How Many Signals Are Behind the Establishment of a New Central State-Owned Auto Enterprise?

On July 29, China Changan Automobile Group Co., Ltd. was officially established in Chongqing, with the State-owned Assets Supervision and Administration Commission of the State Council directly fulfilling the duties of the investor.

As a new central enterprise, China Changan Automobile's strategic positioning and goal is to build a world-class automobile group with global competitiveness and independent core technologies.

"China Changan Automobile Group should leverage its leading role among enterprises of various ownership types in the automotive industry chain, making significant contributions to the development of the intelligent connected new energy vehicle industry and the building of a strong automotive nation," stated relevant leaders from the State-owned Assets Supervision and Administration Commission of the State Council at the group's founding conference.

The newly established China Changan Automobile Group is a new automotive group formed based on 117 subsidiaries, including Changan Automobile and Chen Zhi Group. The headquarters is located in Chongqing, with a registered capital of 20 billion yuan, a total asset of 308.7 billion yuan, and approximately 110,000 employees. Its main business operations include automobiles and auto parts, automobile sales, financial and logistics services, motorcycles, and more.

China's automotive industry has entered a critical period filled with both opportunities and challenges, making the reform of central state-owned enterprises imperative.

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With the rise of new energy and intelligent networking technologies, the global industrial landscape is on the verge of being reshaped. The task of building a strong automotive nation weighs heavily on our shoulders. As the backbone of China's automotive industry, state-owned automotive enterprises need to demonstrate unprecedented determination and courage to drive transformation and achieve high-quality development, thereby contributing more significantly to the national economy and social development.

"Becoming a first-tier central state-owned enterprise means a shorter decision-making chain. We can communicate directly with the State-owned Assets Supervision and Administration Commission (SASAC), respond more quickly to market demands, and seize strategic opportunities," said Zhao Fei, General Manager of China Changan Automobile Group. As a central state-owned enterprise directly supervised by SASAC, the new company will have unparalleled advantages in obtaining national-level strategic emerging industry support funds and major scientific research projects, enabling it to quickly stimulate corporate vitality.

As a new benchmark and model for the reform of central enterprises in the automotive industry, Changan indeed has the confidence and strength.

Originating from the Shanghai Arsenal established in 1862, Changan Automobile boasts a rich heritage and legacy spanning 163 years. As one of the pioneers in China’s automotive industry, Changan Automobile has adhered to innovation and transformation since its inception. After undergoing three major entrepreneurial phases, it has gradually developed into a vital force driving the upward progress of Chinese automotive brands.

In the first half of this year, the cumulative sales reached 1.355 million vehicles, setting a new high in nearly eight years, showcasing the "hardcore" strength of state-owned enterprises. New energy vehicles surged strongly, with sales reaching 452,000 units, a year-on-year increase of 49%. In July, Changan Automobile's sales exceeded 210,000 vehicles, with new energy vehicle sales surpassing 79,000 units, a year-on-year increase of over 73%.

As a leading enterprise in the manufacturing industry, Changan Automobile produces 56% of the city's automobiles and 51% of its new energy vehicles. It serves as the "power source" for high-quality development in manufacturing and is an important pillar of economic and social development. A relevant leader from the Chongqing Municipal Commission of Economy and Information Technology stated that the establishment of the new central enterprise in Chongqing will attract more upstream and downstream companies to settle there, providing strong support for building a modern manufacturing cluster system led by intelligent connected new energy vehicles and creating the "Capital of Intelligent Connected New Energy Vehicles." This will propel the scale of Chongqing's automobile industry to reach the trillion-yuan level.

In Chongqing's "33618" modern manufacturing industry cluster system, the intelligent connected new energy vehicle industry ranks first among the three trillion-yuan industries. The new Chang'an is comprehensively driving the Chongqing automotive industry to "consolidate the chain into a trend." Through strategic guidance, it attracts more top global battery and chip suppliers to set up factories in Chongqing, helping the city achieve the goal of a local supporting rate exceeding 50% by 2025.

In terms of R&D system, Changan has established a global collaborative R&D layout spanning "six countries and ten locations," with a technical R&D team of 24,000 people from 31 countries and regions. Thanks to this team, Changan Automobile's super electric drive system achieves an efficiency of 95%, and its battery low-temperature attenuation technology surpasses the extreme limit of minus 30 degrees Celsius. Currently, 24,000 scientific and technological talents are advancing breakthroughs in 67 core technologies, including solid-state batteries.

In May this year, Changan Automobile's Rayong factory in Thailand officially commenced production. This is Chongqing's first overseas new energy vehicle plant and the first new energy vehicle plant established overseas by a state-owned enterprise, marking Changan Automobile's further transition and upgrade from product export to industry expansion overseas. Currently, Changan is based in China and has established a presence in five major regions: Europe, Southeast Asia, the Middle East and Africa, Central and South America, and Eurasia. It owns 117 subsidiaries worldwide, operates 21 manufacturing bases, and exports products to 103 countries and regions.

Building on its deep expertise in R&D, overseas markets, and manufacturing, a more efficient resource-integrated and technology-focused new Changan will emerge as a fierce catfish, forcing market participants to accelerate innovation and shifting the competition focus away from price wars to battles of technology and brand strength.

The role and positioning of the sub-brand will not change, only strengthen.

Before the establishment of the new group, Changan Automobile was centered around the Changan brand, supplemented by three major new energy brands: Avita, Deepal, and Changan Qiyuan, covering both fuel vehicles and new energy models.

After the establishment of the new Changan Automobile, this pattern will not change. "From the very beginning of the founding of the three new energy brands, we have maximized sharing in terms of organizational structure, manufacturing, logistics, procurement, capabilities, and branding," explained Tan Benhong, Deputy Secretary of the Party Committee of the Group.

He stated that the positioning and target customer groups of the three sub-brands are clearly defined, allowing them to contribute differentially to Changan and generate their own distinct values.

According to internal planning, Avita is positioned as a high-end luxury brand aiming for upward breakthroughs; Deep Blue targets the mid-to-high-end mainstream audience, primarily global young users, offering new energy products priced between 150,000 to 300,000 yuan; Qiyuan carries the mission of being Changan's overall new energy sales pillar, targeting global mainstream family users, positioned as an "intelligent mobile lifestyle provider," delivering a brand-new intelligent mobile travel experience.

"The role and positioning will not change, only be strengthened," added Avatr CEO Chen Zhuo further.

After the establishment of the new group, the challenge facing the three major new energy brands is how to seize the development opportunities brought by the formation of the new group.

Yi Yuan's CEO, Ye Pei, stated that after the establishment of the new group, he feels the burden and responsibility is "very heavy." To seize the historical opportunity of the new group, Yi Yuan will approach it from various dimensions such as strategy, product, and ecosystem. For example, there needs to be a new plan strategically.

Qiyuan strives to achieve global sales of over 1 million units by 2027 and 1.8 million units globally by 2030. Meanwhile, in addition to reaching scale, it must also be profitable. It needs to complete the profit rotation of the main brand, Changan, and become the central enterprise responsible for both scale and profitability.

Shenlan Auto CEO Deng Chenghao stated that for Shenlan, in order to seize the opportunities presented by the establishment of the new group, it is essential to further realize the technology for high-quality development of the new central enterprise. Additionally, Shenlan should become the backbone of the group's breakthrough into high technology, and also serve as the engine for the group's global expansion.

Chen Zhuo said that Avatr will continue to fully commit to undertaking the strategic mission of elevating the new group brand, unwaveringly building a world-class new luxury intelligent electric vehicle brand.

From January to June this year, Changan Automobile in China achieved a production and sales volume of 1.355 million vehicles. This accomplishment is not easy for Changan.

"We are constantly undergoing transformation, and this transformation is a structural adjustment at a high level of over 2 million units for our own brands. It's easy to make adjustments at the scale of 10,000 units, but the entire Changan Group has not only three major new energy brands but also fuel vehicle brands, so we need to consider many things, such as launching new brands and empowering new technologies," said Tan Benhong. He mentioned that in the first half of this year, the entire group worked tirelessly from top to bottom on numerous initiatives.

This year, Changan Automobile aims to achieve sales of 3 million vehicles, including 1 million new energy vehicles. The task for the second half of the year is also quite challenging for Changan Group. "The internal targets are even higher than this public goal. To achieve this, we have made full preparations in terms of product layout and other aspects. Now, each brand has taken on its own targets," Tan Benhong added.

After the establishment of the new Changan Automobile Group, Tan Benhong, as the deputy secretary of the group's Party Committee, will be in charge of the group's brand, among other responsibilities. He analyzed that to achieve the target of 3 million units in the second half of this year, four key areas must be focused on: capturing traffic, launching new products/increasing volume, expanding internationally, and fostering innovation.

Capturing traffic means maximizing the commercial value of existing products and achieving commercial monetization. It aims to gain consumer recognition for products, technology, and services by making them visible to consumers.

"Focus on new products, in the second half of the year, Changan will launch a series of new products, 'focusing on new products means capturing growth'."

*Capturing international opportunities means gaining growth from international markets. Tan Benhong mentioned that in the first half of the year, in order to embrace a broader international market, rapid adjustments and additions were made to the organization and manpower. Five major regions have formed a primary department, and the team has been quickly reinforced.

Focus on innovation, such as intelligent driving and large models.

Seven strategic businesses, an investment of 200 billion yuan over ten years.

After the establishment of the new Changan Group, the goal for its vehicle business is to achieve a production and sales scale of 5 million vehicles by 2030, with new energy vehicles accounting for over 60% of global sales and overseas sales exceeding 30%, aiming to become one of the top 10 automotive brands in the world.

To achieve this goal, Zhu Huarong, Secretary of the Party Committee and Chairman of China Changan Automobile Group Co., Ltd., emphasized that the new Changan Group will firmly invest 200 billion yuan in the new automobile sector over the next decade, adding a technology innovation team of 10,000 people to achieve technological exploration and product commercialization.

"Over the next five years, more than 50 new energy products will be launched globally, including more than 7 global bestsellers with sales exceeding 300,000 units, forming a matrix of a full spectrum of new energy brands, and continuously building the three major brands of Avatr, Deepal, and Changan worldwide."

In order to build a world-class automobile company, in addition to the complete vehicle business, the new group also needs to simultaneously develop core component business, motorcycle business, emerging industries, and other seven strategic businesses. The goal is to build a new automotive and new ecological system. This is not just about the tasks in the original plan but also about driving components, finance, as well as motorcycles, trade, and logistics. The entire industrial chain needs to go global, becoming a robust industrial and service ecosystem.

The establishment of the Chang'an Group is inseparable from the core themes of the national initiative to promote the reform of central enterprises, optimize the layout of state-owned capital, and enhance the competitiveness of the automotive industry.

In January this year, relevant leaders from the Ministry of Industry and Information Technology stated that the next steps will focus on promoting high-quality development, adopting targeted measures, and striving to maintain the good momentum of the new energy vehicle industry's development. This includes researching and developing strategies for the group management of vehicle enterprises and supporting leading companies in improving quality, efficiency, and strength.

"The newly established automobile group is beneficial for developing global competitiveness and for Changan to integrate relevant resources, paving a new path in the fierce market competition to grow bigger and stronger, and to advance towards becoming a world-class automobile group," said Zhu Huarong.

The pace of consolidation and focus in the automotive industry is accelerating. Not only central enterprises, but other private independent brands, such as Geely, are also speeding up integration.

At the first media briefing of the newly formed group, Zhu Huarong emphasized, "Efficiency first. In this round of competition, whoever gets ahead will have more survival opportunities. Without these breakthroughs, it is difficult to stand out in this round of competition."