Changan Trades 70,000 Sales for a Strategic Turn: Is It Worth It?

"Competition in the automotive industry is like a marathon, and it is a marathon without an end."

When the industry falls into a volume race of "trading price for volume", more and more automakers realize that simply pursuing sales volume makes it difficult to achieve sustainable development. Against this background, Changan launched a product matrix optimization and actively performed "subtraction" on its product line. In the first half of this year, the brand contracted the entry-level versions of Lumin below 50,000 yuan, bidding farewell to the low-price volume route; meanwhile, it sorted out the fuel vehicle product sequence and gradually contracted models with weaker profit performance.

Tan Benhong mentioned at the communication meeting that only the adjustment of the Lumin model formed a sales gap of about 70,000 units in the first half of the year. Looking at the overall picture, Changan Automobile's cumulative sales volume in the first half of 2026 was 1.1189 million units, a decrease of nearly 240,000 units compared to the same period last year.

In January to May 2026, the profit margin of the domestic automotive industry fell to 3.4%, and the industry entered an era of thin profits. The sales gap brought by the simplification of the product line is the reality that Changan needs to face to promote structural optimization. What is the deeper consideration behind this series of adjustments? Where will this "decluttering" at the product end take Changan?

From "Producing Many Models to Gain Advantage" to "Emphasizing Both Volume and Profit"

This "slimming movement" was not a temporary whim. In April this year, Changan officially released the "1445" global strategy. The most closely watched planning item is: In the next five years, the product spectrum will be streamlined from 63 models to 36 models, a compression rate as high as 43%. At the same time, Changan clearly stated the need to concentrate resources to build a global flagship product "one model with annual sales of 500,000 units and five models with annual sales of 300,000 units". This is a strategic transformation promoted from top to bottom, the purpose of which is to bid farewell to the car sea tactic of "producing many models to gain an advantage" in the past.

Lumin is exactly a very representative model in this product structure adjustment. This model once had a considerable volume, contributing about 200,000 sales for the full year last year. But the problem lies in the limited profit space for versions priced below 50,000 yuan.

Tan Benhong said straight out at the communication meeting: "For Lumin below 50,000 yuan, we actively adjusted. In the first half of this year, this one product was 70,000 units. We cut off some products with less profitability. Of course, you can have scale, but this kind of scale, we are constantly reviewing it now, such products we should not do."

In fact, the weakening demand for Lumin also has objective factors of the general industry environment. The track of micro pure electric vehicles is shrinking continuously. According to data from the China Association of Automobile Distributors, the wholesale sales of micro pure electric vehicles in June decreased by 50% year-on-year, falling to 8% in the pure electric market share; in the first five months of this year, the cumulative sales of A00-class micro sedans were 192,000 units, a significant drop of 64% year-on-year, and the market share shrank from 6% to 2.7%. In such a market environment, it is difficult to form long-term value by continuing to operate low-revenue models.

Changan's "subtraction" is not only reflected at the product level but also implemented in internal assessment mechanisms. Tan Benhong revealed that the company has established a "operational co-investment" mechanism internally: If a product cannot achieve profitability, even if sales targets are met, personnel participating in the project co-investment also need to bear corresponding losses. "Balancing volume and profit is a very critical point." This mechanism ensures from the system that "pursuing sales with profits" is not an empty talk.

Tan Benhong clearly stated at the communication meeting: "Changan has now discarded the 'Producing Many Models to Gain Advantage' strategy, and more pursues high-quality development." "Simply pursuing quantity, trying to roll others to death through scale, this method is used cautiously in Changan."

What does 70,000 sales volumes get you?

Actively giving up 70,000 sales volume is not an easy decision for any automaker, and Changan has indeed borne the cost brought by the adjustment.

In the first half of this year, Changan's sales volume decreased by nearly 240,000 units year-on-year, corresponding to a total revenue decrease of about 14.551 billion yuan. Based on the net profit attributable to shareholders of 740 million to 970 million yuan in the first half of the year and total sales of 1.1189 million units, a simple calculation shows that Changan's net profit attributable to shareholders per vehicle is only about 66 to 86 yuan, which is obviously lagging behind the industry mainstream level. The huge gap highlights the urgency of Changan promoting product "slimming".

However, while actively shrinking the scale of low-gross margin models, Changan is also cultivating new sales pillars. The one mainly playing the role of substitution is Changan Qiyuan Q05. The performance of this compact SUV is very bright - sales reached 19,350 units in May, further climbed to 23,523 units in June, and cumulative sales in the first half of the year exceeded 76,000 units, continuing to stand at the forefront in the compact SUV track where Changan has a significant advantage in fuel vehicle ownership.

Changan Automobile Executive Vice President Yang Dayong revealed at the communication meeting that Lumin contributed about 200,000 sales for the full year last year, but this part of sales is actively shrinking this year, "replaced by Qiyuan Q05". Under the retreat and advance, Changan has started the preliminary "gearing change" of main sales products.

It is also worth mentioning that the overseas market has become an important growth highlight. Changan's overseas sales reached 454,700 units in the first half of the year, an increase of 51.87% year-on-year. The proportion of overseas sales in total deliveries has risen to about 33.6%. Tan Benhong stated that Changan is systematically promoting overseas organization, talent, base and capacity layout. "Globalization is Changan's core growth pole in the next 3 to 5 years." According to the "1445" strategic planning, the overseas sales proportion needs to reach 35% to 40% by 2030. Doing "subtraction" domestically and "addition" overseas, this is Changan's "two-front battle" idea.

The rapid growth of the overseas market has provided Changan with valuable buffer space. When the domestic market is in the stage of product structure adjustment and scale faces pressure, the incremental increase in the overseas market makes up for part of the shortfall in the domestic market. With the Thailand production base landing and putting into production, and the European market steadily expanding, overseas business will also continue to contribute relatively higher gross margin income.

Of course, the challenges on the transformation path are still considerable. Avatr, the high-end brand, delivered only 27,619 units in the first half of the year, a year-on-year decline of more than 50%; Changan's new energy penetration rate in the first half of the year was about 38.1%, lower than the industry average level. The 1.4 million new energy target set at the beginning of the year was only completed at about 32.5% in the first half. Tan Benhong also frankly stated that Changan is currently in the "second stage of mobilization and structural adjustment critical cycle", and cannot simply use half-year sales and profit data to judge the overall development trend.

For Changan, the most realistic development path right now is to stabilize the mainstream market basic board composed of Qiyuan and Deepal, and at the same time accelerate the product iteration and brand building of Avatr. Whether high-end brands can form a stable profit support will largely determine whether Changan's transformation goal of "volume and profit both gains" can be fulfilled.

Bidding Farewell to "Scale Worship"

Changan's choice is not an individual case, the entire Chinese automotive industry is experiencing a round of profound adjustment.

In January to May 2026, the overall profit margin of the automotive manufacturing industry was only 3.4%, lower than the industry average of 6.1%; the profit margin of vehicle manufacturing was even only 1.5%. Based on this calculation, for a new car priced at 100,000 yuan, the profit in the vehicle manufacturing link is only about 1,500 yuan. JAC Motors, GAC Group, Seres, BAIC BluePark and other automakers announced losses in the first half of the year, and Changan, Great Wall and other leading enterprises' profits also showed obvious declines. The model of relying on "trading price for volume" to seize the market is increasingly difficult to continue.

Looking back at five or six years ago, the profit margin of the automotive industry was long in the range of 6% to 8%, at that time, "scale trading for profit" was a growth method that many car companies were effective. In just a few years, the industry profit margin was almost halved, "price wars" were continuous, vehicle profit dropped from several thousand yuan to hundreds of yuan, and many models fell into loss. Changan's active contraction at this node, rather than being a kind of courage, is more like a kind of sobriety.

Looking at the macro environment, the 2026 Government Work Report explicitly proposed to "deeply rectify involutionary competition", and a series of policies guiding the benign development of the industry continued to land. Changan's strategic choice of actively contracting low-gross margin models also formed a kind of tacit understanding with the policy-driven industry high-quality development orientation.

Tan Benhong compared the current industry environment to "marathon running on the plateau" - blindly accelerating and aggressive expansion will only continue to overdraw enterprise strength. "If we do not reform ourselves and cling to the past, we will definitely not be able to move forward."

In the past few years, many car companies have expanded scale as the core goal, relying on low-priced models to rush volume, trying to amortize costs through scale. But with raw material costs rising and market competition continuing to intensify, continuously releasing models without profitability will only continue to consume enterprise resources. Changan promoting product structure optimization is also a microcosm of domestic car companies shifting from pursuing scale expansion to pursuing operating quality.

Of course, whether "slimming" can successfully "strengthen" after that still needs time to test. Low-end model supply contraction, mid-to-high-end brands have not yet formed a stable performance pillar; new energy penetration rate still has room for improvement, and overseas market profit contribution also needs to be continuously cultivated. Changan's transformation path has just begun.

But one point is very clear: When the industry profit margin falls below 4%, there are not many car companies that can survive by "low price and high volume". Changan chooses to use 70,000 sales volume to exchange for a chance to start anew. Whether this "transformation account" is worth it or not is difficult to conclude in the short term.