GAC Sprinting for 2.4m Sales in 2015, Investing More in EVs

Gasgoo.com (Shanghai Dec 3) Recently, Zeng Qinghong, CEO of GAC (Guangzhou Automobile Group Co. Ltd.) told reporters of National Business Daily, “We hope to integrate resources and make directions clear at the end of this year for next year’s work.”

A few days ago GAC expressed that it would like to purchase 100% of GAC Gonow’s equity interests, which was described as one of its measures to conduct resources integration for building a “mega self-owned” plate. Zhang Fangyou, Chairman of the Board of GAC said that GAC plans for a sales volume of 2.4m units and an annual compound growth rate of 12% in 2020. The currently rapidly growing GAC Trumpchi has not burdened too much in this 2.4m sales plan, which reflects that GAC gives free time for self-owned brands to develop and hopes to get breakthroughs in operating quality.

Zhang Fangyou proposes a clear target and requirements for GAC’s development during the “thirteen-five” period. ”We’ll strive to reach a production volume of 3m units and sales volume of 2.4m units, with an annual compound growth rate of 12% ,operating income exceeding 400b Yuan and total profits exceeding 50b Yuan at the end of “thirteen-five” period. At that time we’ll become a first-class automobile group.” He said.

In the future five years, GAC will increase investments in electric vehicles. “10% of our sales target in “thirteen-five” period isdisposed to alternative energy vehicles.” Zeng Qinghong said, which means that GAC’s alternative energy vehicles’ sales volume will reach 240,000 in 2020.

It’s quite notable that GAC’s future five-year annual compound growth rate of 12% is obviously higher than many institutions’ expectations on future automobile industry’s growth rate.

Data Center of China Automotive Technology & Research Center predicts that the Chinese automobile industry will maintain a low-speed growth with a large base during the “thirteen-five” period. The overall market size will be 28.77m units with an annual growth rate of 4%in 2020.

Zhang Fangyou expressed that, “GAC’s good performance in the “twelve-five” period sets a solid foundation for the “thirteen-five” period development.” The total sales volume in the previous ten months reaches 986,100 units, with an increasing rate of 13.66%, higher than the average growth rate of the industry.

More importantly, GAC is accelerating the resources integration strategy, which is an important measure of decreasing inputs and costs under the context of the slowing Chinese economic growth.

Recently, GAC published announcement that the company’s Board of Directors adopted The Proposal of GAC Mitsubishi Motors Purchasing Mitsubishi Imported Vehicle Business, approving its joint venture GAC Mitsubishi Motors’ purchase of 100% the share equity of Mitsubishi Motors. At the meantime, GAC is also building its self-owned plate. “Self-owned brands including Gonow, and we also hope to integrate resources.” Zeng Hongqing said. “GAC is coordinating with shareholders on the above cases. I believe shareholders will support us.”