Jianghuai Automobile loses another 1.7 billion yuan, and the "Zunjie" initiative still struggles to offset core business pressures

Source: New Yellow River client

Recently, Anhui Jianghuai Automobile Group Co., Ltd. (600418.SH, hereinafter referred to as “JAC Motors”) disclosed its 2025 annual report. In the current A-share auto sector, the company’s performance in the capital market shows a clear mismatch with its operating data.

On the one hand, driven by its “Zunji” brand, the market holds high expectations for its move upmarket, and the company’s total market capitalization has recently surpassed the one-trillion-yuan threshold; on the other hand, judging from the financial data, this long-established automaker is still in a stage of pressure on its traditional business, with its new business not yet fully ramped up.

If you look at “Zunji” on its own, JAC Motors’ annual report is not exactly comfortable: its main business is still loss-making, and its overall profitability has not yet shown a clear turning point.

Revenue is rising, sales are falling: The pull from changes in product mix

In 2025, JAC Motors achieved operating revenue of 46.48B yuan, up 10.35% year over year. However, in contrast to revenue growth, vehicle sales declined: full-year sales of complete vehicles and chassis totaled 384.1k units, down 4.72% year over year.

This situation of “revenue growth but sales decline” mainly comes from changes in product mix.

The high-end brand “Zunji” launched in cooperation with Huawei has significantly raised the overall per-vehicle price. The financial report shows that the Zunji S800, which is priced in the million-yuan range, was launched on May 30, 2025. As of the end of the reporting period, cumulative deliveries have exceeded 10,000 units. Although the sales volume is not large, the contribution to revenue is relatively direct.

As a result, the company’s passenger car segment revenue increased 46.99% year over year, reaching 384.1k yuan.

However, from a structural perspective, this growth has a certain concentration. In its annual report, JAC Motors mentioned, “In the passenger car segment, besides Zunji, the company’s brand market competitiveness is not strong.” Against the backdrop of declining shares in traditional passenger cars, the incremental passenger car business at present relies, to a large extent, on the single brand Zunji.

Where does the loss come from? Joint-venture drag, insufficient capacity utilization, and handling of R&D

The pressure on the profit side is even more direct. In 2025, JAC Motors recorded an attributable net profit of -18B yuan, and its non-recurring profit and loss (after deducting the non-recurring items) was -1.7B yuan.

Structurally, the loss mainly comes from several areas.

The joint-venture segment is still weighing on profits. The Volkswagen Anhui project, which is in the investment stage, has a continuous impact on the current period’s performance. Based on industry estimates, its 2025 loss had a negative impact on JAC Motors’ investment income of approximately 1.08 billion yuan.

Low capacity utilization is also amplifying cost pressure. In 2025, JAC passenger car sales were 149k units, down 10.63% year over year. The company disclosed designed passenger car capacity of 340k units, corresponding to a capacity utilization rate of about 42.36%. In a heavy-asset industry such as automobile manufacturing, once capacity is idle, depreciation expenses are difficult to compress and will continue to erode profits.

The way R&D expenditures are capitalized and handled also affects profit presentation. In 2025, the company’s R&D spending was 2.5B yuan, up 20.64% year over year. Of this, the capitalization ratio was 56.71%, corresponding to 149k yuan. That means more than half of its R&D spending is not recognized as expenses in the current period, but is instead recorded under asset accounts. If a more prudent expense-based recognition approach were used, the loss for the current period would likely expand further.

With pressure on its main business, non-recurring gains and losses provided a certain level of support to profits. In 2025, the company recognized government subsidies of 568 million yuan and gains from disposal of non-current assets of 145 million yuan.

Even so, as of the end of 2025, the parent company’s cumulative undistributed profits were still -340k yuan, and it does not have the conditions to implement cash dividends.

Impacting 65 billion-yuan revenue: Growth depends more on the cadence of new car launches

Although profitability is under pressure, JAC Motors’ cash flow and the commercial vehicle business are still maintaining the fundamentals.

In 2025, the company’s commercial vehicle business achieved operating revenue of 4.18B yuan, with a capacity utilization rate of 72.68%. At the same time, net cash flow generated from operating activities for the full year was 2.37B yuan, up 25.20% year over year.

On the funding front, the company’s 3.5 billion yuan of market-oriented financing has already been approved, and it will mainly be used to support the development of the Zunji high-end brand.

For 2026, the company has put forward a relatively aggressive target: it expects sales of 424k vehicles, up 10.4% year over year; and its target for total operating revenue is 65 billion yuan, up about 39.58%.

In terms of scale, additional revenue of nearly 20 billion yuan cannot be achieved relying on only the Zunji S800 model. According to the plan, products such as MPVs and SUVs developed around this platform are being advanced, and 2026 will enter a new stage of concentrated new car launches.

Based on the current situation, the valuation that the capital market assigns to JAC Motors is, to a large extent, based on expectations for its upmarket transformation—especially the upside implied by Huawei’s empowerment.

But whether these expectations will be realized depends on the actual delivery of subsequent models, as well as the pace of improvement in capacity for traditional businesses and the joint-venture segment. Before it truly achieves stable profitability, JAC Motors still needs to find a balance between its new and old businesses.

(Reporter Du Lin, New Yellow River client)