AutoBeta(AutoBeta.net)05/05 Report--

Last year, sales continued to decline and the joint venture brand market lost, resulting in a huge loss of 2.65 billion yuan for Changan Automobile, the first annual loss in the 23 years since Changan Automobile went public. With the substantial adjustment of corporate strategy, Changan enterprises have ushered in a period of sales growth, but it still takes time to test their performance.

On May 5, Changan Automobile released its April production and sales report, which finally ushered in growth after many months. Changan Automobile sold a total of 159600 vehicles in April, up 32 per cent from a year earlier, according to the report. Affected by the epidemic and other factors, Changan car sales from January to April were 462600, showing a decline of 18.45%.

Specifically, the three major companies of Changan's independent system achieved 74800 vehicles in April. According to official data, the sales of Changan Yizhi PLUS, CS35 and Auchan X7 all exceeded 10,000 in April.

Due to the lack of strength of the joint venture brand, resulting in a continuous decline in market share and the company's losses, Changan Automobile began to vigorously develop its own business. It is understood that 2019 Changan Automobile invested 4.478 billion yuan in product and technology project development, in addition to CS85 COUPE, CS75 PLUS, Ruicheng CC, CS55PLUS, Auchan X7 and other brand-new or replacement products on the market, Changan Automobile also invested in L3-level self-driving technology research and development, fuel cells and other technology research and development, and put into production the third generation of power 'Blue Whale Power'.

The UNI-T, the first model in Changan's new product line UNI (Gravitation), has also been put into production and is scheduled to go on sale in June this year.

By contrast, the market performance of Changan joint ventures is more disappointing. Sales of Changan Ford halved in 2019, with only 184000 vehicles. After the deep adjustment of products and market positioning, Changan Ford is expected to achieve sales recovery, but the market share is still low.

According to the data, Changan Ford sold 20500 vehicles in April, up 38.3% from a year earlier, with cumulative sales of 50900 vehicles from January to April, a slight decline compared with the same period last year. Compared with the overall market situation, Changan Ford's recovery is better.

The new model Ruiji boosts the sales of Changan Ford through differentiation and cost-effective advantages, and in 2020, Changan Ford will have a number of new models on the market. Including the Ford / Lincoln brand, 10 new cars are planned, including the Rui Ji two-wheel drive version, the domestic focus travel version, the domestic explorer, the domestic Lincoln adventurer, the domestic Lincoln flier and so on.

Changan Mazda sold 11000 vehicles in April, up 36.8% from a year earlier. The cumulative sales from January to April were 29000, down 30.7% from a year earlier.

Changan Mazda's overall market share is still low. In April, the new CX-30 completed the domestic launch at the Nanjing factory, positioning the car as a small SUV with a 2.0L naturally aspirated engine, further enriching the layout of Changan Mazda products. The car will go on sale on May 28. At the same time, matching Chuangchi Blue Sky SKYACTIV-X 2.0L engine Onksera, CX-30 two new cars, will also be listed in the follow-up.

According to the report, in 2019, Changan Automobile achieved an operating income of 70.595 billion yuan, an increase of 6.48 percent over the same period last year; realized a net profit loss of 2.647 billion yuan; and deducted a non-net profit loss of 4.762 billion yuan belonging to shareholders of listed companies. For the reason for the loss, Changan Automobile said in the financial report: "mainly due to the decline in investment income of joint ventures."

In the first quarter of 2020, Changan Automobile achieved a total operating income of 11.564 billion yuan, down 27.8% from the same period last year, and achieved a net profit of 631 million yuan, a substantial turnround compared with the same period last year. However, the analysis found that Changan Automobile still lost 1.79 billion yuan in net profit after deducting non-recurring profit and loss in the first quarter.

Among the non-recurrent profit and loss items, Changan Automobile received a government subsidy of 57.4 million yuan, while Chongqing Changan New Energy Automobile Technology Co., Ltd., a wholly-owned subsidiary, introduced strategic investors. Changan Automobile made a profit of 2.084 billion yuan after giving up control.

Therefore, on the whole, the operating performance of Changan Automobile is still under pressure, and the premise of turning losses into profits is to rely on the continuous growth of independent brand sales and the recovery of joint venture sales.

After abandoning the loss assets of Changan PSA in time, Changan Automobile now forms three major businesses: big independent business, Changan Ford and Changan Mazda. Under the unfavorable environment of intensified competition in the automobile market, Changan Automobile is faced with the problem of how to seek new increments.

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