GAC and JAC forecast record Q2 losses
China's car sector is reeling from overcapacity and an extended price war, prompting regulators and industry executives to warn about risks to the sector's long-term viability.
State-owned carmakers are struggling more than private peers such as BYD, Geely and Great Wall Motor, with many teaming up with Huawei to launch new brands and develop new electric vehicles (EVs) to try to tap into the tech giant's technologies and brand halo.
GAC expects its quarterly loss to widen to between CN¥1.1bn (R2.74bn) and CN¥1.9bn (R4.73bn) from CN¥731.6m (R1.82bn) in the first quarter, according to a stock filing on Friday. That compares with a CN¥296m (R737.12m) profit in the second quarter of 2024.
An expected first-half loss of up to CN¥2.6bn (R6.47bn) would be GAC's biggest six-month loss since listing in 2010 and was attributed in part to its new EV and plug-in hybrid models failing to meet sales goals, as well as the price war.
GAC has shared in the losses of its Japanese partners, Honda and Toyota, which have ceded market share in China to local brands such as BYD. Sales of GAC's Aion- and Trumpchi-branded EV and plug-in hybrid cars have also weakened amid intense competition.
JAC Group's EV and plug-in sales slumped 35.1% to account for just 4.4% of its overall first-half sales.
The firm expects a net loss of CN¥457m (R1.13bn) in the second quarter, more than double its first quarter loss and compared with a CN¥195.3m (R486.31m) profit in the second quarter of last year, according to a stock filing on Monday.
Export-reliant JAC said its export business was in decline due to 'an increasingly complex international situation and intensified competition in overseas car markets'.
JAC is still ramping up production capacity for its high-end EV project, the filing added.
The Maextro S800 electric sedan, co-developed with Huawei, went on sale at the end of May priced from CN¥708,000 (R1,762,986), making it the most expensive EV released under the Huawei-led automotive alliance and sales network.
Arcfox, the EV unit of Beijing Automotive Group (BAIC), said on Monday it expected a second-quarter loss of up to CN¥1.5bn (R3.73bn), narrower than in the same period last year. That would, however, extend a streak of quarterly losses stretching back to the start of 2020.
GAC, JAC and Arcfox are not due to report their first-half results until August 29, but Chinese companies sometimes voluntarily publish estimates in advance when significant changes are expected.
Major carmakers including BYD, Geely and Chery are yet to disclose forecasts before their earnings announcements.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The South African
3 hours ago
- The South African
Customs at checkout? Shein introduces 'import charge'
South African Shein shoppers have spotted a new feature that includes import duties in the checkout process. This means that payment now reportedly includes the cost of customs, which it claims no longer has to be paid separately. Shein shoppers in South Africa have noticed that customs can now be paid inclusive of the order total. In the checkout process, a breakdown of prices now includes an 'import charge' fee. The Chinese fast-fashion company reveals that the fee 'includes customs duty, VAT, and other import charges paid on your behalf.' Previously, import duties were paid directly to an international logistics company before the order was dispatched to your doorstep. 'You do not need to pay any additional charges to couriers separately', Shein added. On social media, South African consumers have praised Shein over the new feature, which calculates the import duties for shoppers. TikToker @micy_lesego posted: 'No more stressing about how much we are going to be charged at customs!' Another – @refilwe_molapisi – added: 'Much cheaper. These companies were overcharging us!' @shaolin273 WAIT—Did y'all notice @SHEIN SHEIN now adds import fees BEFORE you even pay? 😳 No more delivery day surprises 😭👏 Your customs are sorted! Just pay & wait for your drip 💅 #SheinSouthAfrica #CustomsIncluded #SheinTips #SheinPlug #TikTokMadeMeBuyIt ♬ original sound – Azwinndini🌸 When shopping on fast-fashion sites like Shein and Temu, consumers should anticipate paying a large portion of import taxes. This figure – provided by an international logistics company on behalf of the company – is broken down into customs duties and VAT. Customs duties are the fee you pay for declaring goods imported into the country. As of last year, SARS imposed a 45% import duty on clothing. For other items, this can be considerably less. VAT is set at 15% and is calculated as the sum of your order's total cost plus the customs duty cost. According to YouTuber Stefan van der Merwe, Shein and other Chinese fashion companies often underdeclare goods, meaning that import taxes could be considerably lower than what they should be. Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1. Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X, and Bluesky for the latest news.
TimesLIVE
5 hours ago
- TimesLIVE
China pivot not a quick fix to US trade pains
Trade, industry and competition minister Parks Tau says while South Africa and China have made in-principle agreements to enhance trade ties, this should not be seen as a quick solution to the ongoing trade ructions with the US. Addressing the media during a press briefing on Monday morning, Tau said there were discussions with China regarding an announcement at this year's Forum for China-Africa Cooperation (Focac) for lower duty trade with the second-largest economy in the world, but this was being studied. 'It is not as simple as opening up floodgates [to China]. There have been a few developments with regard to China. These include the fact that China announced at Focac this year that it will reduce tariffs to 0% for all countries but one. 'We took the opportunity to engage with the Chinese to say: 'What does this mean?'. How do we implement it?' This was two weeks ago. They said we need to sign the China-Africa economic partnership agreement, or some form of economic agreement, so we are able to unlock this.'
IOL News
5 hours ago
- IOL News
China's manufacturing sector
China's manufacturing sector saw a modest dip in activity this July, driven by seasonal patterns and weather-related disruptions. Beneath the surface however, the sector is undergoing a measured, strategic evolution. While the headline Purchasing Managers' Index (PMI) slipped slightly to 49.3 just below the neutral threshold of 50 it would be a mistake to interpret this as a sign of structural weakness. July's data, instead reinforces a growing narrative that China's manufacturing ecosystem is becoming more resilient, technologically advanced, and structurally aligned with long-term development goals. Reading Between the PMI Lines The marginal fall in the PMI from 49.7 in June to 49.3 in July is reflective of the typical mid-year softening in industrial activity. High summer temperatures, regional flooding, and logistical slowdowns historically impact output during this period. Such temporary factors shouldn't overshadow the more telling figures – high-tech manufacturing registered a PMI of 50.6, while equipment manufacturing came in at 50.3. These sub-indexes indicate expansion and suggest that key strategic industries are not only holding firm but they are leading the way forward. In contrast to legacy-heavy sectors like low-end assembly and basic materials, China's manufacturing growth is increasingly concentrated in advanced subsectors. Industrial robotics, new energy vehicles (NEVs), next-generation information technology, and precision instruments are showing signs of durable strength. These are not just areas of domestic growth, they represent Beijing's ambitions to position Chinese manufacturing as a global standard-setter in industrial innovation. Business Confidence and Economic Foundations Strengthening July's business expectation index rose to 52.6, reflecting mounting optimism among manufacturers. The auto, electrical, and rail equipment industries all reported expectation readings above 55, an indication of robust forward orders and continued investment confidence. This improvement in sentiment is further supported by the sustained expansion of China's production index and the steady increase in manufacturing profits, which rose 1.4% year-on-year in June, reversing the 4.1% contraction seen in May. What's important here is not just the return to profitability, but the composition of it. Large enterprises, traditionally slower to pivot are showing encouraging signs of adaptability. Their stability provides a solid base, while agile small- and medium-sized enterprises (SMEs) continue to drive experimentation and sectoral diversification. China's first-half GDP growth of 5.3% year-on-year also supports the notion that manufacturing is feeding into broader economic momentum. The current trajectory points to a more balanced growth model, with manufacturing serving as a bridge between traditional infrastructure-led investment and domestic demand-driven development. Policy Precision The latest Political Bureau meeting of the Communist Party of China (CPC) laid out a forward-looking roadmap for the second half of 2025. Recognising both opportunities and risks, it outlined an agenda focused on accelerating government bond deployment, encouraging private investment, and cultivating high-growth, globally competitive pillar industries. China's macroeconomic management remains one of its most potent tools. The government has resisted resorting to blunt stimulus and instead employs targeted fiscal and monetary instruments, ensuring long-term stability without fuelling inflationary risk. Yang Zhiyong of the Chinese Academy of Fiscal Sciences reinforced this point, noting the breadth of China's macroeconomic toolbox and the policy headroom that remains untapped. Strategic Implications and the BRICS Undercurrent Within the BRICS framework, China's manufacturing strength becomes even more consequential. China is increasingly positioned to serve as the bloc's industrial backbone. This doesn't mean dominance; rather, it reflects an ecosystem where manufacturing interdependencies could be more formally structured. There is growing space within BRICS+ to build collaborative frameworks for supply chain diversification, shared technological standards, and mutual investment in smart manufacturing clusters. China's high-tech production momentum can become an anchor for such cooperation, especially in sectors like green energy, transport electrification, and semiconductors. China's July manufacturing data is a timely reminder that numbers alone don't tell the full story. Yes, the headline PMI reading dipped below 50, but this masks a far more significant shift. The qualitative upgrading of China's industrial landscape. As old engines of growth give way to innovation-driven sectors, and policy focuses on long-term competitiveness rather than short-term fixes, the Chinese manufacturing machine is not slowing, it's recalibrating. Written By: Chloe Maluleke Associate at BRICS+ Consulting Group Russian & Middle Eastern Specialist
