GAC subsidiary faces risk of unrecovered loan from associate

Guangzhou Automobile Group Co. (GAC Group) announced that its wholly-owned subsidiary, GAC Component Co., faces the risk of not fully recovering an entrusted loan provided to its associate, Changsha Magna Automotive Exterior Co. GAC Component initially approved a loan of up to RMB 36.75 million, proportionate to its 49% stake in Changsha Magna. As of the announcement date, the outstanding balance of this loan is RMB 26.95 million, due on October 14, 2025.

The potential for non-recovery stems from Changsha Magna's declining sales and its controlling shareholder, Magna International, indicating a withdrawal from the joint venture due to strategic adjustments. Despite efforts to improve operations in 2023-2024, the current downturn in key customer sales for Changsha Magna has heightened the risk.

GAC Component has fully provisioned for bad debts related to this entrusted loan, mitigating any significant impact on GAC Group's current and future profits. GAC Component plans to engage in discussions with Magna International regarding Changsha Magna's business operations and debt settlement to protect its shareholder rights and minimize risks.