In the fast-paced world of the automotive industry, few companies face challenges like those currently confronting SAIC Motor CorporationDespite showing slight growth in overall vehicle sales for January, deeper analysis reveals significant declines when looking at individual brands under the SAIC umbrellaSAIC Volkswagen and SAIC General Motors reported major downturns, with drops of 20.94% and 6.55% respectivelyThe company’s reliance on SAIC-GM Wuling to maintain a positive sales trajectory reflects an underlying struggle that cannot be ignored.

The most alarming issue emerging from SAIC’s recent figures is undoubtedly tied to its premium brand, ZeekrOfficial reports showcased a staggering 44% decrease in Zeekr’s sales in January compared to last yearOnce a rising star in the competitive electric vehicle sector, Zeekr now finds itself at the bottom of the sales rankings among emerging automotive brands, earning the harsh label of a “poor performer.”

Throughout the first three quarters of the year, Zeekr’s stagnant sales trend only intensifiedAlthough a slight recovery was noted in October and November, the traditionally booming December sales showed substantial decline, both year-on-year and month-on-monthYearly figures may claim a 71.24% increase, but in comparison to initial goals, Zeekr barely scraped together half the intended sales with a total of fewer than 70,000 vehicles.

Compounding these issues, SAIC’s transition to a new energy vehicle strategy seems to be hitting serious roadblocks

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Troublingly, with the recent incorporation of the Feifan brand into Roewe and Zeekr encountering its growth bottleneck, SAIC’s dream of a robust electric vehicle portfolio is now being tested.

Desperation has prompted SAIC to take drastic measures in a bold strategy to redefine its approachOn February 11, 2023, news broke of a confirmed partnership with HuaweiThis collaboration will initiate a new brand, “Shangjie,” employing what’s been termed the “Zhi Xuan Che” vehicle modelThis announcement signals the potential emergence of a fifth brand under the SAIC group.

The inaugural model from this new brand is expected to leverage existing products from Feifan, with a projected starting price of 170,000 yuanPlans suggest a market launch in the fourth quarter of 2025, igniting hopes for a fresh start amidst rising challenges.

The stock market reacted positively, showing a temporary spike of around 8%. However, this enthusiasm was met with skepticism and questions regarding the long-term viability and branding strategy surrounding the new venture.

Why then, did this promising news not yield a more significant and lasting uptick? Comparisons to rival manufacturer BYD reveal a disparity; while their events cause their stock prices to soar, SAIC’s announcements seem to produce only modest gains, followed by immediate downturnsThis anomaly invites speculation and deeper analysis.

Several factors influence this unexpected reaction

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First, since November of the previous year, whispers of a Huawei and SAIC collaboration had initiated market speculation that may have diminished the impact of the official announcementInvestor sentiments can shift rapidly, and it turns out that much of this buzz had already been accounted for in stock prices.

Second, contrasting the fervent interest in past brands, the current spotlight shines brightly on Xiaomi, suggesting that Huawei, despite its strengths, may not possess the compelling allure it once didThis diluted brand appeal could have contributed to tepid investor enthusiasm following the announcement.

Third, performance metrics for the Aito brand, a product of Huawei’s automotive endeavors, have disclosed significant sales stagnationFaced with numerous brands needing developmental support under Huawei’s umbrella, the allocation of resources to the newly conceived Shangjie brand raises concerns about future performance and market share.

Additionally, amidst all these changes, analysts have humorously pointed out that the true core assets of SAIC lie essentially in Feifan and Zeekr, leading to comments suggesting that introducing Shangjie may dilute the essence of SAIC’s brand identity.

If the new models are priced between 170,000 to 250,000 yuan, potential overlaps with Zeekr’s offerings could lead to uncomfortable internal competition and positioningWithout careful branding, Shangjie risks becoming entangled in the very identity conflicts that it aims to sidestep.

Moreover, just weeks prior, Zeekr secured nearly 10 billion yuan in Series B funding

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This raises critical questions about product development continuity and whether resources should still be allocated to support Zeekr amidst new ventures.

SAIC’s leadership faces a dual-edged dilemmaOn one hand, forgoing collaboration with Huawei leaves Zeekr and Feifan struggling to compete and expand sales in a relentless market; on the other, proceeding with the Huawei partnership to launch Shangjie risks relegating Zeekr and Feifan to a marginal status, undermining their growth potential.

Furthermore, even with Huawei’s involvement, the anticipated trajectory for Shangjie could fall short of expectations, possibly stalling the existing brand’s progress and harming well-established market shares.

In the competitive landscape of approximately 200,000 yuan-priced new energy vehicles, SAIC’s Shangjie will face intense competition from a myriad of brands launching compelling offerings into an already saturated market, making the path to prominence exceedingly challenging.

As of now, SAIC Motor Corporation finds itself at an undeniably critical junctionBudget forecasts for 2024 project a net loss potentially exceeding 5 billion yuanThe pressure on finances intensifies, especially with joint ventures - key profit centers - also wrestling with declining sales and profits.

Given these circumstances, the potential partnership with Huawei surrounding Shangjie carries a weight of uncertainty

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