Changan Leadership Change: Defending Domestic Profits, Pushing for Overseas Delivery

On October 16, Changan Automobile announced a leadership change. Zhu Hourong will no longer hold any position at Changan Automobile and its holding subsidiaries, continuing to serve as Party Secretary and Chairman of China Changan Automobile Group; Zhao Fei has been promoted to Chairman of Changan Automobile, and Ye Pei to President.

 

 

The announcement was short, but the underlying reality of this leadership change is a set of numbers that are not easy: the annual target completion rate for the first three quarters is only 51.7%, first-half net profit attributable to shareholders was 817 million Yuan, down 64.32% year-on-year, deducted non-recurring net profit was 251 million Yuan, down 83.01% year-on-year; the relatively bright spot is overseas, with cumulative deliveries of 729,700 vehicles in the first three quarters, up 56.8% year-on-year, with September's single-month overseas sales share accounting for about 44%.

These numbers outline an uneven performance report. For the new management team, they are taking over not a single-line front, but a two-front situation of defending domestic profits and pushing for overseas delivery.

 

 

This leadership change falls during a period with the most concentrated actions by Changan. In recent years, Changan has moved continuously on products, organization, and overseas layout: the model count has been streamlined from 63 to 36, Avatr and Deepal are advancing mid-to-back-office integration, the Thailand factory is ramping up, the Brazil factory has started production, and Europe base site selection is progressing. These actions correspond to the shrinkage of the overall fuel vehicle market domestically, Changan New Energy's baton relay being slow, and fast overseas export growth but local profitability not catching up yet.

Now, actions have been laid out, and the real test is the execution pace: whether the same strategy can form verifiable improvements in average vehicle price, new energy vehicle loss per unit, and overseas regional profitability. After the leadership change, the new team takes over exactly this execution challenge.

 

 

First, look at the domestic market. In the first half of the year, the domestic fuel vehicle market size decreased by 27.8% year-on-year, which is an industry-wide contraction; but Changan's sales core base is still pressed heavily on fuel vehicles, and the relay speed of the new energy sector has not outperformed the speed of the market contraction. In the first three quarters of 2026, Changan New Energy sales share was 41.6%, while the industry new energy penetration rate stood at 53.6% during the same period.

Changan's electrification progress is not stagnant, but the gap of running behind the overall market is clear: for every two vehicles sold in the industry, more than one is new energy, but for Changan, only after selling five vehicles does it just pass two. This is the structural explanation for the pressure on the profit statement. Changan's first-half net profit attributable to shareholders declined 64.32% year-on-year, and deducted non-recurring net profit declined 83.01% year-on-year; phased sales pressure and reduced exchange gains are direct causes, but the speed difference of the structural switch is the line worth watching more. Industry profit margins have fallen to around 3.8% during the same period, and the space to trade price for volume is narrowing.

 

 

Facing the dilemma, Changan's response has already landed on the product and organization levels. The total number of models has been streamlined from 63 to 36, a 43% compression, with the goal of growing 6 flagship models with annual sales exceeding 300,000 vehicles. Avatr and Deepal are advancing the integration and sharing of platform architecture, three-electric systems, intelligent driving software stacks, and supply chain procurement, with shared resource costs expected to decrease by 20%—30%. At the terminal level, Qiyuan Q05 has been ranked high in sales of compact pure electric SUVs for consecutive months, the Qiyuan brand achieved quarterly profitability in the second quarter, and Avatr reduced losses year-on-year; Qiyuan's average vehicle price increased by 12,000 Yuan year-on-year, and Avatr's average vehicle price increased by 2,000 Yuan year-on-year, indicating that "not blindly following the price war" is beginning to generate average price support on some product lines. However, these are still improvements at the single-quarter, single-brand level; the cost reduction effect will be more fully reflected in the financial statements after the integration is completed by the end of 2026. For this domestic execution challenge, short-term looks at whether new energy penetration rate can bottom out and whether vehicle-level losses can narrow; mid-term looks at whether flagship models with high volume can grow from the 36 models.

 

 

If the domestic market is still transitioning, overseas has already seen a volume surge, but the volume surge itself also brings deliverables that need fulfilling. Overseas revenue in the first half of the year was 21.942 billion Yuan, up 78.77% year-on-year, with the proportion of overall revenue rising from 16.89% in the same period last year to 33.43%; overseas gross margin was 20.13%, significantly higher than China's 11.67%. Overseas cumulative deliveries for the first three quarters were 729,700 vehicles, up 56.8% year-on-year, September's single-month share approaching 44%, and the overseas goal of 750,000 vehicles for the whole year is within reach. But in the first half of 2026, foreign operating cost growth of 83.59% was faster than revenue growth of 78.77%, overseas gross margin narrowed by 2.1 percentage points year-on-year, and signs of "volume growth without profit growth" have already appeared in the statements. The tariff structure of the European market is a harder constraint: Chinese-produced electric vehicles face a 10% basic tariff, plus up to 35.3% countervailing duties, with a comprehensive tax rate ceiling close to 45%, making it increasingly difficult to maintain price competitiveness solely relying on complete vehicle exports.

 

 

For this, Changan's solution is to push production capacity to the front line of the markets. The Thailand Rayong Factory fully operated in May 2025 with an annual capacity of 100,000 vehicles, expanding to 200,000 vehicles in 2027, serving Southeast Asia and European RHD markets; the Brazil factory started production in March 2026, achieving "Made locally, supplied locally, integrated locally". The selection of local bases in Europe is also progressing, planning 180,000 vehicles capacity in 2028, and 300,000 to 350,000 vehicles in the long term, with the goal of avoiding tariffs and shortening supply chain radius through local manufacturing. A longer-term framework is the "1+N" global manufacturing and supply chain system, setting a main base in each overseas major region, serving multiple KD/CKD assembly nodes, pushing going global from complete vehicle trade to regional closed loops. For this overseas execution challenge, short-term looks at the capacity utilization rate and local procurement ratio of the Thailand and Brazil factories; mid-term looks at whether export growth rates can gradually shift to regional profitability.

 

 

The two questions in front of Changan are essentially different cycles: domestic new energy relay looks at penetration rate and vehicle-level loss in the coming few quarters; overseas local profitability looks at capacity utilization rate and local procurement ratio measured in years. The same team running the accounts for two cycles at the same time is the true difficulty of the "two-front situation." Now, the leadership change has only completed the handover, and the real test is in the financial statements of the coming few quarters.