Changan Automobile, a prominent Chinese automaker, officially announced the establishment of its new subsidiary in Munich, Germany. This move marks a significant step in Changan’s strategic plan to strengthen its presence in the European market. The newly formed German subsidiary will not only focus on sales, marketing, and services but will also engage in customer insights, market research, technical regulations, regulatory certifications, and product localization. This strategic expansion underscores Changan Automobile’s commitment to becoming a global player in the automotive industry.

The establishment of the German subsidiary is just one part of Changan Automobile’s ambitious overseas strategy unveiled in April 2023. This strategy outlines a roadmap for the company’s growth, aiming to achieve over $10 billion in overseas investments, annual sales of more than 1.2 million vehicles, a workforce of over 10,000 in overseas markets, and the transformation of Changan Automobile into a world-class car brand by 2030.

Changan Automobile’s Overseas Strategy: A Vision for 2030

Changan Automobile’s strategy for the global market is both bold and comprehensive, reflecting the company’s commitment to becoming a leading international automotive brand. The four key goals set by the company to be achieved by 2030 are:

1. Over $10 Billion in Overseas Investment: Changan plans to invest heavily in international markets to support its expansion plans. This investment will be directed towards establishing new subsidiaries, enhancing local operations, developing new products tailored to regional preferences, and building infrastructure for marketing, sales, and after-sales services.
2. Annual Sales of More Than 1.2 Million Vehicles: By 2030, Changan aims to achieve annual sales of over 1.2 million vehicles in overseas markets. This ambitious target reflects the company’s confidence in its products and its ability to penetrate new markets. The company’s focus will be on both mature markets like Europe and emerging markets in the Middle East, Africa, and Southeast Asia.
3. A Workforce of Over 10,000 in Overseas Markets: To support its expansion, Changan plans to grow its international workforce to over 10,000 employees. This will involve hiring local talent for its overseas subsidiaries, fostering cross-cultural teams, and investing in training and development programs to ensure that employees are well-equipped to drive the company’s growth in different markets.
4. Transformation into a World-Class Car Brand: Changan’s ultimate goal is to transform itself into a globally recognized car brand known for innovation, quality, and customer satisfaction. This involves not only expanding its market presence but also enhancing its brand image, building strong relationships with customers, and continuously improving its products and services.

Changan’s Recent Moves in the Middle East and Africa

On August 31st, Changan Automobile hosted a press conference in Riyadh, Saudi Arabia, for the Middle East and Africa markets. The event, attended by key stakeholders, media, and industry experts, was a platform for Changan to outline its strategic plans for these regions.

Changan’s President, Wang Jun, emphasized the importance of the Middle East and Africa as key growth markets for the company. He highlighted the increasing demand for affordable, reliable, and environmentally friendly vehicles in these regions, which aligns well with Changan’s product offerings, particularly its new energy vehicles (NEVs).

During the event, Wang Jun shared Changan’s plan to establish a stronger foothold in the Middle East and Africa by enhancing its local operations, expanding its dealer network, and introducing a range of new models that cater to regional preferences. The company also plans to strengthen its after-sales service network to ensure a superior customer experience.

Financial Performance: A Mixed Bag in 2024

While Changan Automobile has made significant strides in its global expansion strategy, its financial performance for the first half of 2024 reflects both growth and challenges. The company reported an operating income of 76.723 billion yuan, marking a 17.15% increase year-on-year. This increase was driven by strong sales performance, especially in the new energy vehicle (NEV) segment and overseas markets.

However, the net profit attributable to shareholders of the listed company saw a sharp decrease of 63%, falling to 2.832 billion yuan. The basic earnings per share stood at 0.29 yuan. The decline in profitability can be attributed to several factors, including increased costs related to its aggressive expansion strategy, fluctuations in raw material prices, and currency exchange rates.

Despite the decline in net profit, Changan’s sales performance remained robust. The company sold 1.334 million vehicles in the first half of 2024, a 9.7% increase from the previous year. This growth was fueled by the strong performance of Changan’s own brand, particularly in the new energy vehicle (NEV) segment, and the company’s expanding presence in overseas markets.

Growth in New Energy Vehicles (NEVs)

Changan Automobile’s commitment to the development and promotion of new energy vehicles (NEVs) is evident in its sales figures for the first half of 2024. The company’s own brand of NEVs achieved significant growth, with sales reaching 299,000 units, a 69.9% increase year-on-year. This growth reflects the increasing consumer demand for electric and hybrid vehicles, driven by factors such as rising fuel prices, government incentives, and growing environmental awareness.

Changan has been focusing on developing a comprehensive lineup of NEVs, including pure electric vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), and fuel cell vehicles (FCVs). The company’s NEV strategy aims to cater to different market segments and consumer preferences, offering a range of models with varying driving ranges, features, and price points.

The success of Changan’s NEV segment is also attributed to its continuous investment in research and development (R&D). The company has been working on advanced battery technologies, intelligent vehicle systems, and energy-efficient designs to enhance the performance, safety, and affordability of its NEVs.

Strong Growth in Overseas Markets

Changan Automobile’s overseas expansion strategy has started to yield positive results, as evidenced by the strong growth in its international sales. In the first half of 2024, the company’s own brands achieved overseas sales of 203,000 units, representing a remarkable 74.9% increase year-on-year. This growth highlights Changan’s success in penetrating new markets and gaining traction in regions where demand for affordable and reliable vehicles is on the rise.

Changan’s expansion into overseas markets is driven by several factors, including its focus on product localization, strategic partnerships, and tailored marketing strategies. The company is actively working to understand the unique needs and preferences of customers in different regions and adapt its products accordingly. This approach has helped Changan build a strong brand presence and reputation in various markets.

Changan’s Entry into the European Market: A Strategic Move

The establishment of Changan’s new subsidiary in Munich, Germany, marks a strategic move to strengthen the company’s position in the European market. Europe is one of the most competitive and dynamic automotive markets in the world, known for its stringent regulatory standards, high consumer expectations, and strong demand for environmentally friendly vehicles.

By setting up a subsidiary in Germany, Changan aims to gain a deeper understanding of the European market and adapt its products to meet local requirements and preferences. The German subsidiary will play a crucial role in conducting market research, gathering customer insights, and ensuring compliance with technical regulations and certifications.

Changan’s focus on product localization will involve tailoring its vehicles to suit European tastes, preferences, and driving conditions. This could include modifications to vehicle design, performance, safety features, and technology. The company’s emphasis on customer insights and market research will enable it to develop products that resonate with European consumers and offer a compelling value proposition.

Challenges and Opportunities in the European Market

Entering the European market presents both challenges and opportunities for Changan Automobile. On one hand, Europe’s strong demand for electric vehicles (EVs) and the region’s commitment to reducing carbon emissions provide a favorable environment for Changan’s NEV offerings. The company’s focus on innovation, quality, and sustainability aligns well with European market trends and regulatory standards.

On the other hand, Changan will face stiff competition from established European and international automakers, many of whom have a strong foothold in the region. To succeed, Changan will need to differentiate itself through unique value propositions, competitive pricing, and a robust after-sales service network. Building brand recognition and trust among European consumers will be critical to the company’s success in the region.

Changan’s Vision for the Future: A Global Automotive Leader

Changan Automobile’s recent moves, including the establishment of a subsidiary in Germany and its expansion into the Middle East and Africa, are part of a broader vision to become a global automotive leader. The company’s ambitious goals for 2030 reflect its commitment to growth, innovation, and sustainability.

To achieve its vision, Changan is focusing on several key areas:

• Innovation and Technology: Changan is investing heavily in research and development (R&D) to drive innovation and technological advancements in its products. This includes the development of new energy vehicles (NEVs), intelligent vehicle systems, and connected car technologies. By leveraging cutting-edge technology, Changan aims to offer vehicles that meet the evolving needs and preferences of consumers worldwide.
• Sustainability: Changan is committed to sustainability and reducing its environmental footprint. The company is expanding its lineup of NEVs and developing more energy-efficient and eco-friendly vehicles. Changan’s focus on sustainability aligns with global trends towards greener transportation solutions and positions the company as a responsible and forward-thinking automaker.
• Global Expansion: Changan’s strategy involves expanding its presence in key international markets, including Europe, the Middle East, Africa, and Southeast Asia. The company is establishing local subsidiaries, forming strategic partnerships, and investing in infrastructure to support its growth in these markets.
• Customer-Centric Approach: Changan is adopting a customer-centric approach to ensure that its products and services meet the needs and expectations of consumers in different regions. This involves conducting market research, gathering customer insights, and continuously improving its offerings based on feedback and market trends.

Conclusion: A Bold Path to Global Success

Changan Automobile’s recent developments, including the establishment of a new subsidiary in Germany and its expansion into the Middle East and Africa, demonstrate its determination to become a global automotive powerhouse. The company’s ambitious goals for 2030, coupled with its focus on innovation, sustainability, and customer-centricity, position it well to compete in the highly competitive global automotive market.

While challenges remain, particularly in entering established markets like Europe, Changan’s strategic investments, commitment to quality, and focus on new energy vehicles provide a strong foundation for future growth. As Changan continues to execute its global strategy, it is poised to make a significant impact on the international automotive landscape and achieve its vision of becoming a world-class car brand.

 

ALSO READ: Hyundai Creta EV: The Next Big Electric SUV