-year drop of 72.42%. Cumulative sales from January to April 2026 were 45,161 units, down 59.39% year-on-year. This means that in the first four months of 2026, GAC Honda's total sales volume was even lower than what its Accord model alone achieved in a typical two-month period prior to 2020.
Faced with this deepening sales slump, Honda has formally initiated production capacity reduction in China. GAC Honda's Guangzhou Huangpu plant is scheduled to cease production in June 2026, and some production lines at Dongfeng Honda's Wuhan plant will also shut down in 2027. This will reduce internal combustion engine vehicle production capacity from approximately 1.2 million units to 720,000 units, a cut of nearly 40%. Against the backdrop of China's new energy passenger vehicle retail penetration rate exceeding 60% for the first time in April 2026, the survival space for traditional joint venture brands like GAC Honda is rapidly shrinking.
Regarding the weak performance, GAC GROUP explained that it was affected by fierce competition and rapid industry restructuring. While vehicle sales improved sequentially from the second quarter, they fell short of annual expectations. The company also increased sales investments in response to market changes.
Furthermore, costs incurred for organizational adjustments, process re-engineering, and workforce optimization as part of the company's reform efforts were concentrated in the current reporting period. These, combined with significant impairments of intangible assets and inventory, further deepened the losses. The substantial 8.784 billion yuan loss includes asset impairments related to unmet sales expectations, product mix adjustments, and joint venture production line optimization, representing a comprehensive financial write-down.
Automotive analysts point out that price competition in the vehicle industry has been nearly relentless over the past year, extending from A-segment cars to the premium market above 300,000 yuan, continuously squeezing the profit margins of traditional automakers. "GAC's problem lies in simultaneously bearing the dual pressures of declining joint venture performance and heavy investment in its own brands. This situation of being 'squeezed from both ends' is relatively uncommon in the industry," one analyst noted.
GAC GROUP initiated its "Panyu Action" reform at the end of 2024, but improvements in efficiency metrics have yet to be reflected in its financials. It remains to be seen when GAC GROUP will emerge from its downturn and return to a growth trajectory.
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