Changan 2020 semi-annual report released

On August 31, Chongqing Changan Automobile Co., Ltd. released its 2020 semi-annual financial report. The report shows that Changan’s total operating income in the first half of the year was 32.78 billion yuan, an increase of 9.73% year-on-year, and its net profit was 2.602 billion yuan, an increase of 216.17% year-on-year. At the same time, Changan also achieved a year-on-year sales growth of 1.3% in the first half of 2020, and its cumulative sales reached 830,992 vehicles, achieving both sales and profit growth.

It is undeniable that since 2018, the domestic auto market has begun to show a downward trend. At the same time, affected by the epidemic in early 2020, the overall performance of the domestic auto market has been lower than the same period in history. According to the sales data released by CPCA, in the first half of this year, the national passenger car market sold 7.7 million new vehicles, a year-on-year decrease of about 23%. It can be seen that in the tough first half of 2020, it is not easy for Changan to achieve both sales and profit growth.

Behind the increase in profit and sales of Changan, the strong performance of a variety of hot-selling models is inseparable. In terms of Chinese brands, including Changan CS75 series, Changan Yidong series and Changan Auchan X7 models, all of them have maintained a record of over 10,000 sales for several consecutive months. It can be said that the continued hot sales of Chinese brands is an important foundation for Changan to rise against the trend.

In order to maintain the competitiveness of its main models, Changan Automobile has maintained a relatively stable pace of product changes since entering 2020. Changan Yidong PLUS, 2021 Changan CS75 PLUS, Changan CS55 PLUS Blue Whale Edition and Changan Ruicheng CC Blue Whale Edition, etc., are all new products launched by Changan on the basis of existing mature models.

In terms of joint venture vehicles, the launch of new vehicles including Changan Ford’s new Explorer and Changan Mazda CX-30 also provided strong impetus for the steady increase in sales of Changan Automobile’s joint ventures.

The industry generally believes that China's auto market has moved from "incremental competition" to "stock competition". Therefore, the head effect of enterprises has become more obvious, and strong brands will gain more sales share in the market. At the same time, in the context of the mainstream market consumption upgrade, the mainstream market favors automotive products with core competitiveness. Therefore, the continuous upgrading of its star products is one of Changan's important measures to ensure the continuous growth of sales, which is also directly reflected in market sales.

In addition to continuous changes to existing products, Changan has also invested a lot of energy and cost in brand new products and technologies. Since the new product series represented by UNI-T was officially launched, it has received 7,414 orders in just 10 days, and successfully achieved monthly sales exceeding 10,000 in July.

For Changan, UNI-T is not only a brand-new model, but also a transformation of Changan into the high-end market. With its forward-looking design language and advanced intelligent technology configuration at the same level, Changan UNI-T has become a representative and booster of Changan brand. In the future, Changan also plans to launch more UNI serial models and form a high-low match with the existing car series to cover a wider market.

As for the Changan Oushang brand, the Changan Oushang X5 based on the Changan MPA platform has completed its debut and is expected to be launched in the third quarter. As the first sports SUV under the Changan Oushang brand, Changan Oushang X5's main consumer group is locked in between 25 and 35 years old and has made bold breakthroughs in design style.

In terms of NEVs, since 2020, Changan Automobile Group has also launched new models including Benben E-Star and Keshan EV, further enriching its new energy product matrix.

In addition to new models, Changan Automobile has also continued to move in the core powertrain, L3 class autonomous driving, and in-vehicle intelligent interconnection. With the continuous improvement of technical strength, Changan Automobile has successively eliminated more than 20 inefficient products in recent years, eliminated 1.4 million related backward production capacity, and began to focus on its strength to create explosive products.

The overseas epidemic situation continues to spread with the emergence of the long tail effect, and the epidemic is still difficult to control effectively before the vaccine is released on a large scale. It is expected that by the middle of next year, the prevention and control of the epidemic situation in major global economies and economic repair will become normal, economic growth is still struggling to return to normal levels before the outbreak. Combined with the intensification of international trade disputes, the China's exports and imports will be faced with a significant negative impact. The global economy will shrink by more than 5% this year, according to projections by the IMF and other international groups, and China's economy will grow only modestly. At present, with the economy facing downward pressure and increasing uncertainties in the external environment, residents' consumer confidence is obviously insufficient, while the short-term demand for automobiles, as an optional consumption, is obviously restrained. The decline in the auto market led to the company's current operating pressure.

Countermeasures: On the one hand, the company will continue to increase market expansion efforts, reduce the impact of external factors to the minimum, maintain the basic stability of business scale, on the other hand, strengthen the sense of hardship, continue to carry out internal potential, improve quality, reduce costs, increase efficiency, improve the quality and efficiency of business operations to ensure the achievement of strategic objectives.

In fact, since the official release of the third innovation and entrepreneurship plan in April 2018, Changan has already started the brand transformation process. After more than two years, Changan has achieved initial results in new products and new technologies, accumulated a relatively deep brand reputation and celebrity effect, and also demonstrated strong resistance and recovery capabilities in the face of downward market pressure . Under the previous dual efforts of the accumulation of technology in enterprise transformation and continuous investment in innovation and research and development, with the release of favorable factors such as the release of automobile consumption potential, its future development potential is still expected.

In the second half of 2020, when opportunities and challenges coexist, the development trend of the domestic automobile industry will inevitably depend on the influence of multiple internal and external factors. However, no matter how the industry trend changes, striving to consolidate internal strength and build a product system with sustainable competitiveness is a core capability that every automobile company needs to possess. In this regard, the Changan Automobile Group, which has deployed brand transformation early and put it into practice, has already delivered satisfactory mid-term results. We also look forward to seeing its more eye-catching year-end report card at the end of the year.