Compared with financial figures, Changan pays more attention to the growth of enterprises and brands. Chang'an still spares no effort in the system, structure, operation, research, production and marketing to dare to revolutionize its own life.
Author 丨 Zhang Min
Edited by 丨 Dahua
Produced 丨 Automan Media
On April 29, Changan Automobile held a 2021 online performance briefing, where Wang Jun, president of Changan Automobile, explained and explained the 2021 performance, and then Zhu Huarong, secretary of the party committee and chairman of Changan Automobile, made a detailed interpretation of the "Changan Automobile Development Strategy".
Two reports, one focused on tactics and the other focused on strategy. The former focuses on an inventory of past achievements and strength, focusing on a "definitive future"; the latter makes arrangements for Chang'an's long-term strategy. The former is concrete, the latter is grand.
Overall, these are two reports with different emphases, consistent styles, and a panoramic depiction of Chang'an's "future world line".
1
Sales and profitability go hand in hand
Although Chang'an's performance report restrains its boastful feelings, the good performance of Chang'an in 2021 does not need to be hidden.
Zhu Huarong, Party Secretary and Chairman of Changan Automobile
In 2021, Changan's fixed assets and revenue both exceeded 100 billion yuan (of which assets have exceeded 100 billion yuan for the first time in 2020), revenue exceeded 105.1 billion yuan, and net profit attributable to the mother was 3.55 billion yuan; the comprehensive gross profit margin has reached 16.6%, an increase of 1.9 percentage points year-on-year. Multinational car companies with double-digit gross profit margins are also few.
According to the company's 2021 annual operation, Changan passed the profit distribution plan: based on the total share capital of 7632153402 shares, a cash dividend of 2.33 yuan (including tax) will be distributed to all shareholders for every 10 shares, and the capital reserve fund will be increased by 3 shares for every 10 shares.
As a listed company, Changan is committed to providing long-term, stable and good returns for shareholders, and is more committed to stable and sustainable development.
Changan Automobile's 2022 first quarter report shows that during the reporting period, the company achieved operating income of 34.576 billion yuan, an increase of 7.96% year-on-year; net profit of 4.536 billion yuan, an increase of 431.45% year-on-year; deduction of non-net profit of 2.27 billion yuan, an increase of 215.24% year-on-year.
In terms of management expenses, Changan Automobile's management expenses in the first quarter of 2022 were 810 million yuan, down 34.82% year-on-year, mainly due to the provision of fuel and new energy credits in the same period; at the same time, due to the increase in commissioned development, Changan Automobile's research and development expenses during the reporting period were 961 million yuan, an increase of 35.35% year-on-year.
Compared with these financial figures, Changan pays more attention to the growth of enterprises and brands. According to Wang Jun's words, it is "the expansion momentum continues to increase.". If the enterprise dares to continuously expand the scale, and the expansion shows an accelerated trend, then the decision-making not only depends on the improvement of financial data, but also judges that the enterprise itself must have a strong upward momentum.
Wang Jun, President of Changan Automobile
War reports can lie, but the front line will not. To paraphrase here, the financial report can be whitewashed, but the expansion or contraction cannot be falsified. Wang Jun mentioned in the report that Changan "adheres to the low capitalization rate of R&D investment, which has been less than 30% in the past three years."
Many non-audit and finance personnel have yet to realize what a "low capitalization rate" means. R&D expenses are generally administrative expenses that affect pre-tax margins. If R&D is listed as "expense", it is deducted for the current period, and if it is listed as "capital", it can be amortized on an annual basis. Theoretically, the latter means that R&D activities have a certain amount of results and can be converted into "assets".
However, in actual operation, the "capitalization rate" of research and development leads to inflated gross profit margins (that is, lower expenses), which is also a conventional means of whitewashing in financial reporting, and the "capitalization rate" of research and development of some car companies is as high as 70% to 80%. Compared with this kind of operation, Chang'an is undoubtedly very wary of whitewashing financial reports. However, when this is pointed out, those who understand it naturally understand.
This is also the reason why Wang Jun said that Chang'an is "profitable and the quality of development has entered a benign channel". Changan Automobile's profits are still quite "dry".
Even if the "capitalization rate" of R&D is very low, it has not prevented Chang'an's R&D strength from continuing to increase, and scientific and technological innovation achievements continue to emerge. In 2021, Changan's R&D increased by 24.3%, and an engineering R&D team of 5,000 people was built, breaking through 58 "intelligent and low-carbon core technologies" throughout the year.
It is worth pointing out that this is an important part of Chang'an's long-term strategy. 2022 is an important node for achieving a long-term strategy. To this end, Chang'an should continue to "deepen market-oriented reform" and promote the adjustment of organizational structure.
2
Targeting and implementation paths
Unlike the performance report that focuses on the current financial situation, Chairman Zhu Huarong's "Interpretation of Chang'an Strategy" seems to be less specific, but it is an in-depth explanation of the content that is skimmed over in the financial report and is important for long-term strategy.
At the previous Chang'an Partner Conference, Zhu Huarong had announced Chang'an's medium- and long-term strategy. This time, Zhu Huarong further clarified and explained this.
Changan's self-positioning is to transform into an "intelligent low-carbon travel technology company". The first four definite words of "company" illustrate Changan's multiple goals.
"Smart" refers to smart cars, intelligent manufacturing and intelligent management; "low carbon" means to create low-carbon products and transform to low-carbon manufacturing; "travel" is to provide travel products and services; and "technology" is the strength of the company. The four targets are not parallel, but interlocking, presenting a multidimensional and multi-directional structure.
Regarding the 2025 vision (Changan autonomous 3 million vehicles, new energy vehicles 1.05 million), 2030 vision (Changan autonomous 4.5 million, new energy vehicles 2.7 million), why to do so big, the reason is also obvious, Zhu Huarong said that "only world-class companies can survive", "In the next ten years, the world will definitely give birth to world-class Chinese brands, Changan Automobile will be among them." ”
The key is the implementation path. Chang'an is undoubtedly extremely careful to plan the pace of development, step by step to achieve the long-term goals of survival, expansion and global existence for the camp.
Zhu Huarong classified the "path" as brand, technology, product and resource guarantee.
The brand reiterates that the common goal between Changan Deep Blue, Avita, Changan Passenger Vehicle, Auchan and Kaicheng is to continue to evolve to new energy. But they are both cooperative and positioning differences between each other.
Different from the expected analysis of the highlighted brand focus, Zhu Huarong did not favor one over the other in his speech, and Changan's strength is no longer what it used to be, no longer seeking "key attacks", but at the end of the high, medium, and low brands, all-round strategic attack.
Zhu Huarong also re-emphasized the programmatic role of the Shangri-La and Beidou Tianshu plans in the Chang'an strategy.
Under the umbrella of Shangri-La Plan, with the three major new energy platform architecture as the traction, we will comprehensively build future-oriented new energy independent technologies. Zhu Huarong unsurprisingly classified the "three electricity" related technologies as core technologies (especially from batteries to modules to PACK).
In the Beidou Tianshu plan, Zhu Huarong unexpectedly listed chips, algorithms and data as the three "intelligent engines" of automobiles.
This statement has changed the direction of the main engine factory's self-positioning as a chip user, the pursuit of integration capabilities, and the development of application-side technologies such as the Internet of Vehicles and autonomous driving, but the intention to swim upstream, on the chip side, in addition to continuing to cooperate with suppliers, will strengthen some chip research and development.
It is reported that Changan will focus on the research and development of chips and core algorithms under the incubation system of "Changan Technology Company".
It is speculated that Changan will obviously not intervene in the development of basic chips, and may invest funds in several local areas such as the production of IGBT power chips and the IDE design of MCUs, and do limited development activities. However, Zhu Huarong did not make a detailed explanation, and it remains to be observed which chip development links Changan will be involved in.
3
Self-revolution and cohesion
As chairman, Zhu Huarong gave a series of resources to be used to implement the strategy.
Simply put, by 2025, Changan will invest 80 billion yuan (self-investment and financing) in a number of key technology fields. At that time, the number of R& D personnel will reach 20,000, including 6,000 intelligent and software personnel, which is obviously a preparation for a technology company rather than a manufacturing company.
Zhu Huarong and Wang Jun both mentioned organizational reform. Changan summarized the concept as the architecture of "small headquarters + business group + shared platform + incubation and innovation".
This means that headquarters must delegate non-strategic decision-making powers, at least at the level of business groups. The incubation company (such as the "Avita" of the red) may have more comprehensive operational decision-making power.
The structural reform led by the management of the group and the initiative to reduce the power of the group's top level are to rush this point, and the public will of Changan from top to bottom is "combat effectiveness". The matching employment system, reward mechanism (including equity incentives), iteration and follow-up investment are all commonly used by Internet companies and less commonly used by traditional enterprises. It seems that Chang'an's performance did not affect the thoroughness of the self-revolution.
Although the current Chang'an has entered the "most Chang'an era", sales, profitability, product innovation, customer satisfaction have reached the best state in history, and the efficiency of independent operation is also in the best in history, but the outside world has not found a little complacency from Changan's performance.
Chang'an still spares no effort in the system, structure, operation, research, production and marketing to dare to revolutionize its own life. Strength has increased, ranking has improved, products have sold well, and some money has been made, and it is still full of "sense of survival crisis".
Prosperous and dangerous words are always much more than fighting to the death. Chang'an's posture directly regards the former as the latter. Zhu Huarong stressed more than once that the elimination of the automobile industry has intensified, and the top two companies will face huge survival and development problems, and they may not survive.
Survival is a blessing, not a matter of course. In the face of performance, with this sober and long-term goal, people are more optimistic about the firm implementation of Chang'an's medium- and long-term strategy.
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