Changan Auto Will Focus Investment on Sedans Next Year as It Looks to Boost Sales
Yu Liyan
/SOURCE : Yicai
Changan Auto Will Focus Investment on Sedans Next Year as It Looks to Boost Sales

(Yicai Global) Nov. 21 -- Chongqing Changan Automobile Co. [SHE:000625], one of the 'big four' Chinese vehicle makers, will shift its focus toward smaller cars next year,  investing 60 percent of its resources into such vehicles and just 40 percent into sports-utility vehicles, Gong Bing, vice president, told Yicai Global at the Guangzhou Auto Show.

SUVs will likely remain the firm's primary business as it already has a large client base, he added.

Changan has recorded lackluster sales this year, despite maintaining its sound reputation. Through the first 10 months, it made nearly 2.26 million vehicles and sold over 2.32 million, down 7.01 percent and 6.8 percent, respectively, on the year.

"We are well aware of the problem and are under a lot of pressure," Gong said. "There is a gap between our goals and expectations. The problem lies in our car business. Changan used to have two core businesses, but cars have declined this year."

The firm unveiled two new models, the Raeton CC and the second-generation Eado, at the Guangzhou Auto Show this year. They are tasked with helping the company boost its sedan sales. If they pick up, Changan can expect to see two growing core businesses this year, which will be a good indicator of its marketing efforts, he added.

Changan saw a substantial increase in operating costs during the first three quarters, its earnings report showed. Slashing costs and enhancing efficiency is a long-term process, Gong noted, confirming that the company's figures in these aspects were poor in the first nine months.

He believes that Changan's poor earnings were to be expected this year as the company did not offer the price cuts typically found in promotional campaigns, but offered discounts elsewhere.

"When we need to choose between survival and development, we'll definitely choose survival first," Gong said, adding that domestic brands need to realize that survival is the most important thing in such a fiercely competitive market. Changan's price cuts yielded good results, he continued, they also affected the company's costs. "You can take a look at the financial reports of other Chinese carmakers. Some may report decent numbers, but the vast majority saw earnings decline. The entire industry's operating capacity is declining this year as automakers take measures to cope with competition."

Changan will roll out at least two new traditionally-fueled models every year over the next three to five years, Gong added. Including new-energy vehicles, the figure will rise to around three or five new vehicles per annum. However, in the long run, the total number of vehicles the company offers will decline as it cuts poor-performing models from production, he noted.

The company has a research and development center in the US where it develops self-driving vehicles and stores early-stage products and systems, Gong said on the company's receipt of a license to test autonomous vehicles in California.

Changan has already applied its smart- and self-driving technologies to the new Raeton CC, he added, saying the firm plans to build an area for unmanned driving at its new Yuzui plant in China's Chongqing municipality by the end of this year.

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Keywords: MSCI , Autonomous Driving , Changan Automobile