GAC Group released its H1 2026 earnings forecast, expecting a net loss of RMB 4.06B-4.57B, nearly double year-over-year. NEV transition investments in proprietary brands continue to grow, while JV brand profits shrink significantly. The traditional "volume-for-profit" logic has broken down.
Earnings Warning: Loss Nearly Doubles
GAC Group has released a sobering earnings forecast for the first half of 2026. The company expects a net loss attributable to shareholders between 4.06 billion and 4.57 billion yuan, compared to a loss of 2.538 billion yuan in the same period last year. The adjusted net loss excluding non-recurring items is expected to range from 4.8 billion to 5.6 billion yuan, versus 2.945 billion yuan last year. In less than a year, the deficit has nearly doubled.
Even more concerning is that this bleeding occurred despite rising sales, strong overseas market performance, and year-over-year improvement in gross margins. Scale is expanding, yet profitability is contracting—a clear sign that the traditional logic of "volume drives profit" has broken down. GAC's dilemma is not an isolated case, but rather a common pain point faced by traditional Chinese automakers in the transition to new energy and intelligent vehicles.
Proprietary Brands: Profits Squeezed from All Sides
On the proprietary brand side, continuous investment in the energy transition is an industry-wide consensus. Spending on R&D, distribution channels, user operations, and retail promotions does not translate into immediate profit. High-end electric models carry heavy costs before reaching scale, while mass-market vehicles operate on razor-thin margins. Add fluctuating raw material prices, and profit margins for proprietary brands get squeezed from all sides.
GAC's proprietary brand competitive landscape:
- Premium segment: Direct competition with new EV players like NIO and Li Auto
- Mass market: Facing BYD's price offensive
- Cost side: Raw material price fluctuations continue to exert pressure
Joint Ventures: Profit Engines Lose Steam
On the joint venture side, former profit engines like GAC Honda and GAC Toyota are facing continued market share erosion. The relatively slow electrification transition of Japanese JV brands has led to noticeably slower sales growth in China. GAC Group is under pressure from both proprietary and JV brands, with profits leaking from both sides.
Challenges facing GAC's joint venture brands:
- Slow electrification transition with insufficient product competitiveness
- Rising domestic NEV brands continuously eroding market share
- Intensifying price wars further compressing profit margins of JV models
Key H1 2026 performance data for GAC Group:
| Metric | H1 2026 Forecast | H1 2025 Actual | YoY Change |
|---|---|---|---|
| Net Loss Attributable | RMB 4.06B-4.57B | RMB 2.538B | Nearly doubled |
| Adjusted Net Loss | RMB 4.8B-5.6B | RMB 2.945B | Nearly doubled |
| Overseas Performance | Strong growth | — | Continued improvement |
| Gross Margin | YoY improvement | — | Up |
Transformation Outlook: When Will the Inflection Point Arrive
For Central Asian and Russian investors and dealers following the Chinese automotive industry, GAC Group's struggles reveal the deep challenges of traditional automaker transformation. But in the long term, firm commitment to transformation and strategic resolve remain key to navigating the cycle. As GAC Aion and other NEV brands gradually ramp up volume, a future earnings inflection point is worth watching. For more Chinese automotive industry analysis, visit EX1000.COM.
