The American joint venture giant sounds the counterattack horn

Author | Chai Xuchen Editor | Wang Xiaojun Escaping the low point and launching a counterattack, SAIC-GM fired the first shot in the joint venture counteroffensive. Last year was destined to be the most extraordinary year for SAIC-GM in the past 27 years. In the first half of the year, the company's sales plummeted to a freezing point, and revenue recorded a loss for the first time. However, after the Lu Xiao team took over in the third quarter, a series of emergency measures were quickly implemented, bringing this American joint venture back on track. At a media communication meeting before the auto show on April 22, SAIC-GM General Manager Lu Xiao candidly told Wall Street Insight that the company's performance in Q1 completely exceeded the targets originally set by the board, with March sales returning to 47,000 units, maintaining profitability for two consecutive quarters. "In the past eight months, we have done a lot. First, we listened to user advice; whatever the customers want, we can provide solutions in the fastest way on the most suitable framework," Lu Xiao revealed to Wall Street Insight. "In the past year or two, our internal decision-making has also improved significantly, achieving a lock between marketing and product, and R&D is also 'for China, in China.'" After the performance recovery, SAIC-GM did not leave itself much breathing room but chose to go all out while the momentum was strong. Before this Shanghai Auto Show, as one of the hosts, SAIC-GM held three press conferences in a "three days and three nights" special forces manner, releasing a series of announcements, including the "Xiaoyao" integrated architecture, the Buick high-end new energy sub-brand "Zhijing," and unveiling the first model of Zhijing, "Zhijing Shijia." The "Xiaoyao" super integrated architecture is SAIC-GM's ace in speeding up; this architecture can achieve full coverage of vehicle types, new energy technologies, and drive forms; covering products from C-class to D-class sedans, SUVs, and MPVs; as well as diversified new energy drive technologies such as pure electric, plug-in hybrid, and range-extended. Based on the Xiaoyao architecture, Buick will launch six new models within the next 12 months. They were also lined up at the press conference, showcasing a grand momentum. Acceleration is just one part of SAIC-GM's breakout; under the "one price" promotion policy, how to break free from the curse of increasing revenue without increasing profits is even more critical. In an interview, Lu Xiao said to Wall Street Insight, "We will no longer engage in unprofitable business." "In the past two years, we pursued volume more, but it was difficult to maintain a balance between volume and profit. Currently, all operational goals still focus on profitability," Lu Xiao stated. "Many people worry that the one-price policy will lead to losses while gaining attention; this will definitely not happen. Financial reports show that we have done a lot in cost reduction over the past year or two, including technological cost reduction, and SAIC-GM has also undergone significant reforms in this area." Lu Xiao emphasized that after launching the Buick high-end new energy sub-brand "Zhijing," there will be six Zhijing models launched in the market within the next 12 months. "The goal of these new energy products is definitely profitability, and they will all be equipped with the new generation of intelligent cockpit and assisted driving technologies." He has set a new flag: By 2026, the sales proportion of SAIC-GM's new energy products will reach over 50%, and by 2027 it may even reach 60%. All these new energy products must be profitable. After regaining direction in the fog of mixed battles, the fight for brand dignity has completely begun, and speed will be everything for SAIC-GM to win the market. Below is the transcript of the dialogue with SAIC-GM General Manager Lu Xiao, Deputy General Manager Xue Haitao, Deputy General Manager Wang Chendong, and Executive Deputy General Manager of Pan Asia Automotive Technology Center Zeng Yu: Q: How was SAIC-GM's sales performance in the first quarter? Was there any adjustment to the previous goal of achieving profitability for new energy vehicles? Lu Xiao: SAIC-GM's overall performance in Q1 completely exceeded the original targets set by the board, with terminal sales of 129,000 vehicles, reaching 47,000 in March, maintaining profitability for two consecutive quarters. The company's health has returned to normal operating levels, and the performance fully meets or even exceeds the board's expectations. In terms of operations, we are currently pursuing a balance between volume and profit, placing more emphasis on the company's profitability. In the past two years, we focused more on volume, but it was difficult to maintain a balance between volume and profit. Currently, all operational goals still prioritize profitability. We have launched the Buick high-end new energy sub-brand "Aito," and in the next 12 months, six Aito new energy models will be successively introduced to the market. The goal for these new energy products is definitely profitability, and they will all be equipped with the new generation of smart cockpit and assisted driving technology. By 2026, the sales proportion of SAIC-GM's new energy products will reach over 50%, and by 2027 it may even reach 60%. All these new energy products must be profitable; we will no longer engage in unprofitable businesses. Q: Will the current tariffs affect the pricing of SAIC-GM models, and how will exports respond? Given the current competitive situation in the Chinese auto market and the backdrop of the China-U.S. tariff war, will this affect the determination of both shareholders to renew contracts? Lu Xiao: We are closely monitoring the issue of tariffs. The localization rate of all models sold by SAIC-GM is very high, just like all our competitors, with at least 95% of components being domestically sourced. Of course, some parts are imported from abroad, but this volume is very small, so we currently have no plans to adjust terminal prices. We will overcome the current impacts. Everyone is also concerned about the negotiations between the shareholders regarding the SAIC-GM joint venture. Over the past six months, there has been frequent and close communication between the two shareholders. At the board meeting on April 7, both shareholders had a high degree of consensus on the future development direction of SAIC-GM. Currently, the renewal negotiations between the shareholders are ongoing. Q: As a significant force in the development of China's automotive industry, how does SAIC-GM seek long-term development in the context of the rise of independent brands? Lu Xiao: The launch of the "Aito" brand's first high-end new energy MPV family, the "Xiaoyao" super integration architecture, and many leading concept cars under the Xiaoyao architecture have provided some answers, embodying our determination at SAIC-GM during the future transformation period Currently, the entire electrification and intelligentization industry chain in China is leading in the world. Zeng Yu: The "Xiaoyao" super fusion vehicle architecture is our next heavy weapon. This architecture is not just a traditional physical architecture; considering future economic benefits, the Xiaoyao architecture achieves great flexibility in overall dimensions, covering various body structures from sedans, SUVs to MPVs, and is compatible with all energy drive forms from electric, range-extended to plug-in hybrid. Our super fusion architecture also realizes the coexistence of various suspension forms. For example, for the front suspension, MacPherson, double wishbone, multi-link, etc., can coexist; there will also be more intelligent active chassis in the future, including the selection of rear suspension, which will definitely serve the expansion of our future new energy products, ensuring maximum space for the battery. All competitors are also in the race, with pure electric range continuously increasing from 200 to 800 kilometers. Only by leaving enough space for the battery in terms of architecture and design can we be prepared for any changes. Secondly, we will also integrate the entire architecture with the nervous system—namely, the electronic and electrical architecture. More and more components in our vehicles are not traditional iron lumps but are controlled by various electronic control units, capable of responding to different performances in different scenarios. This places high demands on the entire electronic and electrical architecture, so our Xiaoyao architecture also integrates the entire "neural unit," capable of creating over 1800 atomic services, allowing us to combine many new functions in the future to meet different customer needs. Xue Haitao: SAIC-GM and Buick have their own persistence and standards, and the core is still being responsible to consumers. Over the past many years, many brands have developed very quickly in China, but fast is not necessarily a good thing. From a technical perspective, the series of models that will be launched from now on have achieved the first place among joint venture brands in various aspects. In terms of assisted driving, we have worked with Momenta for a very long time, and we have also added a lot of redundant safety designs. This is something we have always adhered to; we must maintain a sense of reverence for car manufacturing, and I believe consumers will recognize this. Question: SAIC-GM had three pain points in the past: first, the electrification and intelligentization were relatively conservative; second, the costs were high and product positioning was unclear; third, the decision-making mechanism was lengthy. After the new leadership has been in office for 8 months, have these three issues improved significantly? Lu Xiao: In the past 8 months, we have done a lot. First, we listen to user advice; whatever customers want, we can provide solutions in the fastest way on the most suitable architecture. Regarding high costs, many people worry that a "fixed price" will lead to losses, but that will not happen. Our reports also show that we have done a lot of work on cost reduction in the past one or two years, including technological cost reduction, and SAIC-GM has also undergone significant reforms in this area. As for the decision-making mechanism, in the past one or two years, our internal decision-making work has also improved greatly, especially last year when we promoted the interlocking of marketing and products. The projects we are developing are also being strengthened, and we will definitely speed up At the age of 28, SAIC-GM wants to rejuvenate, so all future developments will be in China for China, and even for the world. The decision-making power for projects lies with the highest decision-making engineer, and the ultimate decision for the project is made by one person. Therefore, I believe our team has changed a lot in the past eight months. Q: Earlier this year, it was mentioned that at least 10 new energy models would be launched in the coming years. What new products will be introduced this year, and what is the sales target for new energy? Xue Haitao: From May to July and September, the core products under the "Zhijing" brand based on the Xiaoyao architecture will be unveiled one by one. Regarding the sales target for new energy, this year the ratio of fuel vehicles to electric vehicles in the industry is about 50 to 50. Due to national policy subsidies this year, the proportion of new energy will be slightly higher. Currently, SAIC-GM's market share of fuel vehicles continues to rise and has exceeded the tasks assigned by the board. Secondly, we need to continue to make breakthroughs in new energy. With the subsequent rollout of a series of products based on the Xiaoyao architecture, I believe we will achieve even better results. Additionally, Buick SUVs will also increase hybrid configurations, which should be unveiled by the end of this year. Lu Xiao: At the Shanghai Auto Show, Cadillac will showcase four pure electric products from the LOVE family for the first time, including the upcoming VISTIQ and ESCALADEIQ, which are large and even ultra-large SUVs. Regarding other new products from Cadillac in the future, all preparations are being intensively carried out, including Cadillac's hybrids and other types of new energy vehicle products, which have already been scheduled. Everyone will definitely see more Cadillac new energy models next year, including more advanced driver assistance technologies and the next generation of cockpits, all developed by a Chinese team from the ground up in China. Q: While SAIC-GM is transitioning to new energy, it has not given up on fuel vehicles. How will it promote "oil and electricity coexistence" in the future and enhance the market competitiveness of fuel vehicles? Lu Xiao: There are many cold markets in northern China, many mountainous areas, and fuel vehicle enthusiasts. In the future, fuel vehicles will definitely have their market share. We expect that by 2027, fuel vehicles will still account for at least 25% of the market share. At that time, companies with engines and transmission capabilities will have a competitive advantage. Currently, Chinese consumers still prefer hybrid and range-extended new energy products because they achieve better intelligence and balance in addressing range anxiety and other aspects. Therefore, we believe that fuel vehicles will still have a market in the future. SAIC-GM will firmly retain about eight fuel vehicles by 2027, and we will continue to promote "oil and electricity intelligence." These are some of our strong cards to respond to future market changes. Wang Chendong: When we consider the electronic and electrical architecture, we are not only considering new energy vehicles but also fuel vehicles. This includes many intelligent configurations. Ultimately, we still need to listen to the voice of the users and see what they want. We cannot wait until users ask for something before we prepare; by then, it will be too late. Therefore, we are preparing from the perspective of electronic architecture, including intelligent cockpits and intelligent driver assistance We have many deployments for fuel vehicles. Our ultimate principle, which everyone agrees on, is that we must have something that can be provided when users need it. Additionally, regarding OTA, upgrades are common in intelligent electric vehicles, but SAIC-GM has also been working on software upgrades for fuel vehicles, doing so in the past, currently, and will continue to do so in the future. This persistence is rare in the industry. Q: This year, "Intelligent Driving Equality" has become a theme released by various car companies. What is the strategic node for SGM's intelligent driving? Lu Xiao: The "Xiaoyao" architecture will fully implement L2 urban auxiliary driving across all models in the future. While developing locally, we will collaborate with core link enterprises and leading suppliers to jointly research and validate. However, we still adhere to one point, which is the highest safety standards in the industry. For future L2 auxiliary driving, safety is still very important. Our users can drive more confidently and safely, which is the essence of true auxiliary driving. In terms of hardware, we will build strong perception capabilities for vehicles through high-computing power chips, lidar, high-definition cameras, and millimeter-wave radar. On the software side, we are deeply collaborating with Momenta to conduct real vehicle validation, ensuring the highest industry safety access mechanisms. We have very strict requirements on how to bring the entire vehicle to market after development, ensuring that product functionality and safety are genuinely in place, and can be realized on "Xiaoyao" architecture vehicles. Our local development team has a consensus with GM that we must develop local products in China, defining our products based on the needs of Chinese users. Another consensus is on safety; there must be multiple layers of safety protection. If any sensor fails, it must immediately alert the user to focus their attention. At the same time, we have real-time monitoring of the driver, not just DMS and capacitive steering wheels. When the driver is not focused, our system will issue three alerts. If this alert does not regain their attention, we will initiate a safe stop, and the OnStar call center will contact the vehicle to ensure the safety of both the vehicle and personnel. Whether it's Buick or Cadillac, there are their own standards in this regard, which is always prioritizing safety. Q: What prompted SAIC-GM to initiate the reform of its R&D system? Zeng Yu: We believe that product updates and iterations must have a carrier. As mentioned earlier, with so many new energy products and new function products, there must ultimately be a carrier, which led to the creation of the super fusion architecture. Future competition will continuously demand the highest development efficiency and basic efficiency of vehicle models. I cannot, like some competitors, have one product with one architecture and one configuration using a set of independent parts. If so, the product development efficiency would be too low. We inherit the excellent genes of the original GM and the core capabilities accumulated by Pan Asia as an independent technology center for many years, considering the future product platform issues comprehensively and holistically All parts and system designs, how can we achieve the highest efficiency? How can we ensure that they can be shared among limited vehicle models, or can be replaced on another model with minor changes? This is the original intention behind our design of the super-integrated vehicle architecture. Speaking of the reform of the R&D system, we have indeed reflected on our R&D system, including the GVDP that SAIC-GM has always adopted. Over the years in the Chinese automotive industry, many local enterprises have directly taken our GVDP as their product development process from the very beginning. What improvements have we made to these processes? I believe that the current intensification of market competition and the acceleration of changes require us to proactively implement some reforms in our development system. The reforms mainly rely on a few points: first, the strength of the entire industrial system in China. China has the capability to make some changes to the existing R&D system, and the strong system can support us in shortening cycles and solving many efficiency issues. In recent years, the entire industry has undergone drastic changes, and the evolution of new technologies has been very rapid. In this context, we need to abandon our conventional practices; we cannot simply complete product development by benchmarking against the industry. Many times, this prompts us to engage in fundamental thinking: why am I doing this, and what value am I providing to customers? We must benchmark around whether customers need it. I believe these are very good initiatives that can help us continuously refine our products. Q: In this year's joint venture brand counterattack, various companies have launched almost 99% localized products. We see that SAIC-GM is also working in this direction. Does this mean that the company is gradually reducing its dependence on foreign parties at the technical level? Lu Xiao: The biggest advantage of joint ventures is that we can fully utilize the strengths of both shareholders, including General Motors' accumulation in many areas of intelligence, software, and hardware, which still has many resources and technical solutions that can be used by the joint venture. We can make choices, have our own judgments and capabilities, and can also transform and integrate the best solutions from both shareholders to launch solutions suitable for Chinese consumers. Both shareholders will also support SAIC-GM in making the optimal and best solutions for the joint venture, contributing to the high-quality and sustainable development of SAIC-GM in the future. Q: Recent reports of some new energy accidents have once again raised concerns about battery technology. What measures does SAIC-GM have in place regarding battery safety? Zeng Yu: In the entire Pan-Asia system, we regard battery safety as being on par with vehicle safety. This time, we also released our 900V, 6C ultra-fast charging battery, which employs a multi-faceted water cooling technology that improves the heat dissipation capability of the entire cell by 130%, ensuring that the temperature difference between each cell can be controlled within 1°C, which is a very high requirement for maintaining balance. At the same time, in the unfortunate event that the battery experiences a bottom scrape, for example, if the battery fails, our multi-faceted water cooling can also ensure minimal heat dissipation protection for the battery, ensuring that extreme situations do not occur on the battery. Additionally, these cooling pipelines are designed to integrate with the entire battery frame structure. In the entire five horizontal and nine vertical frame structure, these pipelines will run inside, ensuring rigidity while being integrated in design There will be no deformation. The batteries from SAIC-GM are definitely the safest. Q: Who are the target user groups for the GL8 Lushang? How does it differentiate from the existing GL8 family? Xue Haitao: In everyone's perception, MPVs have traditionally been seen as large vehicles that consume a lot of fuel, which families cannot afford. However, with the advent of plug-in hybrid technology, it has provided a great opportunity for MPVs to enter households. At this time, buying a seven-seater vehicle does not have a significant difference in usage costs compared to a five-seater. Personally, I believe that as new plug-in hybrid MPVs arrive, more and more families will choose an MPV as their family vehicle, giving MPVs a great opportunity to enter households. For consumers, if they are in a dilemma, choosing the GL8 is the right choice because we are the only ones with such a foundation and capability in this category. The entire GL8 series provides consumers with more choices across various price points and different customer needs, including the fuel vehicle drive system. Secondly, people who buy MPVs are most concerned about resale value, and the GL8 has consistently ranked first in resale value among MPVs in the market. Q: A series of "one-price" policies were launched from last year to this year. What has been the effect, and why has the one-price policy been more effective for Buick than for Cadillac? Xue Haitao: When I joined SAIC-GM, my thinking was straightforward: consider issues from the user's perspective. The core logic of the one-price policy is to ensure that users, whether in Shanghai or Jiangsu, pay the same price, thus eliminating intermediaries. To implement a one-price policy, it is necessary to maintain consistency across all five to six hundred stores nationwide. This is quite a challenging task, not just in terms of pricing, as it involves a series of factors including funding, sales plans, network rules, and so on. Although it is difficult, it is the right thing to do. Secondly, after the introduction of the "one-price" policy, it has received support from a wide range of consumers and company leaders. We are concerned about market share and how our share compares to competitors in each segment. From the first quarter's situation, we have seen our share increasing in our respective segments, which has been recognized by consumers. The "one-price" policy started with the launch of the Cadillac XT5 on September 28 last year. At that time, many people said that joint venture car models should not be bought at first because they would drop in price after a while. I said that new cars should not be bought quickly; shouldn't those who order early enjoy the earliest rights? This perception needs to be changed. The XT5 has performed very well since its launch, and the price remains very firm. What we are doing now is, first, to convey better product value to users, and second, to enhance the service capabilities and product strength of every 4S store for consumers, and we will steadfastly continue down this path. Q: From a market perspective, once prices drop, it is difficult to recover, which can lead to a collapse in brand value. Are Buick and Cadillac still the same Buick and Cadillac? What measures will be taken in the future to balance price and brand value, and how will Buick and Cadillac define their brands and labels in the era of electrification? ** Xue Haitao: There is an index in the market called ATP (Average Transaction Price). In the first quarter of this year, the average transaction price of Buick has reached 210,000, an increase of nearly 50,000 compared to last year. The average transaction price of Cadillac is between 270,000 and 280,000. Overall, our prices have not dropped. If we calculate an average including all models, we internally say that Buick has become a "luxury brand," because the transaction prices of most BBA brands are also around this range, and I think this is a good thing. Since the first Buick New Century was unveiled in 1999, it has been defined as a high-end vehicle. Now we need to return to our original intention. Why are we launching the "Ultimate" brand this year? In the market, it seems that everyone has been caught up in parameters and prices, which will definitely harm consumers in the long run. In the long term, we still need to maintain our original intention. That’s why we are launching the Buick New Energy high-end sub-brand today, hoping to provide high-value products and platforms for the original customer base of Buick in the future, allowing them to feel secure and trust us. Lu Xiao: Regarding the Buick brand, we reorganized our labels yesterday, which are quality, safety, comfort, and quietness. These are the characteristics I have adhered to while developing the brand DNA during the engineering phase. By this year and even into next year, the average ATP price of Buick has reached over 200,000. In addition to electrification and intelligence, we must bring high value to our customers and ourselves, which is what we need to uphold. Regarding Cadillac, if you pay attention, if you put together the four generations of XT5, you can see that they definitely come from the same lineage. This is the DNA, this is the brand tone, and this is heritage. Luxury brands must uphold these elements; a century-old luxury brand must adhere to them. After discussions with the American side, we will definitely insist on and uphold this. I believe that in the future, everyone will see that all new Cadillac products in China will have this genetic inheritance, and I will guarantee that. Question: It is said that the Chevrolet brand's distribution channels have been completely dissolved. Will there be new reforms in the channels for the other two brands of SAIC-GM? Xue Haitao: Currently, our overall volume is not large; we are a small company and need to operate like a small company. It’s about how to be lean and more efficient. Therefore, what we are doing this year is integrating Chevrolet and Buick dealerships, still providing Chevrolet users with opportunities to purchase and service their vehicles, which can greatly reduce the overall operating costs of dealers. There is no dissolution as everyone talks about; that’s not the case. We are still considering issues from the perspective of cost and efficiency. In terms of channels, we will do several things this year, with the main focus still on pricing. Once prices stabilize, the services provided by each dealership will be different. Therefore, we are now internally treating the services provided by dealers to users as a very important requirement that will be assessed Risk Warning and Disclaimer The market has risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. 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