AutoBeta(AutoBeta.net)04/15 Report--

It is said that the joint venture brand is the cash cow of China's independent car companies, but it does not work here in Changan Automobile, and the joint venture brand has become a drag on Changan Automobile.

On April 15, Changan Automobile released its 2019 performance KuaiBao. Changan Automobile realized operating income of 70.595 billion yuan in 2019, an increase of 6.48% over the same period last year, and the net profit belonging to listed companies was-2.647 billion yuan, down 488.81% from the same period last year. As for the reason for the year-on-year collapse in net profit, Changan Automobile said it was "mainly due to a decline in investment income from joint ventures".

According to the previous sales data released by Changan Automobile, the cumulative sales of Changan Automobile in 2019 was 1759971 vehicles, down 15.16% from the same period last year. From the point of view of sales, both Changan's own brand and joint venture brand have declined to varying degrees.

Changan independent brand sales (Chongqing Changan, Hebei Changan, Hefei Changan) accumulated sales of 849552 vehicles in 2019, down 7.84% from the same period last year. Changan independent brand sales mainly come from the hot sales of CS75 series, CS35 series and CS55 series models. Among them, the cumulative sales of the CS75 series rose 37.75% to 193200 vehicles compared with the same period last year, the CS35 series sales increased 7.5% to 141700 vehicles, and the CS55 series fell 32.1% to 112200 vehicles. In addition, cumulative sales of Changan Yiyou fell 1.5 per cent year-on-year to 124000 vehicles.

Changan Ford, the joint venture brand, suffered the biggest decline, dragging down the overall performance of Changan Automobile. After peaking at 958000 in 2016, Changan Ford's sales began to decline in 2017, with sales falling 14 per cent to 812000 in 2017, 54 per cent to 378000 in 2018 and 51 per cent to 184000 in 2019.

At present, Changan Ford is not developing smoothly in China, but with the launch of Ruiji and more domestic models, the problem of poor delivery of Ford products will be alleviated, but whether the products have sustainable market competitiveness remains to be seen.

Changan Mazda, as one of the core brands of Changan Automobile, has encountered a Waterloo in sales in the past two years, and is in urgent need of transformation and marketing innovation. Cumulative sales of Changan Mazda fell 19.66 per cent to 133600 vehicles in 2019 and 13.41 per cent to 166300 in 2018, according to the data.

At present, Changan Mazda has only three main selling models, namely, the Mazda CX-8, the Mazda CX-5 and the Mazda 3 Encela. The reason why the sales volume of Changan Mazda is so poor, in addition to the small number of products, high price but few terminal concessions, slow product update and other factors, product quality is the key that can not be ignored.

In addition to announcing the 2019 results of KuaiBao, Changan Automobile also issued a forecast for the first quarter of 2020. Changan Automobile expects to make a net profit of 500 million yuan to 750 million yuan in the first quarter of this year, up from a loss of 2.096 billion yuan in the same period last year. Changan Automobile said that the net profit increased significantly compared with the same period last year, mainly due to the improvement of product structure and profitability. At the same time, Chongqing Changan New Energy Automobile Technology Co., Ltd., a wholly-owned subsidiary, introduced strategic investors, and the company gave up the priority right to increase capital. It is expected to increase the current non-recurrent profit and loss by about 2.2 billion yuan.

Against the backdrop of declining sales, it is a surprise that Changan Automobile has turned a loss into a profit. However, through the announcement, we can see that the non-recurrent profit and loss of Changan Automobile in the first quarter is 2.2 billion yuan, but the net profit is only 5-750 million yuan? It turned out that on December 4, 2019, Chongqing Changan Automobile Technology Co., Ltd., a wholly-owned subsidiary, agreed to introduce strategic investors based on the asset evaluation report, and the company gave up the priority of this capital increase. On February 12, 2020, Changan Automobile disclosed the progress of capital increase and share expansion of its wholly-owned subsidiary by means of public listing. Changan Automobile received a total of 1.42 billion yuan from four strategic investors. In accordance with the capital increase agreement, the payment of the remaining capital increase price shall be completed within 6 months after the first capital increase is in place.

Affected by the epidemic, Changan Automobile accumulated sales of 303078 vehicles in the first quarter, down 32.1% from the same period last year. Among them, the cumulative sales of Changan independent brands fell 24.70% year on year to 174863 vehicles in the first quarter, while Changan Ford and Changan Mazda sold 30456 vehicles and 17340 vehicles in the first quarter, down 17.2% and 48.1% respectively from the same period last year.

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