SAIC net profits up in spite of the downturn

The SAIC Motor Corp reported revenues up 1.13 percent, to 323.6 billion yuan ($51.07 billion) in the first half of 2015, from the same period of last year, in a semi-annual filing, on Aug 28, in spite of the serious challenges of the economic downturn, and net profits of 14.2 billion yuan, up 4.36 percent year-on-year,.

SAIC sold 2.86 million cars for the period, roughly on par with the same 2014 period, with the home market contributing 23.4 percent, or 0.4 percentage points higher than the level at the end of last year. Internationally, the company has been expanding its global presence and shifting focus from exports to overseas operations, with plans to gradually move production facilities and sales networks around the world. Its Maxus is exported products to 33 countries, including Australia, New Zealand and Ireland, and its overseas sales rose 333 percent in the first half, year-on-year.

Its vision is to become a world-famous auto company with global presence, international competitiveness, and brand influence and it has a development roadmap, where it says it will make every effort in innovative development with new technology and business models, to inject more vitality into the enterprise.

New energy and cutting-edge technologies

In recent years, with the emergence of the new energy vehicles market auto companies are paying increasing attention to new energy technology. The advent of the E50 pure electric and the Roewe 550 plug-in hybrid on the market, together with the successful debut of fuel cell vehicles, SAIC has made breakthroughs in core technologies concerning battery, electric drive and electric control systems, thus paving the way for its leading position in the home market in this area. The sales volume of Roewe 550 plug-in hybrid is expected to top 10,000 units this year.

SAIC will step up research on future technologies, as a way to foster competitiveness and tap new market opportunities. The group is making intensified effort to make information communication on innovation programs between home and abroad smoother through a series of measures, including the setup of a venture capital firm in the Silicon Valley as well as an internal seed fund, and the launch of an information sharing and program tracking system for innovation programs.

In the first half of the year, the company approved 60 innovative technology programs in intelligent driving, Internet cars, human-machine interaction, new energy, and lightweight technology and, at the 2015 Shanghai Auto Show, SAIC rolled out its iGS, its first “intelligent-driving” concept car.

Auto service and finance

SAIC says it is s trying to build a leading auto business and service in China, beginning with online-to-offline business, with the aim of bringing customers an enjoyable online and offline experiences and full-life cycle services. Its car sales and service network now covers 271 cities and 868 online dealerships, with its “Chexiang Home” program, while its “Chexiang Auction” handles used car sales. In the first half of this year, the company set up a finance division for auto financing and equity investment to merge the auto industry with the finance sector for comprehensive financial services for the auto industry. It also started its Motor Insurance Sales Co in April, to meet customer insurance needs with competitive services to help boost car sales. Currently, profits generated from financial services only account for about 8 percent of company profits, compared to a global average of about 15 - 20 percent for auto giants. So, there’s clearly growth potential.

Internet cars

SAIC reached a strategic cooperation agreement on “Internet cars” with the Chinese e-commerce giant Alibaba Group, which helped found a 1-billion-yuan Internet car fund, with the aim of building “cars on the Internet” and shaping the industry at the same time. So far, it has at least 200 engineers involved in the project, and the first “Internet car” is expected to make its debut next year. In the mid-to-long term, China’s auto market will see slower growth than in the past, but the popularity of cars will continue, with an improved, personalized consumer trend bringing new growth opportunities. For the rest of this year, the company will look for growth opportunities in the market and improve operations to increase advantages for steady growth in performance and shareholder rewards.

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