On August 24, 2018, Guangzhou Automobile Group Co., Ltd. (hereinafter referred to as “GAC”) officially released the 2018 semi-annual report. From January to June 2018, GAC maintained steady growth. The production and sales of vehicles respectively exceeded 1 million units, reaching 1,048,000 and 1,017,000 units, with a year-on-year growth of 7.7% and 5.5%, ahead of the industry average growth. In the first half of the year, GAC, plus its joint ventures and affiliates, realized a total business revenue of approximately 172.607 billion yuan, a year-on-year increase of roughly 6.22%. The consolidated total business revenue was approximately 37.20 billion yuan, a year-on-year increase of about 7.00%; the net profit attributable to owners of the parent company was approximately 6.913 billion yuan, a year-on-year increase of approximately 11.82%, the best record for the semi-annual report since the listing of the company. The total profit of GAC, plus its joint ventures and affiliates, was 17.174 billion yuan, a year-on-year increase of 10.6%. The total profit and tax were 34.004 billion yuan, a year-on-year increase of 4.2%. GAC was intended to distribute the interim cash dividend of 1 yuan (including tax) for every 10 shares. And it is estimated that the total amount of cash dividends of approximately 1.021 billion yuan will be distributed, an increase of about 57% over the same period of the previous year. Since the listing, GAC has accumulated a total of 11 billion yuan in cash dividends. GAC got 39th place among the “List of Listed Companies with Good Returns” jointly issued by the China Association for Public Companies, together with Shanghai and Shenzhen Stock Exchange. In addition, GAC has been among the Fortune Global 500 rankings for six consecutive years. It ranked No.202 in 2018, up 36 places from the previous year.

　　In the core business segment of vehicle manufacturing, passenger car companies such as GAC Honda, GAC Toyota, GAC Motor, GAC Mitsubishi, and GAC New Energy continued to grow. The cumulative sales of GAC Toyota in the first half of the year increased by 16.37% year on year, those of GAC Mitsubishi increased by 38.64% year on year, and GAC Hino increased significantly by 213.15% year on year; GAC BYD received an order of nearly 5,000 pure electric bus in the first half of the year. With the gradual release of the potential of China’s new energy vehicles and GAC’s continued efforts, GAC New Energy achieved sales of 6,301 units in the first half of the year, a substantial year-on-year increase.

　　Products of brands under GAC have been highly welcomed by the market. The independent brand Trumpchi GS8 is in the forefront of seven-seat SUV market segment. The sales of GM8 were increased month by month, and it has entered the first camp of premium MPV market. GAC New Energy GE3 530 is under official pre-sale, which became the only domestic pure electric SUV that has achieved the highest subsidy standard in terms of power consumption, battery life and energy density. Such star models as Eighth-Generation Camry, Levin, Highlander, Tenth-Generation Accord, Avancier, Odyssey, Outlander from GAC’s JV continued to sell well.

Continue to Strengthen Core Competitiveness

　　In the first half of the year, GAC continued to focus on quality improvement and efficiency enhancement and consolidate its core competitiveness in terms of system improvement, business layout and personnel training.

　　In terms of perfecting the development system of independent brands, GAC actively promoted the construction of key projects such as GAC’s Industrial Park for Intelligent and Connected NEVs (“the Park”) and the first phase expansion and the second phase of  GAC R&D Center Hualong Base. In addition, the company continued to promote independent research and development, enhance the cultivation of independent innovation capabilities and strengthen the driving force for high-quality development. From January to June, GAC had 462 new patent applications (119 invention patents), and 3,850 cumulative patent applications (1,061 invention patents). GAC’s project of “Gas Engine High-efficiency Combustion Technology and Product Development” won the first prize of the 2017 Guangdong Science and Technology Award.

　　In such aspects as “Electrification, Internationalization, and Intelligence& Connectivity”, we are actively deploying emerging business modes and promoting the steady development of internationalization undertakings. In the first half of the year, GAC and NIO jointly established a new energy automobile company, and successively signed strategic cooperation agreements with Cisco China and Didi for more extensive cooperation in the fields of driverless technology, big data application and mobility services; on April 18, GAC also obtained the first batch of autonomous driving test vehicle licenses issued by the Chongqing Municipal Government; on June 16, GAC Trumpchi All-New GS4, the first fruit of cooperation between GAC and Tencent, was launched. This state-of-the-art model is equipped with Tencent “AI in Car” system and supports such features as voice control and connection with cell phone. In addition, on April 14, GAC Advanced Design Center in Los Angeles was officially opened inaugurated, undertaking such tasks as forward-looking design, interaction and experience design and brand visual design. The Center emerged as an important platform for GAC to integrate overseas resources, create a top R&D team and establish a global R&D network.

　　Inheriting the concept of taking talents as the first resource, GAC has recently promoted a series of management system and mechanism reforms, and strived to build a high-quality, young and professional talent team. At the Beijing Auto Show in this April, GAC released a new strategic concept of corporate culture - the GAC philosophy and the corporate culture slogan of “Creativity Defines our Future”, and transforming the excellent cultural essence of GAC into the productivity that promotes high-quality development; In June, GAC University and GAC Party School were unveiled, which would continue to deliver talents for the transformation, innovation and development of GAC. GAC also went to Germany and France to launch overseas talent recruitment events in June, attracting a large number of overseas high-end talents. Among 351 interviewees, 172 of them had the intention to join us.

Accumulate and Promote Continuous High Quality Development

　　In 2018, with its open, pragmatic and user-centered innovation practices, GAC breeds dynamics for independent development, joint venture and collaboration, transformation and upgrading, giving rise to new opportunities for development. At the same time, GAC actively responds to the higher requirements of corporate development through the practice of open pragmatic and independent innovation in light of such factors as current international situation, industrial policy, trend development and market environment.

　　In the second half of this year, with the launch and gradual ramp up of GAC Trumpchi All-New GS4, GAC New Energy GE3 530, GAC Honda 2018 CITY, GAC Toyota C-HR, GAC Mitsubishi Eclipse Cross, we have good reasons to believe that sales of GAC will continue to rise.

　　In terms of intelligent connected new energy vehicles, on July 19, GAC and CATL formed two joint ventures. Such cooperation would secure the stable supply of core components of new energy vehicles, further reduce procurement cost of core parts of new energy vehicles and enhance the market competitiveness of new energy vehicle products. At the same time, 70% of the Park has been constructed. And the project is progressing steadily according to the schedule. The first phase of the project, GAC New Energy Vehicle Plant is expected to be completed and put into production by the end of this year; such projects as GAC Aisin Automatic Transmission Factory, Guangzhou CATL Battery Joint Venture, and GAC Powertrain Factory are all scheduled to start at the end of this year. It is estimated that by 2019-2020, two newly designed models of pure electric vehicle based on new platform with a range of more than 500 kilometers will be launched every year.

　　In terms of joint ventures and cooperation, on August 13, GAC Group reviewed and approved the shareholder capital increase proposals of the joint ventures GAC Sofinco and GAC Hino, further highlighting the firm confidence of GAC and its partners in close cooperation for win-win achievement given that foreign ownership control in joint venter was eased by Chinese government.

　　In addition, GAC started to deepen the organizational reform, which was officially implemented on this August 1; it also carried out personnel adjustment and rotation for some of the leading cadres of the group headquarters and invested enterprises. In step with attaching importance to main businesses, GAC will leverage forces of strategic emerging fields such as new energy, intelligence, connectivity and mobility. GAC is poised to give full play to the synergy effect of various sectors to further stimulate the innovation vitality and promote the high-quality development; GAC’s professional manager reform was also officially launched in August.

　　GAC will size up and grasp key points to further enhance product strength, marketing force, brand reputation and execution, and take development as the top priority, reform and innovation as the driving force for development, talent as the primary resource, culture as the soft power and party building a fundamental guarantee. GAC is ready to embrace sound development driven by quality, efficiency and motivation and strive to achieve the goal of increasing sales by 10% in 2018 compared with 2017.

　　Looking ahead, GAC will always stay with “one focus, two principles and three transformations”. Besides, GAC will march proudly towards the grand objective of becoming a top 100 company in the world by the 30th anniversary of its establishment in 2027 and a first-class company with global competitiveness by the 40th anniversary of its establishment in 2037.