Bernstein: GAC’s third-quarter revenue rebounds, while joint ventures’ swing to losses weighs on earnings recovery

Which businesses are growing behind the revenue rebound?

In the third quarter of 2026, GAC Group reported revenue of 28.66 billion yuan, up 17.8% year over year and 9.1% quarter over quarter. Bernstein said higher sales volumes drove revenue, though some of the increase was offset by a decline in the average selling price.
Own brands Trumpchi and Aion delivered approximately 180 thousand vehicles combined, up 12.7% year over year and broadly flat quarter over quarter. Bernstein estimates that the average selling price of the own brands rose approximately 5% year over year and 9% quarter over quarter, possibly supported by a higher share of overseas sales.
Overseas sales rose approximately 70% year over year and accounted for nearly three-tenths of own-brand sales. However, the company’s overall wholesale volume was 370 thousand vehicles, down 13.6% year over year, reflecting simultaneous growth in own brands and declines in joint-venture brands.

Under Chinese accounting standards, the third-quarter gross margin was -1.5%, an improvement on both -4.7% a year earlier and -2.4% in the second quarter, but sales revenue still did not cover the cost of sales.
Selling expenses were 2.1 billion yuan, or 7.4% of revenue, above 5.3% a year earlier but below 7.9% in the second quarter. Bernstein believes the increase in expenses may be related to overseas expansion and investment in the new brand Qijing.
Operating loss excluding investment income was approximately 4 billion yuan, compared with losses of 3.9 billion yuan a year earlier and 4.3 billion yuan in the second quarter. The overall net loss was 3.44 billion yuan, wider than the 2.29 billion yuan loss a year earlier but narrower than the 4.75 billion yuan loss in the second quarter; the net loss attributable to the parent was 2.52 billion yuan.

The profit contribution from joint ventures and associates swung to a loss of 201 million yuan in the third quarter, from profits of 952 million yuan a year earlier and 165 million yuan in the second quarter, reducing their support for the group’s results.
GAC Toyota’s third-quarter wholesale volume fell 22.4% year over year and 15.9% quarter over quarter; GAC Honda’s fell 59.1% year over year and was broadly flat quarter over quarter. Bernstein said GAC Honda’s product mix remains heavily reliant on combustion-engine vehicles.
Domestic demand also showed pressure: GAC’s third-quarter retail sales in China fell 30.3% year over year, while industry retail sales fell 23.6% over the same period; the company’s market share fell to 6.3% from 6.9% a year earlier.

At the end of September, GAC announced the acquisition of FAW’s 50% stake in FAW Toyota, leading Bernstein to expect further integration of Toyota’s two joint ventures in China. In early October, Toyota proposed a strategic alliance framework covering functions including research and development, procurement, production and sales, but the firm considers it less extensive than expected and believes substantive integration may take time.
Bernstein forecasts net losses attributable to GAC’s parent of 7.68 billion yuan and 1.61 billion yuan in 2026 and 2027, respectively, and maintains its market-perform rating and target price of HK$2.00.