Riding on GBA growth potential
- Dominant auto player in GBA; anticipate auto sales rebound on stimulus
- Speeding up NEV business; GAC AION Apr-22 sales ahead of EV Trio (NIO, XPeng, Li Auto)
- Aggressive in new smart vehicle models development
NEV subsidy and additional car license plates are positive on car sales for GAC. More importantly, its EV business is posting strong performance. GAC AION’s Apr-22 volume shipment is ahead of the other new EV players like NIO, XPeng and Li Auto at over 10,000 units.
GAC is racing ahead on smart vehicle development. Its ADIGO 4.0 as well as proprietary battery system are key building blocks for fast growth at its EV segment. GAC AION has an aggressive plan to deliver 600,000 units by 2025, representing five-fold growth from 2021’s level. Besides, smart car development allows GAC to move up the value chain to expand profits.
Both GAC-Toyota and GAC-Honda JVs are also ramping up their EV business scale. Toyota aims to achieve vehicle electrification rate of 60% by 2025 and Honda also plans to launch an electric vehicle every year. A clear EV strategy by the Japanese partners provides better clarity on the EV path, since the Japanese JVs contribute the bulk of GAC earnings. We estimate the JVs to record FY21-23 earnings CAGR of 15% to Rmb13bn.
2022 is expected to be an exciting year for GAC, with 15 new models in the pipeline (about half from its self-brand). Of which, six are EV new models.