Sales fell across the board, performance fell sharply, Changan Automobile's sales fell to six major countries in 2018
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Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

 

After sales fell to the last of the six state-owned automobile groups in 2018, Changan Automobile’s performance showed no signs of rebound.

In the past April, Changan Automobile set the worst monthly sales record in recent years. In the list of the top fifteen car companies by sales volume in April, there is no Changan brand.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

On May 9th, Changan Automobile’s sales bulletin data showed that in April this year, Changan Automobile Group’s total sales volume was 121,200, a decrease of one-third from the same period last year. Among them, Changan Ford’s sales fell by 60.85%, Changan Mazda’s sales nearly halved, and Changan’s independent decline by more than 30%. In the first four months, the cumulative sales of Changan Automobile Group was 570,100, a year-on-year decrease of 32.54%.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

The “full-line rout” of its various brands, coupled with the ever-expanding decline, is putting tremendous operating pressure on Changan Automobile. In 2018, Changan Automobile’s net profit fell by 90% to 104,624,365 USD and its net loss after deducting non-recurring gains and losses was as high as 486,249,805 USD. In 2018, Changan Automobile received government subsidies of 441,388,844 USD which is the main source of its profits.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

In fact, starting from the third quarter of 2018, Changan Automobile has had negative net profits for three consecutive quarters, with losses of 68,520,509, 74,051,313, and 322,015 USD, respectively, and the losses have continued to expand.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

“From the current sales of Changan Automobile and the overall auto market this year, whether it is Changan Autonomous or Changan Ford, it is unlikely that sales will pick up in the short term. Moreover, under the fierce market competition, profits will also be pulled down. The possibility of a turnaround in the second quarter is very low.” On May 18, an auto industry securities analyst told a reporter from 21st Century Business Herald.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

Regarding the reason for the decline in operating performance, Changan Automobile said it was mainly due to the decline in investment income from joint ventures. However, an industry insider told reporters that it is not appropriate to attribute Changan Ford’s losses entirely to Changan Ford. Such problems as excessive reliance on joint ventures, lack of competitiveness of independent products, low brand premium capabilities, and shortcomings in product quality are the problems. The root cause of Changan Automobile’s loss.

 

 

Sales fell across the board, performance fell sharply, Changan Automobile's sales fell to six major countries in 2018

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

 

On May 10, Tan Benhong, executive vice president of Changan Automobile, admitted in an interview with 21st Century Business Herald that Changan Automobile is currently facing a very embarrassing situation. “Because the brand’s premium ability is not enough, so the overall profitability level is not high.” Tan Benhong said.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

Sales fell across the board, and performance plummeted

Although China’s auto market saw its first negative growth in 28 years in 2018, the overall industry pattern is polarized and the fittest survives. However, Changan Automobile’s sales fell by 25.58% to 2,137,800, which was much higher than the 4% decline in total automobile sales across the country.

The sluggish sales of Changan Ford and Changan passenger vehicles were the main reason for the overall sharp decline of Changan Automobile. Data show that in 2018, Changan Ford’s cumulative sales were 377,700, a year-on-year decline of 54.38%.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

Back in 2016, Changan Ford’s cumulative sales reached 957,400 vehicles that year, only one step away from the “Million Vehicles Club”. Changan Passenger Cars had won the sales champions of self-owned brand passenger cars in 2015 and 2016. After being surpassed by Geely in 2017, according to data from the Passenger Association, the cumulative wholesale volume of passenger cars of Changan Automobile in 2018 was 859,294, a year-on-year increase. A decline of 19.1%, sales have fallen below one million, no longer the style of independent leader in the past.

Entering 2019, the sales of several major brands under Changan have not improved. Even the extent of the decline is still expanding. From January to April this year, the cumulative sales of Changan Automobile was only 570,100, a year-on-year decrease of 32.54%.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

“Although the market trend this year is not good, it is also a time to test a company’s product competitiveness and ability to withstand pressure. If a car company’s decline is much higher than the overall level of the market, it also confirms the weak product competitiveness and the company’s The brand influence is not strong.” The above-mentioned auto industry insider told the 21st Century Business Herald reporter.

Changan Automobile’s joint venture sector has always been an important source of profits, but several of its major joint ventures have all fallen into trouble in 2018. Changan Ford’s sales fell off the cliff, the DS brand under Changan PSA did not improve, Changan Suzuki lost to China, and Changan Mazda’s sales also experienced double-digit declines.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

Some insiders in the auto industry believe that the biggest factor in the sharp decline in sales of Changan Ford lies in its products. The aging of its models, slow update and iteration speed, and low degree of localization have made Changan Ford lack of market competitiveness in a weak market. Although the main reason is the misjudgment of Ford’s strategy in China, Changan, the other party of the joint venture, also bears certain responsibilities.

“This shows that Changan Automobile does not have a high right to speak in Changan Ford. It is not difficult to determine the reason for Changan Ford’s stall in China. The slow response speed has already lost many market opportunities. When the market is in a downturn, I want to throw it back. It’s very difficult to find the market again,” said the industry insider.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

The downturn in sales has directly led to a decline in performance. According to a research report of Industrial Securities, Changan Mazda is the only profitable business in Changan Auto in 2018. In 2018, Changan Ford lost 122,906,744 USD, while in 2017 it made 1,874,327,846 USD; Changan PSA lost 133,661,084 USD; Changan Autonomous lost 420,955,598 USD, which is an increase from the 2017 loss of 178,214,778 USD; Changan Mazda earned 388,692,577 USD, down 0.8%.

Although Changan Automobile has always claimed that it insists on walking on “two legs” by independent and joint ventures, from the perspective of Changan Automobile’s profitability, its main profits have always come from Changan Ford and Changan Mazda. Although Changan Automobile’s autonomous sector has reached The market size of one million vehicles has been increased, but it has been at a loss. Zhong Shi, an automobile analyst, believes that Changan Automobile is completely dependent on joint ventures, and that apart from a few SUVs of its own brand passenger cars, they have little contribution to profits.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

However, when the joint venture sector was no longer able to continue blood transfusions to Changan Automobile as in the past, Changan Automobile plunged into the quagmire of losses from its annual net profit of nearly 1,536,334,300 USD.

Turning around depends on Ford, Changan waits for Lincoln

Changan Ford, the “profit cow” of Changan Automobile, is now accused of being a “drag” to Changan Automobile’s performance. For Changan Automobile, which has been losing money for three consecutive quarters, it can only hope that Changan Ford will recover. .

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

Changan Ford is the main source of Changan Automobile’s net profit. In 2016, Changan Automobile’s net profit was 1,580,119,827 USD of which Changan Ford contributed 1,387,156,239 USD accounting for 87% of Changan Automobile’s net profit; in 2017, Changan Automobile’s net profit fell to 1,096,481,789 USD and Changan Ford contributed 927,792,283 USD. The proportion of net profit is still as high as 84%. However, sales in 2018 were cut in half, which directly led to losses for Changan Ford.

Although Changan Ford launched new models in the Chinese market since then, the former ace model Fox failed to help Changan Ford reverse the downward trend. Judging from the sales in the first four months of this year, Changan Ford sold 51,200 new cars, which is almost the sales level of half a month during its glorious period.

Facing the difficulties of developing in China, Ford urgently needs a new development plan to regain confidence. On April 3, Ford China announced a new strategy for the 2.0 era-more Ford, more China. This is also the first time Ford Motor Company released its business development plan in China after the upgrade of Ford’s China business to an independent unit. The release of the new development plan also established the Chinese market’s important position in Ford’s global strategy.

Although Ford has released a brand new product strategy and marketing strategy, and even made huge changes in localization, Ford’s road to reorganization in China is full of challenges, and the current Chinese auto market is in a downward channel. Changan Ford’s future Unexpected”.

The success or failure of Ford’s strategic adjustment in China is directly related to Changan Ford’s future, and also directly related to when Changan Automobile can turn its losses.

“Changan Ford’s turning point comes from global Ford changes. One is the change of Ford China’s CEO or management. Ford China’s executives have changed relatively quickly, but they have always been foreign CEOs. Starting this year, the Chinese CEO aims to accelerate Decision; Second, the overall framework and structure of sales in China are changing, and the level of reporting has been improved. From the perspective of focusing on the Chinese market, this is a good positive change. This is related to the new cycle of Changan Ford and the future of Changan Automobile Important core indicators.” On May 10, Deng Xue, chief analyst of the auto industry at Tianfeng Securities, told a reporter from 21st Century Business Herald.

In addition to launching new products, Changan Ford’s important means of sales growth and profitability improvement will come from the rapid localization of Lincoln. Lincoln’s first domestically produced model will be put into production this year.

“Lincoln’s development or sales data before and after localization can refer to the trend of another American luxury brand Cadillac. The launch of Lincoln models has a very impressive profit margin for Changan Ford’s bicycles.” said Liang Chao, chief researcher of Guosen Securities.

However, due to intensified market competition, the current price of luxury cars is constantly dropping. After domestic production, there is still a lot of uncertainty about whether Lincoln can quickly obtain sufficient market response, and the level of profitability is yet to be evaluated.

Second-tier luxury brands such as Volvo, Cadillac, and Jaguar Land Rover have slightly insufficient brand premium capabilities, while Lincoln’s own positioning is biased towards the niche market, and how much investment income it can bring to Changan remains to be continued.

Where is the differentiated competitiveness?

“Changan Automobile is in a difficult transition period.” Tan Benhong said bluntly that the real problem that Changan Automobile has to solve in the past two years is that “joint ventures are no longer profit cows.” This is a sustainable development problem that all Chinese brands must solve.

Although Changan Automobile used to be a “autonomous brother” with sales exceeding one million, it is quite embarrassing that the autonomous sector has not brought real money to Changan Automobile, and it still needs to rely on joint ventures to “feed back”. At the same time, after the auto joint stock ratio policy was liberalized, BMW Brilliance has set a precedent. All large state-owned auto groups need to make changes for the long-term development of the company, and the autonomous sector needs to take on more responsibilities. If Changan Automobile wants to get out of the current predicament, the most important thing is to enhance the core competitiveness of its own brands.

Another reason why Changan Automobile’s performance is under pressure is that it has always invested heavily in research and development, and the profits from joint ventures have been invested in independent research and development. And Changan Automobile has always been the main label of “technical school” and has been promoting the “five countries and nine places” global research and development system for many years.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

A few days ago, the Changan Automobile Global R&D Center with a total investment of 660,623,749 USD has been put into use. In Tan Benhong’s view, the global R&D center will provide a new engine for the transformation and upgrading of Changan Automobile and is an important part of promoting the third venture of Changan Automobile.

“Independent R&D and innovation capabilities are critical and have become Changan’s most valuable differentiated strategic capabilities. Changan Automobile insists on investing 5% of its sales revenue in R&D every year, investing 1,229,067,440 USD each year. The accumulated investment in research and development expenses was 6,037,793,799 USD.” Tan Benhong said.

However, even so, some insiders told reporters that, compared with rivals Great Wall Motors and Geely, Changan Automobile’s products do not have the ability to differentiate competition, and are slightly inferior in terms of premium ability and brand building.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

“The research and development institutions around the world seem to be very large-scale, but the purpose of research and development is to take out real product advantages compared with competitors.” An automobile industry insider told the 21st Century Business Herald.

Although Changan Automobile has produced independent research and development results in the two most important core components of traditional cars, the engine and gearbox, the results are not satisfactory.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

In 2018, Changan’s main model CS75 had a large-scale recall due to the issue of “increased oil”, and the engine used in the car was a brand-new engine independently developed by Changan Automobile; in the same year, there was news that the 6AT gearbox independently developed by Changan has been released However, the new CS 85 coupe recently launched by Changan Automobile is equipped with the Aisin 8AT gearbox, which is also one of the biggest highlights of this model in its class.

The former glory is no longer there. After sales fell below 1 million, Changan Automobile is accelerating the pace of adjustment. In April 2018, Changan Automobile released its third entrepreneurship-innovation and entrepreneurship strategy, accelerating its deployment in intelligence and new energy.

Changan Automobile has launched the intelligent strategy “Beidou Tianshu Plan” and the new energy strategy “Shangri-La Plan”. However, it would be difficult for Changan Automobile to achieve a rapid turnaround in the short term through its third venture.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

In terms of intelligence, Changan Automobile appears to be more open. At present, it has reached cooperation with many domestic Internet giants such as Tencent, Huawei, and Baidu. In its recently launched new cars, it has been equipped with L2 assisted driving and other functions. However, from the current point of view, the strategies adopted by my country’s mainstream car companies in terms of intelligent driving are similar to those of Changan Automobile. The progress of several leading companies is almost the same, but there is still a certain gap with foreign multinational car companies and technology companies.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

In terms of autonomous driving, commercialization still takes time, and a large amount of investment is required in the early stage. In Changan’s third venture, a huge challenge is that continuous expenditure on new technologies will also affect Changan Automobile in the short term. Profit performance.

Although Changan started early in new energy vehicles, its development is relatively slow compared with brands such as BYD and BAIC New Energy. The product line is not rich, and the market share is limited. According to official data released by Changan, from January to April this year, the sales volume of Changan’s new energy vehicles was only 10,500 units. Facing the decline of subsidies, the test is the cost control of electric vehicles and the level of industrial scale of auto companies, which will also bring great resistance to Changan Automobile.

Earlier, Changan Automobile announced that Changan New Energy plans to introduce strategic investors to increase capital. It plans to introduce no less than 3 strategic investors, and the proportion of capital increase equity is not less than 51%. However, as of now, no strategic investors have been seen. Take the plate.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

And the stage of market downturn is also the time for the survival of the fittest. Zhu Huarong, president of Changan Automobile, once said bluntly that only five independent brands will survive in the future.

Changan Automobile, which is stuck in the darkest moment, will be more difficult to start a business for the third time than the previous two.

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018

Sales fell across the board, performance fell sharply, Changan Automobile’s sales fell to six major countries in 2018
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