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Changan's Q3 report sparked some discussions. On October 30, Changan Motor disclosed its Q3 report. The report shows that Changan's operating revenue for the period was 36.249 billion yuan, a 10.1% increase quarter-on-quarter; however, net profit attributable to the parent company was -758 million yuan, and net profit attributable to the parent company after deducting non-recurring items was -952 million yuan. For Changan, which has a stable operation, this is a rare situation in history. The external question is whether this represents a change in Changan's performance, or a major change occurred? The answer is no.
From a macroeconomic perspective, demand in the domestic automotive market has decreased, and the traditional "Golden September" failed to bring the market heat of previous years. From January to September this year, China's cumulative car sales reached 23.271 million vehicles, a year-on-year decrease of 4.5%, with passenger car sales of 19.96 million vehicles, a year-on-year decrease of 6.1%. In September alone, domestic sales were 2.588 million vehicles, a year-on-year decrease of 9.5%. Moreover, from a competition standpoint, Changan also faces stronger industry competition than before. In the third quarter, a wave of new cars were launched domestically, and Changan's products faced homogeneous product competition from competitors. Given the decline across the entire industry, Changan's financial report exceeding the industry average was quite remarkable.
From an accounting perspective, Changan's financial report does show some pressure, but if we exclude occasional factors, its operating condition remains good. Especially from core indicators, Changan's revenue continues to grow, and market performance is stable. The changes in profit are mainly due to increased costs and expenditures, affecting profit performance. Changan's official explanation in the financial report stated that the core reason for profit pressure is affected by R&D expenses, exchange gains and losses, raw material price increases, active structural adjustments, and a significant increase in overseas strategic resource investments. These are not excuses.
Regarding R&D expenses, Changan's R&D expenses from January to September were 5.261 billion yuan, a slight year-on-year increase. Among them, Changan's R&D investment in the third quarter was 2.106 billion yuan, a significant increase compared to 1.755 billion yuan last year. Despite changes in revenue scale, Changan's investment intensity in R&D has not decreased synchronously; investments related to new energy and intelligence continue. Changan specifically highlighted investment in intelligent driving R&D. Changan stated that Tianshu Pilot has smoothly passed the pre-mass production phase, the investment peak is about to end, market performance and monetization ability are excellent, and future profits are considerable.
However, R&D investment is only a small part of the impact; the core lies in raw material price increases, exchange gains/losses, and overseas market investments. Looking at exchange rates, the Q3 report shows Changan's financial expenses changed from -2.066 billion yuan (net income) in the same period last year to 0.647 billion yuan net expenditure in this period, a change of +131.33%, mainly due to increased exchange losses and decreased interest income; foreign currency translation differences brought about a large negative change in other comprehensive income.
In the second quarter of this year, Changan had already explained the situation regarding exchange rate changes. In the semi-annual report this year, Changan Motor clearly stated: "After deducting the impact of exchange gains, net profit attributable to shareholders of the listed company increased by 12% year-on-year." From this, it can be seen that Changan's book profit was severely distorted by exchange rate fluctuations. Secondly, the rise in raw material prices.
The rise in automotive raw material prices has been mentioned by many car companies since the second quarter of this year. Among them, AITO (Wenjie) stated that the total cost per AITO vehicle increased by 15,000–20,000 yuan. While Nio Chairman Li Bin once revealed that the cost per vehicle in the second quarter increased by about 14,000 yuan compared to the end of last year, expected to increase by another 2,000–3,000 yuan in the second half of the year. From this, it can be seen that Changan's profit was swallowed up significantly.
In addition, Changan is currently in a rapid expansion period for the overseas market, with huge overseas investment. The investment in this sector currently has no specific number, but Changan is accelerating its expansion in the overseas market this year. For example, at the Brazil base, it is in a new round of investment from 2026-2028, with a total cost of 950 million US dollars, with a planned capacity of 90,000 units/year.
The Thailand base put into production in 2025 continues to upgrade this year, with an initial total investment of about 9 billion Thai Baht. In 2026, continuous investment in production line upgrades, battery pack production lines, and supporting supply chain investment will continue; target long-term capacity is 100,000 units/year; in June of this year, the 20,000th vehicle rolled off the line, mass producing Deepal S05 and Qiyuan Q05, supporting local battery pack assembly. In addition, Changan has also made a significant investment in the European market.
As of the 2026 Paris Auto Show, cumulative investment in Europe reached 1.18 billion euros. Currently, 8 subsidiaries are established, with over 800 employees, and the plan is to expand to 1,200 people within 3 years. Starting from 2026, Changan's Qiyuan NEVO brand will launch in Europe, while Avatr and Deepal European channels will expand. All of this requires upfront cost expenditure.
Changan Motor stated that overseas investment has now entered a peak strategic investment period. Superimposed with objective reasons such as exchange gains and losses, Changan Motor experienced a temporary profit fluctuation, but strategic investments are all promoted on a scale according to the latest regulatory requirements, products land faster, monetization is stronger. Superimposed with sales growth momentum and excellent gross margin, the overseas profit window period has clearly emerged, and will bring benefit improvements far exceeding the domestic market in the future.
Changan's semi-annual report shows, in terms of gross margin, Changan's overseas business gross margin was 20.13%, far higher than the domestic 11.67%. Looking from January to September, Changan Motor's overseas sales were 727,000 vehicles, a 56% year-on-year growth. It is expected to break through one million for the whole year, with eye-catching overseas revenue growth.
So, how will Changan achieve performance improvement in the follow-up? First, besides the end of the overseas and R&D investment peaks mentioned above, costs will decrease and enter the harvest period. Changan's internal integration and cost reduction will also show effects. For example, the administrative expenses in the third quarter were 2.397 billion yuan, a year-on-year decrease of 27.36%, and internal management cost reduction has achieved certain results; sales expenses also contracted year-on-year, and marketing investment and rhythm were controlled more meticulously against the background of fierce industry competition.
In addition, Changan also plans to introduce strategic investment in technologies that require huge investments, to reduce its own financial pressure. On the evening of October 30, Changan Motor also announced that its wholly-owned subsidiary "Chongqing Changan Technology Co., Ltd." plans to increase capital and expand shares through public listing, introducing strategic investors. However, the problem of rising raw material costs does not seem to have eased for now, which is also an unfavorable impact that the subsequent automotive industry will face together.
Of course, from an internal perspective, Changan's associated companies still need to accelerate market expansion. The Q3 report shows that Changan's investment income from associated and joint venture enterprises from January to September was -220 million yuan; the same period last year was +140 million yuan, turning from profit to loss, affecting profit accounting change by 360 million yuan in total, which is one of the important drag factors for Q3 profit decline. In the first half of this year, Changan announced a strategic integration between Deepal and Avatr, coordinating resource allocation in technical R&D, supply chain management, market layout, and other links for both parties to optimize operational efficiency. This is also a measure to reduce costs and improve profitability.
Looking from the Q3 report, this financial report is one accumulated with multiple unfavorable factors and peaks of multi-directional investments. This is an important investment period for Changan's forward-looking layout during the transition period. From all aspects, the current stage can be said to be the "coldest winter" of the automotive industry in the recent 20 years. Changan has always proceeded steadily according to its own rhythm at this moment, with no lag in any aspect, and the layout is also very perfect. Among them, the subsequent explosion points are quite clear.
Against this background, Changan has shown the enterprise's longer-term growth potential in terms of performance stability and subsequent explosion power.
