Changan Automobile, led by its new brands Deepal and Avatr, has surged in popularity this year selling just under 1.7 million cars so far this year. The company’s semi-annual report highlights the results of their new energy transition with revenue reaching 76.7 billion yuan (10.77 billion USD), growing by 17% year-over-year.
This growth, however, came with challenges. Despite high sales and revenue, the car maker price war has hurt Changan profits, with profit margins falling 13.8%.
More on Changan
With a history spanning 160 years, Changan has undergone significant transformations as China’s oldest automaker. Its most recent shift towards sustainability and NEVs began in 2017 and the company is now seeing the fruits of its investments.
Changan sold an average of 7,422 vehicles per day in the first half of 2024, achieving a 9.7% year-over-year growth in sales. Of these, its own Changan brand accounted for 84% of its total sales. NEV sales alone grew by 69.87% to more than 300,000 units. Overseas sales similarly surged by 75.9% to 203,000 units.
Changan’s revenue for the first half of 2024 was 76.7 billion yuan (10.77 billion USD), a 17.15% increase compared to last year, with an average revenue per vehicle rising from 54,000 yuan (7,585 USD) to 58,000 yuan (8,150 USD).
Profits, however, did not follow the same trajectory. Net income fell 63% to 2.83 billion yuan (397.5 million USD), shrinking from 6,322 yuan (888 USD) per car in 2023 to 2,121 yuan (298 USD) in 2024. This decline can be partially attributed to the financial results of Changan’s Deepal .
Changan’s NEV transformation relies on three main brands: Changan Nevo (Also known as Qiyuan 启源), Deepal, and Avatr. Changan Nevo delivered 98,236 units from January to August, Deepal delivered 120,710 units, and Avatr delivered 21,088 units.
Even though Changan’s two NEV brands, Deepal and Avatr, are operating at a loss, both brands are narrowing their deficits this year. Profit margins have dropped for the Chinese auto industry across the board, with an average profit margin of 13.8% this year compared to 16.34% last year. Changan believes Deepal will be profitable at 30,000 sales a month.
Changan and other state-owned automakers
While other state-owned automakers like FAW and Dongfeng have struggled to adapt to market shifts, Changan has been able to adapt to the era of NEVs. Part of Changan’s success can be attributed to its high R&D investment. Changan developed the efficient Blue Whale powertrain technology, and also the accompanying SDA architecture, which integrates electrification and connectivity in a single platform.
Changan’s partnership with Huawei, starting in 2018, is another key driver of its transformation. Instead of creating a partner brand with Huawei like other SOE automakers, Changan integrates Huawei’s intelligent driving system into its models like the Deepal S07.
As Changan continues its NEV transformations, it stands out as a rare successful example among other China’s state-owned manufacturers. These SOE’s have typically relied on joint-ventures to drive sales, but as the Chinese auto market changes the appeal of foreign brands has begun to fade. Changan has, so far, been able to separate itself from other state-owned manufacturers with its new branding and partnerships.
Sources: Yiche, Autohome
