Chongqing Changan Auto plans to accelerate the electrification of products in its two joint ventures with foreign automakers, as Chinese EV brands increasingly gain market share at the expense of fossil fuel makers, according to the state-owned giant’s board chairman. .
Changes in the industry were revealed at last month’s Shanghai Auto Show, where the booths of Chinese brands were packed with visitors, Changan’s Zhu Huarong said in response to questions from reporters during the company’s 2022 earnings presentation, Monday (8). . A decade ago, cars made by Chinese multinational ventures would normally be the center of attention at such an event, he said.
Changan feels the impact of changing trends firsthand. Its partnership with Ford Motor saw a 17.6% drop in annual vehicle sales in 2022, while sales of its joint venture with Mazda Motor fell 21.4%, according to a statement from Changan in January. Most of the cars sold by the two joint ventures are petrol-powered cars.
“We have to admit that there are some challenges in doing business today,” Zhu said in the earnings announcement.
Faced with declining sales, Changan’s joint venture with Ford and Mazda plans to accelerate its transition to electric vehicles, Zhu said, in an effort to survive in China’s crowded auto market, where about 150 brands compete. Changan also plans to team up with Ford to launch new electric vehicle models next year, Zhu said. The company has similar plans with Mazda, he added. The company aims for new energy vehicles (NEV) to represent 60% of its total sales by 2030.
Shenzhen’s BYD, which makes pure electric vehicles and plug-in hybrids, led China’s NEV passenger market last year with an impressive 31.7% share, which contributed to China’s top brands collectively controlling more than 60% of the domestic NEV market, according to data from the China Passenger Car Association (CPCA).
In 2022, Changan NEV’s private label sales more than doubled to more than 271,000 units, representing about 12% of the group’s total sales, which grew by just 2%, according to the January announcement.
Changan has two proprietary brands of electric passenger cars – Avatr and Deepal – and has announced plans to launch a third, called Changan Qiyuan, later this year, which will feature fuel-efficient vehicles. Avatr’s only model, the sports utility vehicle (SUV) Avatr 11, features intelligent driving software and a digital cockpit system powered by the Harmony OS operating system, developed by Huawei Technologies.
The company is also looking at growth opportunities in foreign markets including China. Changan is ready to invest four billion yuan ($580 million) in a factory in Thailand, expected to reach a future capacity of 200,000 NEVs per year, Zhu said, adding that the company aims to enter the European market in 2024.
At the same press conference, Changan chairman Wang Jun highlighted an industry-wide price war in the first quarter, which he said could intensify competition between electric and gasoline car makers. He predicted that more than 40% of new cars sold in China this year will be NEVs.
In January, Tesla added discounts to some of its models sold in China, leading to price cuts that have involved several electric car makers, such as XPeng and BYD, as well as conventional carmakers, such as Dongfeng. Peugeot Citroen cars.
The price cut by a joint venture that makes fossil-fuel vehicles shows their desire to liquidate as they lose share in China’s domestic car market to Tesla and local electric car brands, an Everbright analyst said. Securities in a March research report.
“A price war could weaken automakers, especially joint ventures,” analysts at Ping An Securities said in a March report, citing the exit of foreign brands including Suzuki Motor and Acura from the mainland Chinese market in recent years.
Translated by Paulo Migliacci