In the fiercely competitive world of the automotive industry, the distinction between being a leader and a challenger can often feel razor-thinThe phrase, "It's not easy to be the 'Big Boss' in the rivers and lakes, nor is it easy to be the 'Number Two', especially if you've previously held the top position," captures the precarious situation of many companies aiming to reclaim their former gloryThis sentiment rings painfully true for SAIC Motor Corporation, which finds itself in a precarious position in 2024.

After holding the title of China's largest automotive manufacturer for 18 consecutive years, SAIC was dethroned by BYD in 2024, a year that marked a significant shift in the competitive landscape of the automotive sectorWith total sales reaching 4.013 million vehicles, a stark contrast to BYD's 4.27 million, SAIC's fall from grace is not merely a statistic but a glaring reminder of how swiftly fortunes can change in the cutthroat automotive arena.

For a company like SAIC, being overtaken in sales by its rival BYD signals potential crises on multiple frontsThe echoes of history loom large; back in 2006, SAIC similarly surpassed FAW Group, clenching the title of the largest automotive conglomerate in ChinaThat victory was, however, followed by a long and arduous period for FAW, suggesting that the trajectory of decline could be just as consequential for SAIC if decisive actions are not taken.

In response to this alarming shift, SAIC has been actively exploring new strategies to re-establish its prominence in the industryA significant development emerged in the wake of the 2024 Lunar New Year: the announcement of a collaboration with tech giant Huawei to co-develop electric vehiclesThe partnership reflects an acknowledgment of the need for innovation and agility in a rapidly evolving market that increasingly favors new energy vehicles.

Under the newly formed alliance, the vehicles produced will adhere to the "Smart Selection" model, aligning closely with Huawei's robust electronic architecture and intelligent technologies

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While the exact details remain murky, the initial models will reportedly be based on existing SAIC brands, indicating a strategic pivot towards integrating advanced tech to regain market relevanceThe first vehicle from this collaboration, tentatively named "Shangjie," aims to hit the market by the fourth quarter of 2025.

SAIC's leadership has been vocal about their reluctance to cede control over their product direction, historically embodying a philosophy referred to as the "Soul Theory." This concept champions the idea that relying exclusively on a single supplier's comprehensive solutions would subsume SAIC's identity, reducing it to mere execution rather than innovationThe gravity of this philosophy underscores the significance of the partnership with Huawei—not only as a business strategy but as a cultural shift within the organization.

The urgency for change at SAIC cannot be understatedThe company's declining sales figures reveal an alarming truth: while their new energy vehicle (NEV) sales have seen a commendable year-on-year growth of 30%, they still only represented a mere 34.13% of SAIC’s total annual sales in 2024. With the Chinese automotive market experiencing a profound transformation towards electrification, SAIC's over-reliance on traditional fuel vehicles—which still account for over 60% of their total sales—could pose significant risks as the market pivots more decisively toward sustainable options.

Industry data paints a clearer pictureThe total sales of passenger vehicles in China hit 22.608 million, with traditional fuel vehicle sales plummeting by 17.4% to about 11.558 millionThis decline signals a broader trend in which fossil fuel vehicles are losing their market share, underlining the threats faced by companies like SAIC that have not fully adapted to this new landscapeTheir slower adoption of new energy models puts them at risk of being outpaced by competitors rapidly moving toward electrification.

Equally concerning is the growing competition among joint venture brands, once dominated by SAIC, now facing mounting pressures from an insurgent wave of domestic players

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Brands like SAIC Volkswagen, SAIC General Motors, and SAIC-GM-Wuling collectively reported a drastic drop in their sales—over 40% since their peak in 2018. The competitive landscape is shifting, forcing long established conglomerates to play catch-up in an increasingly dynamic market.

In particular, the statistics from 2024 starkly highlight the precarious situationSAIC Volkswagen reported a sales fall of 2.6%, while SAIC General Motors plummeted by an extraordinary 56.54%. The numbers reveal an urgent need for rejuvenation in branding and customer appeal as they struggle under the dual pressures of declining sales and rising competition from nimble upstart brands.

Finances, as another lens, reflect an alarming downturnWith projections of a significant plunge in net profits expected to fall sharply to between 1.5 billion to 1.9 billion yuan—an 87% drop from the previous year—it’s evident that SAIC is not merely in a transitional phase but contending with an existential challengeWith the anticipated losses in the company's adjusted net profit set to reach upwards of 41 billion to 60 billion yuan, reflection on their operational frameworks is crucial going forward.

Amid these setbacks, SAIC's decision to join forces with Huawei represents a strategic lifelineIt showcases an approach of adaptability—engaging externally rather than solely relying on in-house development to reinvent their vehicle propositionsSuch partnerships could bode well for innovation but carry an inherent risk: the more companies that ally with Huawei to leverage their technology, the less unique the advantages become, as similarities permeate the market.

Understanding the automotive landscape, it's vital to acknowledge that while Huawei’s recent success with their AITO series solidifies their technology prowess, the saturation of their partnerships may result in diminishing returns for SAIC

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