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Changan Automobile released a forecast of results for the first half of 2019. Affected by the decline in sales, the net loss in the first half of the year was as high as 1.9 billion yuan to 2.6 billion yuan. Changan brands and joint venture brands are in dire straits, of which Changan Ford has been the mainstay of Changan's profits, with sales of 75000 vehicles in the first half, down 67 per cent from a year earlier.

China's auto market has been growing negatively since June 2018, and Changan car sales have plummeted due to the depressed environment of the industry, making it difficult to make a profit. According to the announcement, Changan Automobile sold 141700 vehicles in June, down 24.8 per cent from a year earlier. The cumulative sales from January to June were 825000, down 31.65 per cent from a year earlier.

Changan independent brands performed well in Changan brands, with cumulative sales of 392000 vehicles in the first half of the year, down 26% from the same period last year. Changan's independent decline narrowed, thanks to a pick-up in sales in June. Changan Independence used to be a million sales brand, independent car first, but so far the brand effect has declined sharply, sales continued to decline, ranking also fell to third independent, overtaken by Geely and Great Wall Motors.

For a long time, the joint venture brand is the profit cow of the major car companies, but the continued sluggish market performance of the Changan joint venture brand has become a major pain point for the car company. Nowadays, the changes in the Chinese market are accelerating, and the speed of product upgrading is constantly being compressed. Unfortunately, Changan Ford and Changan Mazda are not aware of the problem in advance, causing the product power to lag behind its competitors, resulting in a sharp decline in sales.

Changan Ford has absorbed a large number of Chinese marketing executives in the past year, focusing on building a localized management team and speeding up decision-making efficiency, but the results are not significant so far. According to Changan Ford, the company's retail data are growing month-on-month and continue to reduce dealer inventories. In May and June this year, Changan Ford retail sales grew by an average of 30% month-on-month, and reduced dealer inventory depth to 28 days in the past two months, the lowest level in 18 months.

The decline of Changan Ford market is mainly related to the end of the product, the application of three-cylinder new technology market, product reputation and so on. China's car sales have declined one after another, further accelerating the decline of Changan Ford sales. Changan Ford said that new focus, Fox Active crossover, new Ruijie family and new Taurus will be launched one after another in the second half of 2019, which will help improve sales performance. Chen Anning, president of Ford China, said Ford would "take three years to restore the brand to a strong position and lay a real foundation".

Changan Ford is indeed a pain point for Changan Automobile, which once contributed 80% and 90% of its profits, but now it is operating at a loss, directly affecting the performance of Changan Automobile. The annual net profit of Changan Automobile in 2018 was only 681 million yuan, a year-on-year drop of 90%, of which Changan Ford lost 800 million yuan, while Changan Ford made a profit of 12.2 billion yuan in 2017, a huge gap.

In fact, Changan Automobile posted a net loss of 3.165 billion yuan in 2018 after deducting non-recurring profits and losses, and the final profit was due to a government subsidy of 2.873 billion. Changan's performance has not improved this year, and in the first half of the year, it has received new energy vehicle incentive funds and R & D subsidies totaling 850 million yuan. However, Chang'an still lost 19-2.6 billion yuan.

Changan Independence is a self-owned brand that Changan Automobile has made great efforts to build in recent years, but after the peak of millions, sales have declined one after another. Joint venture brands in addition to Changan Ford, Changan Mazda downturn, Japan's Suzuki has long been withdrawn from Changan Suzuki, Changan Peugeot Citroen sales are even worse.

Gone are the days when independent brands did not fully hold up, and the days of relying on joint venture brands to make money are gone forever. As a result of Changan Automobile, the continuous decline in sales in the domestic market is part of it, and management decision-making and poor management may be the main reason.

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