China’s former automotive king has posted a dramatic comeback in its financial results. SAIC Motor (600104.SH), the long-reigning domestic sales champion until 2024, has announced an eye-popping projected net profit increase of 438% to 558% year-on-year for 2025. Yet, this impressive headline number has been met with investor apathy, as the stock barely budged. This dissonance highlights a critical question for the auto giant: can it recover the nearly 270 billion yuan in market capitalization that has vanished since its 2018 peak? The journey to answer this question reveals a complex story of accounting shifts, strategic pivots, and the harsh reality of investor sentiment in a rapidly evolving Chinese automotive market where past glory offers little guarantee of future valuation.
Dissecting the Profit Surge: A Question of Quality
The projected net profit of 9 to 11 billion yuan is undeniably a massive leap from the dismal 1.67 billion yuan recorded in 2024. However, a closer examination suggests this ‘vanished market cap’ will not be easily recovered based on operational performance alone. The surge is built on two significant, non-recurring pillars that cast a shadow over its sustainability.
The Low Base Effect and One-Time Impairments
2024 served as an exceptionally weak base for comparison. SAIC’s profitability was crippled that year primarily due to massive asset impairment provisions at its joint venture, SAIC General Motors (上汽通用). These write-downs alone reduced consolidated net profit by approximately 7.87 billion yuan. This artificially depressed starting point makes the 2025 rebound appear more spectacular than the underlying operational improvement might warrant. It is a classic case of a low base creating a high growth rate, a nuance sophisticated investors quickly factor into their valuations.
The Indian JV Sale: Accounting Windfall vs. Operational Cash
A more significant contributor to the profit jump was the partial divestment of SAIC’s Indian operations, MG Motor India. In 2024, SAIC introduced local investors like JSW, reducing its stake to 49%. This transaction generated proceeds that boosted net profit by 5.178 billion yuan. Crucially, as analyst reports highlighted, the reduction in stake triggered a change in accounting methodology from the cost method to the equity method. This allowed SAIC to book cumulative profits from the Indian venture all at once in 2025.
As noted by several market observers, this represents a one-time, non-cash accounting gain—a realization of账面利润 (book profit) accumulated over years, not a reflection of new, sustainable earnings power generated in 2025. This distinction is key for investors questioning the quality of earnings needed to fuel a recovery of the vanished market cap.
- Key Insight: A substantial portion of the profit surge is non-recurring. Excluding the Indian JV gain and the low 2024 base, the core operational profit improvement, while positive, is less explosive.
- Data Point: SAIC’s projected扣非净利润 (non-recurring net profit) for 2025 is 7-8.2 billion yuan, a solid recovery from a 5.4 billion yuan loss in 2024, but a more modest figure than the headline net profit suggests.
The Persistent Valuation Dilemma: A Stock Stuck in Neutral
Despite the improved fundamentals, SAIC’s share price has remained stubbornly depressed, trading around 15 yuan per share with a market cap of approximately 172 billion yuan. This stands in stark contrast to its peak of nearly 440 billion yuan in March 2018 and pales next to BYD’s current market cap exceeding 850 billion yuan. The vanished market cap is a persistent shadow over the company.
The “破净” (Price-Below-Book) Conundrum
A core issue plaguing SAIC is its prolonged status as a破净股 (a stock trading below its net asset value per share). Along with GAC Group, it is one of the few A-listed automakers in this predicament. According to the China Securities Regulatory Commission’s (CSRC, 中国证监会) “上市公司监管指引第10号——市值管理” (listed company supervision guideline No. 10 – Market Value Management), companies in long-term破净 status are required to disclose valuation enhancement plans.
SAIC complied in April 2025, announcing a plan to “strive to improve the company’s market value management performance.” To date, this plan has yielded little visible success in moving the stock price. The failure to escape the破净 trap signals deep-seated investor skepticism about the company’s future return on equity, a major hurdle in recovering the vanished market cap.
Shareholder Sentiment and Strategic Divestment
Compounding the valuation problem has been the selling activity of a major state-owned shareholder. In 2021, SAIC’s controlling shareholder, Shanghai Automotive Industry Corporation (Group) (上海汽车工业集团总公司), transferred a 3.58% stake to Shanghai International Group (上海国际集团), both ultimately controlled by the Shanghai SASAC. Subsequently, Shanghai International Group systematically sold down its position, disappearing from the top ten流通股东 (tradable shareholders) list by Q3 2025.
While this was a strategic asset reallocation within the state-owned system, the减持 (reduction in holdings) by a major shareholder during a period of破净 trading was perceived negatively by the market. It undermined confidence at a time when the company was trying to signal a turnaround, making the task of市值管理 (market cap management) even more challenging.
The Strategic Pivot: New Management and a Three-Pronged Attack
Recognizing the crisis, SAIC undertook a significant leadership and strategic overhaul in 2024. Veteran executive Wang Xiaoqiu (王晓秋) succeeded Chen Hong (陈虹) as Chairman, and Jia Jianxu (贾健旭) took over as President. The new team adopted a notably humble and aggressive posture, with President Jia famously stating internally that the company must “learn to kneel to be a person,” working quietly before rising as a巨人 (giant).
They crystallized their strategy around three core pillars: strengthening自主品牌 (own brands), accelerating新能源 (new energy vehicle) development, and expanding海外市场 (overseas markets). Initial results from this refocus are promising.
- Own Brands: In 2025, SAIC’s own brand sales surged 21.6% to 2.928 million vehicles, accounting for 65% of total sales. This reduces reliance on合资企业 (joint ventures) and captures more value per vehicle.
- Overseas Success: SAIC has become a leader in automotive exports, selling 1.07 million vehicles overseas in 2025, a bright spot in its portfolio.
- NEV Volume Growth: New energy vehicle sales reached 1.643 million units, up over 30% year-on-year, though heavily weighted toward affordable models like the Wuling Hongguang MINI EV.
This operational execution demonstrates that SAIC is not standing still. However, for the vanished market cap to be recovered, these efforts must translate into higher-quality, profitable growth that captures investor imagination.
The Critical Challenge: Crafting a Compelling NEV Narrative
The ultimate test for SAIC’s recovery and its ability to reclaim the vanished market cap lies in the premium new energy vehicle segment. This is where brand value, margins, and investor excitement are generated in today’s market. Here, SAIC’s track record has been shaky, presenting its greatest strategic hurdle.
Past Stumbles in the Premium Segment
SAIC’s previous forays into the高端 (high-end) EV space have struggled. Its heavy investment in the飞凡 (Feifan/Rising Auto) brand failed to gain traction, with sales dwindling to near irrelevance by 2025. Industry analysts often point to internal competition and brand positioning issues, particularly with its other premium project,智己 (IM Motors).
Co-founded with Zhangjiang Hi-Tech and Alibaba with an investment exceeding 10 billion yuan as a “Number One Project,” IM Motors had a slow start but is showing signs of life. It delivered around 81,000 vehicles in 2025, achieving monthly profitability in recent quarters. Yet, scaling up sustainably in the fiercely competitive premium EV market dominated by Tesla, BYD, and a host of startups remains a formidable challenge.
The New Hope: 尚界 (Boundary) Brand
The focus has now shifted to the newly launched尚界 (Boundary) brand. Its upcoming models, the Z7 and H7, are seen as SAIC’s latest and most direct attempt to compete in the profitable 200,000-300,000+ yuan price bracket. The Z7, with design cues reminiscent of classic Porsches, is positioned as a direct competitor to the popular Xiaomi SU7.
The success of these models is crucial. They must prove that SAIC can not only manufacture EVs at scale but also create desirable, technologically advanced products that command premium prices and margins. Without a successful story in this space, SAIC’s valuation may continue to be pegged to its legacy joint venture profits and volume-focused, low-margin NEV sales, capping its potential for multiple expansion. The vanished market cap is unlikely to return without a breakthrough here.
Path Forward: Rebuilding Investor Trust for Market Cap Recovery
SAIC Motor has undoubtedly executed a remarkable operational turnaround in 2025, pulling itself out of a deep trough. The strategic focus on own brands, exports, and NEVs is the correct path forward in the context of China’s automotive transformation. However, the financial markets are forward-looking and demand a narrative of future growth and profitability that justifies a higher valuation.
To begin recovering its vanished market cap, SAIC must accomplish several key tasks. First, it must demonstrate that the core automotive business can generate sustainably higher and high-quality profits beyond the one-time gains of 2025. Second, it needs a clear and credible roadmap to achieving healthy margins in its new energy vehicle business, ultimately requiring a hit product in the competitive mid-to-high-end segment. Third, consistent and transparent communication with the market is essential to rebuild investor trust that was eroded during the years of decline and shareholder selling.
The battle for SAIC is no longer just about selling cars; it is about selling a convincing growth story to the capital markets. The company has shown it can weather a storm and adapt its operations. The next, and perhaps more difficult, phase is to translate that operational resilience into a re-rating of its stock. The vanished market cap of 270 billion yuan serves as a stark reminder of past disappointments and a high bar for future expectations. Only consistent delivery of premium-brand success and robust financials will provide the lift needed to scale that wall and reclaim its stature in the eyes of global investors.