What is the history of Changan company?

Chinese state-owned automobile manufacturer

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Chang'an Automobile Co., Ltd.[2] (CCAG) is a Chinese state-owned automobile manufacturer headquartered in Jiangbei, Chongqing.[3] Founded in 1862, it is China's oldest automobile maker.[4][5] It is currently the smallest of the "Big Four" state-owned car manufacturers of China, namely: SAIC Motor, FAW Group, Dongfeng Motor Corporation, and Changan Automobile, with car sales of 5.37 million, 3.50 million, 3.28 million and 2.30 million in 2021 respectively.[6]

The company produces and sells vehicles under its own branding, such as Changan, Deepal, Avatr, Oshan, Kaicene, as well as under foreign-branded joint ventures such as Changan-Ford and Changan-Mazda. In 2021, domestic branded cars took over 76% of sales (1.75m, 1.2m passenger vehicles).[7]

Its principal activity is the production of passenger cars, microvans, commercial vans and light trucks.[8]

It is China's second most popular car brand, with 1.4 million Changan cars sold in 2016.[9] A subsidiary of Changan, Chongqing Changan Automobile Company (SZSE: 000625), is listed on the Shenzhen Stock Exchange (but is also state controlled).[3]

History

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Changan's early origins can be traced back to 1862 when Li Hongzhang set up a military supply factory, the Shanghai Foreign Gun Bureau.[10] It is China's oldest automobile maker.[5] In 1937, during the Second Sino-Japanese War, the factory was moved to Chongqing when Shanghai was invaded and bombed.[11]

In 1959 a predecessor entity, Chongqing Chang'an Arsenal, under contract to the government, began auto manufacturing and built Changjiang Type 46 vehicle which was the first production vehicle of China.[12] Changan introduced minicar by licensing from Suzuki.[13]

In 2009, Changan acquired two smaller domestic automakers, Hafei and Changhe.[14] In 2013, Changhe was transferred to Jiangxi provincial government for restructuring, and later became a majority-owned subsidiary of another Chinese automaker BAIC Group.[15]

As of 2010, China Weaponry Equipment is the parent company of this state-owned automaker,[16] and that year Chang'an became the fourth most-productive car manufacturer in the Chinese automobile industry by selling 2.38 million units.[17]

The company also released a new logo for its consumer offerings in 2010 while commercial production retains the former red-arch brand.[8]

Although it only allowed the company to achieve fourth place among domestic automakers in terms of production, Changan made over 2 million whole vehicles in 2011.[18]

In 2012, it was reported that 72% of production was dedicated to passenger vehicles,[19] but this count likely conflates private offerings and microvans, tiny commercial trucks and vans that are popular in China.

In November 2012, Changan Ford Mazda Automobile was divided into two new joint venture companies: Changan Ford and Changan Mazda.[20]

Changan plans to ending production of vehicles powered solely by internal-combustion engines by 2025, as the automaker will be selling only hybrid vehicles and all-electric vehicles from 2025 as a result due to the climate change, air pollution issues in the China and stringent emissions regulations. The company stated that this is because Government of China announced that it has passed legislation that will ban new ICE-powered vehicles by the mid-2030s, due to high air pollution and due to China's reiterated commitment in the United Nations Paris Agreement as the automaker wants remain compliant with the government's automotive emission standards. The automaker is joining Volvo Cars, Jaguar Land Rover, Hongqi, BYD Auto, Lotus Cars, and several other automakers in planning on ceasing production of ICE-powered vehicles in the coming years.[21]

In December 2023, Huawei announced it plans to move core technologies and resources in its smart car unit to a new joint venture with Changan. The new company will engage in research and development, production, sales and service of intelligent automotive systems and component solutions. Changan and its affiliates plan to acquire no more than 40 percent of the new company's equity, with the specific amount of capital contribution and term to be separately negotiated between the two parties.[22][23]

Brands and products

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Changan produces and markets vehicles primarily under 5 brands:[24]

• Changan Auto for SUVs and passenger cars
  • Changan Nevo (Qiyuan) for entry premium range extended electric vehicles.
• Deepal (Shenlan) for electric vehicles
• Avatr for premium electric vehicles, jointly invested by Chang'an and CATL
• Kaicene for the commercial vehicles, light trucks, and MPVs

Changan Auto

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Current models

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Sedan

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SUV

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Pickup truck

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• Changan Hunter (2024-present), mid-size pickup truck, EREV

Discontinued models

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SUV

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• Changan CS35 (2012-2022), subcompact SUV
• Changan CS15 (2015-2023), subcompact SUV

Changan Nevo (Qiyuan)

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Changan Nevo (长安启源) is the entry level EV line under the Changan brand, launched in 2023. Models initially include the A05 compact sedan, the A06 compact sedan, and the A07 midsize sedan. The A06 is a rebadged Changan UNI-V with restyled front and rear ends.[25] The A05 is a rebadged Changan Yida with restyled front and rear ends.[26]

Deepal (Shenlan)

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Deepal (Chinese name Shenlan) is EV brand owned by Changan Automobile. The company was originally named Chongqing Changan New Energy Automobile Technology founded in 2018 and became an independent brand since 2023.

Avatr Technology

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Avatr Technology is a premium EV brand Changan joint-ventured with battery provider CATL and multiple Chinese domestic foundations, technology supported by Huawei.[27]

Changan Kaicene

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Current models

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• Chana Ruixing S50V

• Chana Ruixing S50T

• Chana Ruixing M90

• Chana Ruixing M80

• Chana Ruixing M70

• Chana Honor

• Kaicene F30

• Kaicene F70

• Kaicene Star Truck

• Kaicene Shenqi T30

Former Kaicene models

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Sales

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Chang'an group sales (joint-venture brands excluded)[28][29][30] Year Total[a] Changan[b] Deepal Avatr Oshan 2010 1,316,557 - - - 2011 987,991 - - - 2012 950,568 - - - 2013 990,556 - - - 2014 1,126,011 - - - 2015 1,270,154 - - - 2016 1,382,917 - - - 2017 1,327,168 - - 339,910 2018 1,139,540 - - 192,745 2019 1,060,676 - - 153,258 2020 1,306,169 861,750 - - 113,820 2021 1,557,282 998,921 - - 194,381 2022 1,874,569 1,125,048 33,354 757 222,030 2023 2,097,794 1,390,387 136,912 27,589 229,449

Joint ventures

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Like most major Chinese automakers, Changan partners with Western and Japanese companies to produce and sell the products of these foreign firms in China. It also partners with other companies within China to augment manufacturer capacity and share development costs.

Changan currently participates in the following joint ventures:

Ford (2001–present)

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A Chinese police Ford Focus, 2007

In 2001, Chang'an Ford was formed[31] and initially built Ford-branded passenger vehicles from complete knock down kits.[12]

Making Chinese-market versions of Ford consumer offerings,[8] its 2010 dealer network was thought to include many showrooms in second- and third-tier Chinese cities[citation needed] such as Chongqing.[32] So-called second- and third-tier cities are large and medium-sized cities not among the top four in terms of population and contribution to GDP.[33]

Changan Mazda (2012–present)

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Changan Kuayue

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Chongqing Kuayue Automobile is a co-operative venture between Changan and Chongqing Kuayue Group specializing in commercial vehicle production.[34]

The group builds commercial vehicles for Changan primarily under the Kuayue and Kaicene brands.

Kuayue commercial vehicles rebranded as Mamut in former Soviet countries.

Current models

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• Kuayue Kuayuexing V3

• Kuayue Kuayuexing V5 EV

• Kuayue V5

• Kuayue Kuayuewang X1

• Kuayue Kuayuewang X5

Former models

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• Kuayue Xinbao Mini
• Kuayue Xunlong

• Kuayue Xinbao mini

• Kuayue Xinbao

• Kuayue Xinbao T3

• Kuayue Kuayuewang X5

• Kuayue Xinbao V5

• Kuayue Xunlong

Jiangling Investment and Jiangling Motor Holding

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Jiangling Motor Holding Co. Ltd. (simplified Chinese: 江西江铃控股有限公司; traditional Chinese: 江西江鈴控股有限公司; pinyin: Jiāngxī Jiānglíng Kònggǔ Yǒuxiàn Gōngsī), also known by the initialism JMH, was a joint venture established in October 2004 and controlled equally by Changan and JMCG. To create Jiangling Motor Holding Changan invested money and in exchange JMCG transferred its Jiangling Motors Corporation (JMC) equity to the venture. Jiangling Motor Holding was the largest shareholder of JMC,[36] with a 41.03% stake as of March 2018.[37] JMH also owned the Landwind marque.[36][38]

In April 2019, it was announced that JMCG and Changan planned to split JMH into two separate companies: one keeping the same name and other tentatively called Jiangling Investment. Jiangling Investment would hold the 41.03% JMC stake and some liabilities and would still be equally owned by Changan and JMCG. The new JMH would own the rest of the former JMH assets (including Landwind)[39][40] and it would issue 100% more shares to be sold to investors, leaving JMCG and Changan with a 25% stake each.[40] Jiangling Investment was formally established in May 2019, completing the split of the former JMH.[41] In June 2019, it was announced that the investor for the new JMH was the car manufacturer Aiways. Aiways acquired a 50% of the new JMH with the aim of securing production permits for new energy vehicles.[42][43]

Former

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Oshan (2017-2024)

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Oshan (Chinese: 欧尚) was a passenger car brand under Changan Automobile. It was originally known as the Changan Commercial Vehicles, the division which focus on micro vans and light trucks. The brand was renamed to Oshan in April 2017 and began to produce passenger vehicles since.

In 2024, Changan decided to cease the operation of Oshan brand and merge the product line and sales channel into Changan brand.[44]

Changan PSA (2010-2020)

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DS 5LS

Changan and the French car manufacturer PSA Peugeot Citroën agreed in 2010 to set up a 50/50 passenger car and light commercial vehicle-making joint venture.[45] Named CAPSA, it was the PSA Group's second joint venture company in China, after Dongfeng Peugeot-Citroën Automobile, and its first with Chang'an.[46] Centering on a newly built production base in Shenzhen, it was estimated that initial production capacity for the project will be 200,000 units/year.[47] Manufacturing commenced in 2014, with China specific Citroën DS models; the DS 5LS first and then the DS 6WR.[48] The venture was dissolved in 2020.

Changan Suzuki (1983-2021)

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Chang'an Suzuki SC7080 Alto

Technical and commercial cooperation with Suzuki Motors, beginning in 1983, saw Changan assembling inexpensive commercial trucks (originally the Suzuki Carry ST90 as the Chang'an SC112[49]) under license into the 2000s.[50] The two companies formed Chongqing Chang'an Suzuki Automobile Co in 1993,[31] which built licensed versions of the Suzuki Alto, Suzuki Cultus, and more recently the Swift.

In parallel with its Suzuki joint venture, Changan also continued to build small trucks and vans for commercial use based on the 1999 Suzuki Carry license, but independently developed vehicles are quickly replacing them.[50] These small cars carry the Changan brand name although Suzuki technology is used in their design and manufacture.

On 4 September 2018, Suzuki transferred its 50 percent stake in Changan Suzuki to Chang'an Automobile Group, ending 25 years of joint venture. Under the plan, Chang'an would continue to make and sell Suzuki-branded cars in China under license.

In 2021, Changan Suzuki was renamed to Chongqing Lingyao Automobile.[51]

Production and research facilities

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Domestic

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Changan has four major production bases (in the City of Chongqing, Hebei province, Jiangsu province, and Jiangxi province),[citation needed] eleven automobile production bases, and two engine production bases in mainland China[52] for a more-current total of 21 vehicle-making bases including newer sites in Anhui province, Guangdong province, Heilongjiang province, Shandong province, and Shanxi province.[citation needed]

Anhui

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A planned 300,000 units/year capacity mini-vehicle production base in Hefei, Anhui province, should see completion in 2011.[citation needed] Production capacity figures may consider engines and vehicles as discrete.

Beijing

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An existing R&D center in Beijing[53] will soon be joined by a passenger car production base in Fangshan District, Beijing, which will become operational in 2012.[citation needed]

Chongqing

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Chang'an has numerous sites in the city of Chongqing. A Chang'an-Ford plant and another, planned Chang'an-Ford plant (which may produce engines[54]) are joined by a Chongqing-based R&D center[53] and an industrial park in Yubei, Chongqing.[citation needed]

Hebei

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An industrial park in Hebei province may continue to be Chang'an controlled.[citation needed]

Heilongjiang

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A Harbin, Heilongjiang province, R&D center, is now a Chang'an asset.[53] It may have been owned by Hafei prior.

Jiangsu

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A Chang'an-Ford plant and an industrial park[citation needed] in Nanjing, Jiangsu province, may comprise Chang'an operations in this province.

Jiangxi

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A planned Chang'an commercial vehicle production base in Nanchang, capital of Jiangxi province, will produce JMC and Ford-branded vehicles[54] and join an R&D center[53] as a second facility in this province. The latter facility may be a former Changhe asset.

Shanghai

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Chang'an has an R&D center in this coastal city.[53]

International

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The company maintains four factories in international markets and several overseas R&D centers. Chang'an had an assembly plant in Poteau, Oklahoma, piecing together products sold under the Tiger Truck brand from 2007 to 2010.[55] The Changan CS35 is built in Lipetsk region of Russia since 2016.[56] Also Changan vans and pickup trucks were assembled at Ganja Auto Plant in Ganja city, Azerbaijan in 2005.

Pakistan

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Changan has built a production facility in Karachi, Pakistan. It is a joint venture with Master Motors with an investment of US$100 million. This plant makes right hand drive passenger vehicles for Pakistan as well other right hand drive markets. The first "Made in Pakistan" unit of Changan rolled out on 2 May 2019. With a manufacturing capacity of 30,000 cars per year, this facility is Changan's first to produce right hand drive cars.[57]

R&D centers

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Chang'an has over 7,000 engineers and researcher working in R&D facilities in Chongqing, Beijing, Shanghai and Harbin,[10] Turin, Italy,[53] and Yokohama, Japan.[53] It set up two more in 2011. These are located in Birmingham (originally was set up in Nottingham), United Kingdom, and Detroit, United States.[58] The Detroit center opened in early 2011, and its office was moved to Plymouth 2015.[59][60]

See also

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Notes

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1. ^

   Including passenger and commercial vehicle

2. ^

   Chang'an brand passenger vehicle only

References

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In this article, we introduce Changan Automobile (长安汽车)(SZEX: 000625), one of China's largest state-owned auto manufacturers which focuses on producing affordable and occasionally medium tier passenger and commercial vehicles under Ford, Mazda, and in-house developed brands.

This article is part of our China auto industry series, which includes:

 

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Corporate History

Changan claims that the company can be traced to a weapons factory founded in 1862 by Li Hongzhang, a high profile government official during China's Qing dynasty. In the 1950s, the weapons factory produced military SUVs for the army, after which production was halted in 1963 and did not resume until China's opening up in the 1980s.

In 1981, Changan resumed business and formed a technology cooperation agreement with Japanese carmaker Suzuki in order to start producing Changan branded mini vans. Subsequently in 1993, Changan formally entered a joint venture with Suzuki through the establishment of Changan-Suzuki, which produced several Suzuki car models for the Chinese market, including the Suzuki Swift and Suzuki Alto.

Changan went public on the Shenzhen Stock Exchange (SZEX: 000625) in June 1997.

In 2001, Changan entered a joint venture with Ford to produce Ford-branded cars in China, including the popular Ford Focus. In 2006, the joint venture was expanded to include Japanese automaker Mazda, thereby becoming Changan-Ford-Mazda, with Changan holding a 50% share, Ford holding a 35% share, and Mazda holding a 15% share. The same year, Changan-Ford-Mazda also acquired technology from Volvo to produce and sell the Volva S40, S60, and S80 models in China.

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In 2010, Changan formed a joint venture with PSA Group (Peugeot S.A.) to produce Peugeot and Citroen cars in China.

In 2011, Changan-Ford-Mazda split into Changan-Ford and Changan-Mazda, while Changan itself suspending production of Volvo cars in 2015. Three years later, Suzuki left the China market in 2018, thereby putting an end to Changan-Suzuki, while the Changan-PSA joint venture was terminated a year later in 2019.

Over the past several years, Changan has put greater focus on developing new in-house brands (on top of the existing Changan brand) with the launches of the Changan Kuayue (长安跨越), Changan Oushang (长安欧尚), and Changan Kaicheng (长安凯程) brands from 2018 to 2020. The company also started mass producing pure electric vehicles in 2022.

Brand Portfolio

Changan's current portfolio consists of the following brands:

• Changan

• Changan-Mazda

• Changan-Ford

• Changan Kuayue

• Changan Oushang

• Changan Kaicheng

Changan (长安)

There are currently 20 Changan branded cars, comprising of a mix of affordable sedans and SUVs.

Changan CS75 (Source: auto.sina.com/新浪汽车)

Note: the Changan CS75 is one of Changan's bestselling cars.

Changan Yidong (长安逸动) Sedan (Source: auto.sohu.com/搜狐汽车)

Note: the Changan Yidong is another bestseller from Changan.

Changan-Mazda

Changan-Mazda produces seven Mazda models in China, namely the Mazda 3, Mazda 6, Mazda CX4, Mazda CX5, Mazda CX8, Mazda CX30, and Mazda CX30 EV.

Changan-Ford

Changan-Ford produces 22 Ford models in China, including the Ford Focus, Ford Edge, and Ford Explorer.

Changan Kuayue (长安跨越)

The Changan Kuayue brand was founded in 2018 and comprises of 13 affordable commercial truck and van models.

Changan Kuayue car models (Source: Changan Kuayue)

Changan Oushang (长安欧尚)

The Changan Oushang brand was launched in 2018 and consists of nine affordable SUV models.

Changan Oushang X5 (Source: auto.sina.com/新浪汽车)

Note: the Changan Oushang X5 is one of Changan's top three bestselling cars.

Changan Kaicheng (长安凯程)

The Changan Kaicheng brand is Changan's newest brand launched in 2020, which includes 27 commercial truck and van models that are slightly more expensive than the Changan Kuayue brand, but are still generally considered to be quite affordable.

Changan Kuayue Pick-Up Trucks (Source: Changan Kuayue)

Changan Kuayue Vans (Source: Changan Kuayue)

Overall, Changan's bestselling models include the Changan CS75 (also called the CS74), the Changan Yidong, and the Changan Oushang X5, all of which have been pictured above.

New Energy Vehicles

Although Changan primarily focuses on traditional internal combustion engine vehicles, the company does have several new energy vehicle offerings, with hybrid models launched in the past and widely commercialized pure electric vehicles launched only in 2022.

Changan's bestselling pure electric vehicle is the Changan Lumin, an affordable compact sedan.

Changan Lumin (Source: autohome.com/汽车之家)

Changan also launched the Changan Shenlan (长安深蓝) SL03 car to compete with other electric vehicle makers in the more premium range (e.g. BYD, XPeng, and NIO).

Changan Shenlan SL03 (Source: auto.sina.com/新浪汽车)

Financial Overview

We now turn to look at Changan's financial performance and sales and production numbers.

Revenue and Profit Margins

#1: Revenue Grew Strongly In The First Half Of The Decade But Stumbled Later On

Changan's revenue grew steadily during the first half of the decade from RMB29.5 billion in 2012 to RMB80 billion in 2017, before dropping substantially in 2018 and making a gradual rebound to reach a new high of RMB105.1 billion in 2021. Management attributes the 2018 drop to a slowdown in China's auto industry, although we believe the decline in revenue is more likely due to competitive product launches from other auto makers given that other auto companies did not experience the same substantial drop that year.

It is noted that revenue from Changan's foreign joint ventures are accounted for as Investment Income From Associates and Joint Ventures, which is not included in total revenue but is included in operating income. Changan's operating income turned negative in 2018 and remained negative until 2020, predominantly due to the deteriorating performance and disposal of the company's various foreign joint ventures. It is also noted that the Changan Kuayue brand is accounted for as an associate in the Investment Income From Associates and Joint Ventures item rather than in the company's top line.

Data Sources : Changan Automobile Annual Reports (click image to enlarge)

Note: our operating income metric presented above differs somewhat from the official operating profit figures reported by the company. Since Changan is listed on the Shenzhen Stock Exchange, the company adopts the Chinese Accounting Standards (CAS) used in mainland China. As most of the companies in our China auto industry series are either listed in Hong Kong (with IFRS accounting standards) or the US (with US GAAP accounting standards), we recalculate the reported CAS financial metrics to be more comparable with those from IFRS and US GAAP for ease of comparison across companies.

Data Sources : Changan Automobile Annual Reports (click image to enlarge)

#2: Gross Profit Margin Is Relatively Stable, Whereas Operating Profit Margin Is Volatile

As a whole, Changan's gross profit margin declined only slightly from the 17% to 18% range during the first half of the decade to the 15% to 16% range in the second half. In contrast, the company's operating profit margin fluctuated substantially over the past ten years, with negative and near-zero margins during the latter half of the decade as a result of the low levels of operating income discussed above.

Data Sources : Changan Automobile Annual Reports (click image to enlarge)

#3: More Than 90% of Changan's Revenues Are Generated In China

The majority of Changan's revenues are generated in China, although the company has made some diversification efforts over the past few years with overseas sales particularly in Pakistan and Saudi Arabia.

Data Sources : Changan Automobile Annual Reports (click image to enlarge)

Note: available data only starts in 2014

Vehicle Sales Data

#1: Changan Sold 2,300,530 Cars In 2021 and 1,125,764 Cars In 1H2022

Changan and the company's associates and joint ventures sold 2,300,530 vehicles in 2021 and 1,125,764 cars during the first half of 2022. Similarly to other mature Chinese auto companies, Changan's sales and production volumes peaked in the middle of the decade. However, the company's sales (and hence production) dropped more substantially than competitors (such as SAIC or Great Wall Motor) during the latter half of the decade, without a very strong subsequent rebound.

In 2021, Changan and the company's associates and joint ventures produced and sold 115,775 and 114,125 new energy vehicles respectively (earlier data on new energy vehicle sales is unavailable).

Data Sources : Changan Automobile Annual Reports (click image to enlarge)

Regrettably, management does not provide a sales and production volume breakdown by brand.

Future

In this section, we discuss management's key strategies for Changan's future.

#1: Brand Revitalization And Developing In-House Brands

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