Changan Auto Cuts Low-Margin Models, Shifts to Balanced Volume-Profit Strategy

In the first half of 2026, Changan Automobile sold 1.1189 million vehicles, a year-on-year decline of 236,400 units—nearly 240,000 fewer than in the same period of 2025. Sales of both its self-owned brands and new energy vehicles (NEVs) dropped significantly. The company reported consolidated revenue of approximately RMB 113.949 billion for the first half, down RMB 14.551 billion year-on-year. Net profit is projected to range between RMB 740 million and RMB 970 million, representing a year-on-year decline of 57.66% to 67.70%. The declines in sales and profitability stem from multiple factors. According to data from the China Automobile Dealers Association, domestic passenger vehicle retail sales totaled 8.701 million units from January to June 2026, down 20.2% year-on-year. Additionally, rising prices of battery raw materials, chips, and other components—combined with foreign exchange losses due to currency fluctuations—have further squeezed profit margins. Changan stated it will strengthen foreign exchange risk management and address cost pressures through cost reduction, expense control, and technological optimization. The company has explicitly adjusted its business strategy, abandoning unprofitable scale expansion. Tan Benhong, Deputy Party Secretary of China Changan Automobile Group, said the company has proactively halted production of low-priced, low-margin models such as the Lumin. Priced below RMB 50,000, the Lumin alone accounted for a sales shortfall of approximately 70,000 units in the first half. Meanwhile, the micro pure-electric vehicle (BEV) segment has shrunk overall: wholesale deliveries in June fell 50% year-on-year, and its share within the BEV market dropped to just 8%. Beyond Lumin, other sub-brands also underperformed. Avatr delivered 27,600 vehicles in the first half, over 30,000 fewer than the same period last year. The company attributed this to overall market contraction and product cycle timing but plans to launch new models like the Avatr 07L in the second half to boost sales. Changan emphasized that, given limited resources, it will no longer pursue blind volume growth but will maintain a basic level of brand presence in the market. Currently, Changan’s sales are primarily driven by three core brands: Changan Gravity, Qiyuan, and Deepal, which sold 329,800, 173,800, and 164,200 units respectively in the first half—collectively accounting for nearly 60% of total sales. Its internal combustion engine (ICE) business is transitioning toward HEVs (hybrid electric vehicles) to counter the rapid decline of the traditional fuel vehicle market: pure ICE retail sales fell 42% year-on-year in June, while conventional hybrid models declined only 7%. On the NEV front, Qiyuan plans to launch the Q06 and refresh several existing models in the second half. Deepal aims for annual sales of 480,000 units; having achieved roughly one-third of that target in the first half, it must rely on new products to drive subsequent sales. Deepal and Avatr are advancing collaboration in technology, supply chain, and ecosystem resource sharing, though they will maintain independent sales channels and user operations. Overseas markets have emerged as a key growth driver. First-half exports reached 454,700 units, up 51.87% year-on-year, already achieving 60.63% of its full-year target of 750,000 units. In July, Changan announced plans to establish an Asia-Pacific regional headquarters and a major global production base in Thailand. Despite deliberately scaling back low-margin products, Changan still needs to achieve its full-year sales target of 3.3 million units. This requires average monthly sales of approximately 360,000 units in the second half—significantly higher than the first-half pace. The company must close this gap without relying heavily on aggressive price cuts, instead leveraging Qiyuan, Deepal, Avatr, and overseas operations to boost volume while enhancing per-vehicle profitability and overall operational quality.