Guangzhou Automobile Group say H1 net loss at 2.5 bln yuan

Guangzhou Automobile Group say H1 net loss at 2.5 bln yuan

Guangzhou Automobile Group (GAG) announced its first-half (H1) 2025 financial results today, revealing a net loss of 2.5 billion yuan. This marks a significant downturn compared to the same period in 2024, when the company reported a net profit of 1.2 billion yuan [1].

The primary driver behind the loss was a substantial decline in revenue. GAG's net revenues fell by 39.3% to 36.3 million yuan in the first half of 2025, largely due to lower sales of off-road vehicles and electric vehicle (EV) products [1]. This revenue decline was compounded by a decrease in net income, which dropped to 1.7 million yuan from 2.4 million yuan in the first half of 2024 [1].

Despite the financial setbacks, GAG reported a notable improvement in its gross margin, reaching 45.2% in the first half of 2025, up from 31.7% in the same period in 2024. This increase was attributed to favorable product mix, regional sales shifts, and the sale of previously impaired inventory [1]. However, the company's operating expenses decreased by 21.4% to 18.3 million yuan, driven by lower general and administrative expenses and selling and marketing expenses, but partially offset by an increase in research and development spending [1].

GAG's research and development expenses rose by 48.5% to 2.5 million yuan in the first half of 2025 compared to the same period in 2024, due to new battery product initiatives launched during this reporting period [1]. The company's cash position also strengthened, with cash, cash equivalents, restricted cash, and certificates of deposit totaling 256.7 million yuan as of June 30, 2025, up from 126.3 million yuan at year-end [1].

GAG has been actively expanding its dealer network and exploring new revenue streams. The number of retail outlets grew to 1,050 as of June 30, 2025, and the dealer-to-retail sales mix improved from 129 to 228 by June 30, 2025, indicating a more diversified distribution structure [1]. Additionally, the company has entered collaborations with Deep Robotics and is exploring intelligent golf equipment and quadruped robots, targeting new revenue streams [1].

CEO Feng Chen emphasized a dual engine strategy that balances stable cash flow businesses with growth incubation businesses, supporting transformational ambitions. The company anticipates further profitability gains through ongoing operational refinement, inventory optimization, and cost control [1].

In summary, while Guangzhou Automobile Group reported a net loss in the first half of 2025, the company demonstrated resilience and a strong capacity for sustained growth amidst external challenges and internal transformation. The loss can be attributed to revenue declines, particularly in off-road vehicle and EV sales, but the company's focus on operational efficiency, strategic partnerships, and technological innovation positions it for long-term development.

References:
[1] https://www.aol.com/kandi-kndi-q2-2025-earnings-130041731.html