Last year, the entire vehicle manufacturing business had negative gross margin. GAC: Due to intense price competition across the industry.

GAC Group (02238) stated in a reply to the Shanghai Stock Exchange that the gross profit margin of the company’s complete vehicle manufacturing business for the first half of 2025 was -7.03%, down 9.21 percentage points from the full-year gross profit margin in 2024. Due to multiple factors such as industry price competition, declining sales leading to increased promotional spending, and business structure imbalance, the company’s gross profit margin for the complete vehicle manufacturing business in 2025 was negative for the entire year.

In 2025, China’s automobile market officially entered the deep water phase of stock competition. The industry development logic shifted from previous “scale expansion” to “efficiency optimization and structural upgrading,” with market segmentation becoming more intense than ever. This market characteristic of “total volume capped and structural reshuffling” directly triggered fierce price competition across the industry, with mainstream vehicle models experiencing price cuts reaching their highest level in nearly five years.

The company’s independent brand passenger vehicles continued to face pressure amid intensified competition, with sales falling short of expectations, decreasing by 22.83% year-on-year in 2025. To address inventory pressure and the risk of market share decline, the company’s main models under its independent brand increased promotional efforts, with terminal discounts generally ranging from 15,000 to 30,000 RMB, leading to a significant reduction in per-vehicle gross profit.