Changan Automobile Accelerates "Breaking Off And Leaving": "Third Innovation And Entrepreneurship" Is A Long Way To Go

Recently, with the Chongqing Changan automotive Limited by Share Ltd (000625, hereinafter referred to as "Changan Auto") and Shenzhen Qianhai Rui on the Changan Peugeot Citroen equity transfer agreement reached, Changan automobile is in full swing to Changan Peugeot Citroen equity divestiture, business change is expected to reach 2020 in the year.

Reporters found that the sale of equity brought 1 billion 630 million yuan book value deducted from the 2019 Peugeot Citroen 278 million yuan loss in Changan, Changan automobile is expected to get 1 billion 352 million yuan of investment income; coupled with the December 3, 2019 Changan new energy 2 billion 840 million yuan to introduce four strategic investors to bring profits, in recent days, including Everbright Securities, Huaxi Securities and Societe Generale Securities, and many other brokerages have raised the Changan 2019 profit expectations.

Public data show that in the first three quarters of 2019, Changan Peugeot Citroen realized a net profit of -22.3 billion yuan, with a serious loss.

In the view of securities dealers, after stripping off the deficit assets, Changan automobile will significantly improve the performance of listed companies. At the same time, with the gradual growth of Changan auto autonomous sector and Changan Ford since the second half of 2019, Changan automobile will usher in a turning point in 2020.

From 1 yuan in 2018 to acquire shares held by the joint venture company SUZUKI, to abandon the joint venture brand Changan Peugeot Citroen, and then introduce new strategic investors to Changan new energy, in the past two years, Changan automobile has accelerated a series of actions to speed up the "break off" of excess capacity and loss plate, and promote business focus.

"The third undertaking" weighs ahead.

"In 2019, Changan was a turning point in hard struggle. In 2020, although there are still challenges, it is more confident for Changan. The goal of Changan automobile is to win. " On December 30, 2019, Zhang Baolin, chairman of Changan automobile, said in an interview with reporters.

At this point, it was nearly third years since April 2018 when Changan automobile proposed the "innovation and entrepreneurship plan". It is a mixed blessing to comb the market performance of Changan automobile in the past two years.

On the one hand, along with the improvement of CS series SUV model segmentation market, Changan auto autonomous plate has gradually improved since the fourth quarter of 2019. Data show that in 2019 1-11 months, the total sales volume of Changan automobile was 1 million 566 thousand and 200, and Changan's Chinese brand car exceeded 1 million 100 thousand vehicles, of which 715 thousand and 400 were Chinese brand passenger cars, 8-11 months for 4 consecutive months, the growth rate was 8-11, the growth rate was 6.6% in October, 8.9% in November, and the market in the fourth quarter was higher than that in the fourth quarter.

On the other hand, Changan's joint venture brand Changan Ford and Changan Mazda still do not go out of the trough; meanwhile, the short board of the car plate and the homework of the new energy vehicle are also difficult to make up in a short time.

From the second half of 2018 to the present, the negative growth of car market in the past two years and the many uncertainties facing the future make the joint venture stalled and unbalanced development of Changan automobile face new challenges and transformation pains.

In the industry's view, over reliance on joint ventures, lack of competitiveness in independent products, low brand premium and short product quality are the fundamental reasons for the recent problems of Changan automobile.

Changan executives headed by Zhang Baolin have already recognized this problem. In April 2018, Zhang Baolin put forward the "third innovation and entrepreneurship plan" that "the era will eliminate you and have nothing to do with you" and officially opened the road of transformation in Changan -- from traditional automobile manufacturing enterprises to intelligent travel technology companies.

Among them, intelligence and new energy are the two most important starting points. Changan has invested a lot of resources.

In May 2018, Changan automobile set up a wholly owned subsidiary of Changan new energy as an important part of its Shangri-La plan. According to the plan, by 2020, Changan will complete the construction of the three new energy special platform, and stop selling traditional fuel cars in 2025.

However, as of October 31, 2019, Changan's new energy has been in a state of deficit. Publicly available data showed a loss of 227 million yuan in 2018 and a net loss of 530 million yuan in the first ten months of 2019, but sales were only 32 thousand.

After a week of mixed change, the new Changan energy company launched the E series of the first pure electric SUV models in December 10th. E-Pro, E-Star, E-Pro, E-Rock and E-life four models will also be put into the market in 2020.

It is worth noting that E-Pro is based on the development of the Changan CS15 fuel vehicle. The upcoming three other models of the E series are not pure electric platform development.

"To be practical and realistic, new energy is really subsidized at a loss. Changan is a full caliber listed company. Every penny of losses and every penny earned is listed in the statements of listed companies. Because of this, the amount of new energy resources in Changan will not be so large." For Changan's new energy sales, Tan Benhong, vice president of Changan automotive, told reporters.

In Zhang Baolin's view, the introduction of long-term strategic investors for new energy in Changan can solve the problem of future development of new energy vehicles in terms of capital and technology input.

"Breaking away from home"

In fact, with the "third innovation and entrepreneurship" plan, Changan automobile's "excess capacity" and its focus on core business are almost simultaneously carried out.

Compared with other automobile groups, Changan automobile advantage is not obvious. The joint venture plate is relatively small in volume, single brand, and more vulnerable to economic and political environment. As a major source of Changan's auto profits, the sales of Changan Ford fell, and Changan Peugeot Citroen's losses for many years made Changan's automobile worse.

In addition to the one dollar purchase of SUZUKI stake held by SUZUKI in Changan, the sale of Changan Peugeot Citroen and the introduction of strategic investors for Changan's new energy sources, since 2018, Changan has eliminated more than 20 uncompetitive products, vehicle and engine about 1000000 backward production capacity.

"Changan is facing the pressure of declining sales volume, and it is very painful to take away all the old plates which are not in line with the future development direction." Zhang Baolin told reporters.

However, what is more important than "breaking away from home" is how to look for new increments in the future.

"In the future, Changan will always revolve around the changing needs of consumers to create classic products, while continuing to focus on Shangri-La plan and the Beidou Tianshu plan to promote the transformation of Changan automobile to intelligent technology companies." Zhang Baolin said, "the strategy is more focused and the path is clearer. It is closely related to the strategic development goals of new energy intelligence, and we are doing our work around the transformation of our enterprises. In addition, we basically stopped taking the simple sales target. "

In addition, in view of the short board of the independent brand in the car field, Tan Bin Hong said that the Chinese brand cars were not recognized. In the car market of more than 100 thousand yuan, there were very few Chinese brands, and the rest were low-end products under 70 thousand yuan and 80 thousand yuan. Profits, brands and word-of-mouth were all limited.

Therefore, Changan launched Yat mobile PLUS, hoping to make the car really make a difference in the 100 thousand yuan level market from several aspects, such as the new development of the shape and the new power.

"Changan must always do a good job in this aspect of consumers. We must grasp the needs of consumers, and we must do well in technological innovation." Zhang Baolin said, "from 2018, Changan made a lot of changes to the product design. The interior decoration is further younger, and the two screens and three screens are linked together, which is very suitable for young consumers' personalized demand for technology. In this respect, Changan has firmly grasped it in the past two years and will always do it well in the future.

In addition, Tan Benhong also revealed the brand promotion plan launched by Changan automobile in 2020. Among them, Changan will renew and iterate the whole brand mission, positioning crowd and design language.

"Changan high-end brand AB brand will also come out." Tan Benhong told reporters that Changan will soon start a new campaign in the car market. In the future, the high-end brand AB brand will also be a new growth sector in Changan's passenger cars.