For state-backed automakers such as SAIC Motor and BAIC Group, the real solution to rebuilding market confidence may not lie in short-term capital market measures, but in their ability to compete in the next phase of electric vehicles and intelligent mobility.
Within one week, several Chinese state-owned automakers sent strong signals to investors, triggering an unusual wave of shareholder actions aimed at stabilising listed auto companies.
On July 20, SAIC Motor announced that its controlling shareholder, Shanghai Automotive Industry Corporation, would not reduce its stake in the company through any method for six months from that date. The shareholder currently owns around 7.324 billion SAIC shares, representing 63.71% of the company.
The same day, SAIC issued similar non-sale commitments for its listed subsidiaries Huayu Automotive Systems and, later, Power Solutions International. Four days later, BAIC Group announced a different approach: direct share purchases in three listed affiliates, BAIC BluePark, Foton Motor and Bohai Automotive.
A Falling Market Set the Stage for the Intervention
To understand why state-owned automakers moved to support their share prices, investors first need to look at the broader market environment.
In the first half of 2026, China’s A-share vehicle manufacturing sector declined by more than 28%. The combined market value of listed automakers fell from around $720 billion at the beginning of the year to approximately $600 billion by the end of June, erasing nearly $120 billion in market capitalisation.
Hong Kong-listed electric vehicle companies also experienced significant corrections, with the sector falling more than 20% during the same period.
SAIC Motor shares came under sustained pressure. By July 1, the stock had fallen 35.74% since the beginning of 2026, while its free-float market value and average daily trading volume had both declined significantly. The company was also removed from the SSE 50 index in June.
BAIC BluePark faced similar valuation pressure. Its share price dropped sharply during the year, with the maximum decline from its annual peak exceeding 40%. On the day of BAIC’s announcement, the stock closed at 4.73 yuan per share, compared with a previous high above 8 yuan.
The market correction reflected deeper industry challenges. China’s passenger vehicle market entered a rare adjustment cycle, with retail sales in the first half of 2026 falling 20.2% year on year to about 8.7 million units.
The industry has also moved into a phase of intense competition. After EV penetration exceeded 40%, growth momentum slowed significantly. Around 630 new models entered the market during the first half of the year, while vehicle manufacturing margins dropped to around 1.5%, among the lowest levels in recent years.
Two Different Strategies: Locking Shares and Buying Stocks
Facing prolonged share price pressure, SAIC and BAIC chose two different paths: one chose restraint, while the other committed fresh capital.
SAIC’s controlling shareholder stated that the decision was based on confidence in the company’s future development prospects and recognition of its intrinsic value. The six-month commitment prevents the controlling shareholder from selling existing shares, including additional shares received through capitalisation or dividend distributions.
The move carries a clear message for investors: SAIC’s controlling shareholder believes the current valuation does not fully reflect the company’s long-term value and prefers to remain aligned with the listed company.
BAIC Group adopted a more direct approach. It plans to increase holdings in BAIC BluePark, Foton Motor and Bohai Automotive through open-market purchases within six months, with total planned investment capped at around $35 million.
The company said the move reflected confidence in its strategic development plans and its commitment to supporting listed subsidiaries, including potential restructuring and quality asset injections.
This was not BAIC’s first attempt to align management interests with shareholders. Earlier in 2026, BAIC BluePark announced a collective purchase plan involving the group and 22 senior executives, with planned investment of around $2 million.
More Automakers Turn to Buybacks and Share Support
The trend extends beyond SAIC and BAIC. Changan Automobile announced a share buyback programme in February with a planned value between approximately $140 million and $280 million. Seres announced that its controlling shareholder would increase holdings by around $210 million to $420 million. JAC Motors also launched a buyback programme worth up to around $140 million.
Across the sector, listed automakers are using different methods — from preventing shareholder sales to direct purchases — to signal confidence in their long-term strategies.
Can Share Support Measures Reverse the Decline?
In the short term, the measures have improved investor sentiment. SAIC shares recovered after the announcement, while BAIC BluePark stabilised following the purchase plan and later hit its daily trading limit, closing at 5.74 yuan with a 9.96% gain.
Yet longer-term recovery remains difficult. The fundamental pressures facing the industry cannot be solved through share purchases alone.
China’s EV incentives are gradually being reduced, while automakers continue to face declining demand, aggressive price competition and shrinking margins. At the same time, capital markets have shifted attention toward sectors such as artificial intelligence and semiconductors, creating additional pressure on traditional vehicle manufacturers.
State-owned automakers also face the challenge of closing the gap between operating scale and market valuation. SAIC sold 4.507 million vehicles in 2025 and is targeting a 5 million-unit scale in 2026, yet its market value remains far below previous levels. BAIC BluePark reported strong sales growth in the first half of 2026, but still expects a significant loss for the period.
The Real Test Lies Beyond the Stock Market
Share support measures are not meaningless. From a long-term market value management perspective, they can provide confidence during periods of uncertainty, reduce irrational selling pressure and better align management incentives with corporate performance.
But they cannot replace the fundamental work of transformation. The long-term direction of share prices will ultimately depend on operational improvement, technological competitiveness and the ability to win in electric vehicles and intelligent mobility.
For SAIC, BAIC and other state-owned automakers, the strongest defence against market pressure will not come from short-term capital market actions, but from building a stronger position in the next generation of automotive technology.
