BAIC Hanging Tough as EV Manufacturers Take a Battering
COVID-19 and China
New BAIC Senova D50 launched off assembly line in 2017. Image credit: BAIC Motor

Company history and management

BAIC Motor (北京汽车股份有限公司01958: HKEX) is the platform of the Beijing Automotive Group Co., Ltd (BAIC Group). The company is a car manufacturer and service provider in China and one of the leading passenger car enterprises within the industry.

Founded in September 2010 and headquartered in Beijing, BAIC is one of the enterprises to which the Beijing municipal government offers focused support. BAIC Motor completed its Initial Public Offering (IPO) of H Shares on 19 December 2014 and went public on the Main Board of the Stock Exchange of Hong Kong Limited (SEHK) with the code: 1958: HKEX.

From the manufacturing side, the company produces a wide range of brands, from JV luxury passenger cars, JV luxury commercial vehicles, JV middle-end and high-end passenger cars, to passenger cars of self-owned brands. In this way, the company is trying to address different consumer needs from diverse users. Additionally, BAIC Motor has a diverse range of business operations, from R&D, manufacturing, sales and after-sales services for passenger cars, production of passenger car core components to automotive finance and other related businesses.

The company runs its passenger car business through four complete vehicle sectors – BJ Brand, Beijing Benz, Beijing Hyundai and Fujian Benz. Furthermore, the company is also a big player in China’s electric vehicle (EV) industry, producing pure electric passenger cars.

BAIC Motor is managed under its board of supervisors, which includes Mr. Xu Heyi – the Chairman and Non-executive Director of the company – and Mr. Chen Hongliang, Executive Director and President of the company.

Current market situation and key financial indicators

The company started producing EVs in the late 2010s and benefitted largely from the subsidies provided by the government to the EV industry.

Since 2014, the Chinese EV market has been propped up by huge government subsidies as part of the government’s policy to build global leadership in cleaner driving and reduction of air pollution.

While the supply side subsidies include loans and financial aid, the demand side subsidies include tax cuts, rebates and easy provision of car plates. These subsidies will eventually make EV prices cheaper. To illustrate, for a representative, midsize car, the amount is approximately 23 percent of the total EV price, according to a McKinsey report.

Therefore, the country has spent billions of dollars on subsidies to help companies, including BAIC Motor, to achieve large-scale production of plug-in vehicles, which are gaining traction among urban drivers as well as taxi fleets and government agencies.

However, the government has been slowly rolling back its subsidies since last year. In June 2019, China cut its subsidies by about half and completely eliminated subsidies for vehicles with ranges under 250 km. The subsidy cut announcement prompted consumers considering an EV purchase to head to the showrooms in anticipation of what was effectively a price increase for EVs after June. The market felt the effect of the subsidy changes almost immediately, with monthly sales of EVs in July 2019 declining 4.7 percent from July 2018.

However, the end of subsidies isn’t all bad for the big market players. While subsidy cuts may lead Investors to be uninterested in floating small, unestablished EV makers, they may still be drawn to top competitors in the Chinese market such as BAIC Motor. The good news is the annual sales growth rate for EVs is still rising in the country despite a sales slowdown in the months following the subsidy rollback.

In fact, the company saw its overall revenue increase by 4.26 percent year-on-year in 2019 to reach USD 72.3 billion (about CNY 501.2). Moreover, Beijing Electric Vehicle Co. (BJEV), BAIC Motor's electric car-making arm, has pushed for innovative development and sold 114,000 new energy vehicles in the first 11 months of 2019. 

Total sales of Foton Motor, a subsidiary of BAIC, hit 594,500 units in 2019, with bus and truck sales outperforming the market average.

Chairman Heyi said the company will maintain its momentum of high-quality development and expects revenue of USD 80 billion ( about 520 billion yuan) in 2020.

When it comes to financial resources besides the sale profits, the company usually satisfies its daily working capital requirements through its own cash flow and borrowing. BAIC Motor’s net cash generated from operating activities decreased from USD 1,600 million (CNY 11,212.4 million) in the first half of 2018 to USD 1,530 million (CNY10,720.0 million) in the first half of 2019, representing a year-on-year decrease of 4.4 percent, mainly due to an increase in cash paid for purchasing goods.

By the end of June 2019, the company had cash and cash equivalents of USD 6,571 million (CNY 46,815.2 million), notes receivable of USD 416 million (CNY 2,914.6 million), notes payable of USD 1,121 million (CNY 7,847.7 million), outstanding borrowings of USD 3,957 million (CNY 27,830.1 million), unused bank credit lines of USD 3,428 million (CNY 24,928.5 million) and commitments for capital expenditure of USD 1,807 million (CNY 12,645.8 million). The above outstanding borrowings included USD 281 million (CNY 1,973.2 million) equivalents of Euro loans and USD 14,8 million (CNY 103.9 million) equivalents of USD loans as at the end of June 2019.

Therefore, it appears that the initially, the subsidy cuts adversely affected the sales and the net income of the company; however the company has adjusted its financials to adjust to the negative effect of the subsidy cuts and is now showing steady growth.


Although subsidy cuts may eliminate the small competitors in the market, BAIC has lots of big domestic and foreign rivals. Some of them are listed here with brief company information:

BAIC Motor's Prospects

Although the company forecast a stable or a slightly better revenue for 2020 for its operations, it is turning out to be a brutal year for the business, especially for automakers, due to diminishing manufacturing facilities thanks to Covid-19 and reduced demand due to the global economic slowdown. The company already recorded a sharp drop in sales in January 2020 – by 56 percent compared to January 2019 and by 95 percent compared to December 2019 – to just 2006 vehicles.

However, among Chinese manufacturers, BAIC remains one of the most resilient of all,  due to its management, history of operations and financials.

Editor: Luke Sheehan
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