Changan Integrates Avatr and Deepal to Tackle Industry Profitability Crisis

During the 2026 Beijing Auto Show, Changan Automobile announced plans to integrate its two brands—Avatr and Deepal. Despite achieving sales of 2.913 million vehicles in 2025, marking six consecutive years of growth and a nine-year high, the company reported a 44% year-over-year decline in net profit, reflecting a trend of "revenue growth without profit growth." Avatr targets the RMB 250,000–700,000 price segment, while Deepal focuses on RMB 150,000–300,000. However, their actual product lineups exhibit significant price overlap. For instance, the Deepal S09 is priced at RMB 259,900, entering Avatr’s core sales range, while the Avatr 06T starts at RMB 219,900, directly competing with Deepal’s higher-end models. In 2025, neither brand met its sales targets: Avatr posted a loss of approximately RMB 1.59 billion in the first half of the year, and Deepal incurred a full-year loss of RMB 900 million. Changan Chairman Zhu Huarong stated that the industry has entered a “black hole of disorder,” where simply increasing the number of models can no longer sustain competitiveness. The company plans to advance integration through a “front-end independence, mid-to-back-end synergy” approach: maintaining independent market operations and distinct brand identities for both Avatr and Deepal, while sharing resources in backend functions such as R&D, component procurement, and system building. This move is expected to reduce costs of key components—such as advanced intelligent driving modules—by 20% to 30%. Additionally, Changan will streamline its product portfolio from 63 models to 36 over the next five years, a reduction of 43%, focusing instead on developing globally competitive core products. Avatr’s plan to list in Hong Kong remains unchanged, and employee and shareholder rights will not be affected. Across the industry, multiple automakers are pursuing similar consolidation strategies. Geely has already placed Lynk & Co and Zeekr under a unified holding platform; SAIC Motor established a “large passenger vehicle division” to coordinate its multi-brand strategy; GAC Group integrated the supply chains of Aion and Hyper; and NIO is consolidating resources across its three brands to enhance risk resilience. According to Roland Berger, by 2030 China’s auto market may be dominated by only five to seven leading companies, each selling over two million vehicles annually. Changan aims for combined annual sales of 1.5 million units from Avatr and Deepal by 2030, supporting its strategic goal of entering the global top ten automakers. This integration is widely seen as a critical step to address industry overcapacity and improve systemic efficiency.