Chinese car manufacturer Changan Automobile, with two flagship brands Deepal and Avatr, has made significant progress by selling around 1.7 million cars this year.
The company's half-year report shows that the transition to new energy vehicles has brought them revenue of 76.7 billion Chinese yuan (10.77 billion USD), a 17% increase compared to the same period last year.
However, this growth comes with challenges. Despite high sales and revenue, Changan has witnessed a 13.8% decrease in profit.
Changan's Deepal G318 electric SUV (Photo: Changan).
Changan is one of the oldest car manufacturers in China, and since 2017, they have been transitioning to new energy vehicles. Now, they are reaping the rewards.
Changan has been selling an average of 7,422 cars per day in the first 6 months of this year, a 9.7% increase compared to the same period last year. The Changan brand contributed 84% to the total sales. Specifically, sales of new energy vehicles grew by 69.87%, reaching over 300,000 vehicles. Sales of vehicles in foreign markets increased by 75.9% to 203,000 cars.
Changan's revenue in the first 6 months of this year reached 76.7 billion Chinese yuan (10.77 billion USD), a 17.15% increase compared to the same period last year, with revenue per vehicle increasing from 54,000 Chinese yuan (7,585 USD) to 58,000 Chinese yuan (8,150 USD).
However, the company's profit decreased by 63% to 2.83 billion Chinese yuan (397.5 million USD), down from 6,322 Chinese yuan per vehicle (888 USD) in 2023 to 2,121 Chinese yuan (298 USD) this year. This decline is partly due to the business results of the Deepal brand under Changan.
Changan's transition to new energy vehicles relies on three brands: Changan Nevo, Deepal, and Avatr. Changan Nevo sold 98,236 vehicles in the first 8 months of the year, Deepal sold 120,710 vehicles, and Avatr sold 21,088 vehicles.
Although Deepal and Avatr are still facing losses, both brands have reduced their losses. The industry average profit margin of the Chinese automotive sector has also decreased, with this year's average profit being 13.8% compared to 16.34% last year. Changan believes that Deepal will become profitable when sales reach 30,000 vehicles per month.
While other Chinese state-owned auto companies such as FAW and Dongfeng are struggling to adapt to market changes, Changan has successfully embraced the electric vehicle era. Changan's success is partly due to heavy investment in research and development (R&D).
Changan partnered with Huawei in 2018, which is also seen as a crucial factor in the transition. Instead of establishing a joint brand with Huawei like other state-owned auto companies, Changan integrated Huawei's intelligent driving system into models like the Deepal S07.
Changan has emerged as a rare success story among domestic Chinese manufacturers. Domestic enterprises often rely on joint ventures to boost sales, but as the Chinese auto market shifts, the appeal of foreign brands is starting to decline.
So far, Changan has been able to separate itself from the group of other domestic manufacturers.
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