BYD's remarkable sales performance has upended the traditional automotive hierarchy in China, where it overtook SAIC, the long-standing market leader, for the first time. According to data released recently, BYD's cumulative sales for the first eleven months of 2023 reached 3.7573 million units, marking a significant 40% increase compared to the previous year. Meanwhile, SAIC's cumulative sales fell to 3.53 million units, representing a stark decline of 19.48% year-over-year.
This shift is emblematic of changing preferences within the Chinese automotive market, particularly under the rising tide of new energy vehicles (NEVs). Historically, the narrative has been dominated by SAIC, which had maintained its position as the top car seller for nearly two decades. Experts had long characterized the automotive industry as having 'one dominant and three strong players'; with SAIC firmly establishing itself as the 'one dominant' player. The recent sales figures tell a different story.
SAIC's subsidiaries—including SAIC Volkswagen, SAIC GM, and SAIC-GM-Wuling—recorded combined sales of 3.619 million units this year, down from 6.1067 million units just five years ago. This decline signals significant challenges for SAIC, underscoring the impact of rapid shifts within the industry. Entering 2024, the pressures from domestic brands have only intensified, leading to worrying forecasts for SAIC's continued market prominence.
Official sales reports indicate troubling trends for the SAIC family. The company’s performance, particularly for SAIC Volkswagen and SAIC GM, showed year-over-year declines—1.018 million units down 5.06%, and 370,900 units down a staggering 58.61% respectively. Comparatively, SAIC-GM-Wuling managed to maintain some momentum, selling 1.1605 million units, albeit with just 3.4% lower year-over-year results.
To combat this trend, SAIC launched aggressive pricing strategies last year, implementing 'fixed price' discounts across over 100 car models across its various brands. Reports suggested discounts ranging from 50% to 80%, as well as trade-in subsidies to coax buyers back to the showrooms. Despite this effort, such drastic measures have taken their toll on profits. By the third quarter of last year, SAIC reported revenues of 430.6 billion yuan—down 17.74%—and net profits plummeted by 39.45%, indicating significant financial strain.
Fortunately for SAIC, there was some rebound observed during November sales, attributed to these aggressive tactics. The company managed to sell 180,000 new cars through SAIC-GM-Wuling—a 12.5% YoY increase—while SAIC Volkswagen's numbers were also encouraging with 132,500 units sold, marking up 10.41% year over year. Yet the drop-off at SAIC GM continues to be concerning, with only 56,200 new cars sold.
Meanwhile, IM, another automotive player, has made impressive strides, achieving 58,000 units sold during the first eleven months of 2023—a staggering 106.5% increase compared to the previous year. IM is poised for ambitious growth, outlining plans to introduce four new product lines, including two electric models and two range-extended models by 2025. With expectations set for monthly sales exceeding 10,000 units, IM aims to establish itself as a formidable competitor within the mid-to-large MPV and SUV segments.
This resonates with the broader challenges facing traditional giants such as SAIC. The inability to adapt to the rapid advancements and consumer preferences characteristic of the new NEV era has been apparent for SAIC, which has recently acknowledged its developmental pace as being overly slow. The General Manager of SAIC Volkswagen, Jia Jianxu, cited the need for agility, stating, "Our current development process is still sequential, so many things are slow." This is indicative of the broader need for speed and adaptability in the fast-evolving automotive sector.
Despite current setbacks, SAIC anticipates being able to claw back some of its lost market share by 2025, following a challenging 2024. The automaker is strategizing to navigate the competitive pressures and to redefine its standing within China’s automotive marketplace, which continues to experience seismic shifts owing to consumer demand for innovative NEVs.