produced by | bullet finance

author | wei shuai

editor | feng yu

art editor | qianqian

review | songwen

three years agochangan automobilewhen we teamed up with catl and huawei to build cars, we didn’t expectavitait’s like “can’t be helped”.

the latest sales data show that in august this year, avita delivered a total of 3,712 new cars, an increase of 88% year-on-year and a slight increase from the previous month; in the first eight months of this year, avita's cumulative deliveries were 36,367 vehicles.

the seemingly year-on-year growth data actually shows that the monthly sales of the entire series are less thanbydthe monthly sales volume of the hot-selling models of leading enterprises, such asideal autothe monthly sales volume is equivalent to that of the previous year.

sales have always been a problem for avita.

in the three years since the brand was founded and nearly two years since its delivery, avita has been handed a "golden spoon" but has never been recognized by the market.

in april this year, in order to boost sales, avita carried out a series of reforms in terminal channels, communicated and transformed about 216 stores and sales personnel, abandoned the original heavy asset direct sales model, and began to expand the channel network with a direct sales + dealer model.

four months have passed since the drastic channel reform, and the sales of avita have not increased but decreased. the poor sales of avita have become the "disadvantage" part in changan automobile's financial report, and have single-handedly lowered changan automobile's profit level.

changan automobile's financial report data for the first half of this year showed that changan automobile's revenue in the first half of the year was 76.723 billion yuan, a year-on-year increase of 17.15%; the non-profit attributable to the listed company was 1.169 billion yuan, a year-on-year decrease of 5.89%.

among them, avita is the company with the largest loss among all its subsidiaries and joint-stock companies. in the first half of 2024, avita achieved revenue of 6.152 billion yuan and a net loss of 1.395 billion yuan.

today, there is not much time left for avita to "turn things around".

at the recent chengdu auto show, avita launched its new car, avita 07, and officially entered the extended-range market.

(photo/avita official website)

at the same time, avita once again strengthened its huawei label and spent 11.5 billion yuan to acquire a 10% stake in huawei yinwang company. while strengthening the partnership between avita and huawei, it also used this opportunity to enhance its recognition in the market.

no one knows better than avita how much pressure he is under. according to the information released at the 2024 china (chongqing) unicorn enterprise conference, avita's valuation is only us$2.425 billion (approximately rmb 17.318 billion).

in the three years since its establishment, avita has accumulated losses of nearly 7.5 billion yuan.as the key carrier of changan automobile's brand advancement, if avita still cannot take over the high-end new energy market, how long can changan automobile continue to provide it with blood transfusions?

1. "holding thighs" is just the beginning

for the avita brand, the role of huawei's label is self-evident.

the avita brand store located in sanlitun, east third ring road, beijing, is one of the few self-operated stores currently.

in the not-so-big store, besides theavita 11andavita 12in addition to the two models on sale, only a small area is left for display and negotiation.

but even though the space is limited, in the display area on the right side of the exhibition car, a poster that reads "avita officially invests in huawei and hopes to become the second largest shareholder" is still placed in a prominent position to demonstrate the strength of the entire series equipped with huawei qiankun intelligent driving and cooperating with huawei.

huawei empowers avita, which has become a technical highlight that sales staff are proud of. sales consultant xiaotian told tanke travel that many people know us because of huawei. "only after a deep experience can you appreciate the goodness of this car. our weakness is that we are not good at marketing."

in fact, avita is one of the first car companies to adopt huawei's advanced intelligent driving solutions, and is also known as one of the car brands with the highest "chinese content".

even if we look back to 2021 when the avita brand was first established, huawei's advanced intelligent driving was one of the few companies in the industry to choose it, and its foresight in intelligent driving is unquestionable.

huawei's rotating chairman xu zhijun once said that avita is huawei's earliest pioneering practice in exploring the process of "not making cars, but helping car companies make better cars."

not only in product definition and intelligent driving technology research and development, avita and huawei have close cooperation in equity cooperation and investment.

previously, changan automobile chairman zhu huarong revealed at the signing ceremony that changan automobile and huawei have signed seven agreements to deepen strategic cooperation, covering all aspects such as product development, digital transformation, and talent training.

now, after nine months of negotiations, avita, a subsidiary of changan automobile, has officially become the second largest shareholder of shenzhen yinwang intelligent, a subsidiary of huawei, with a 10% stake and a transaction amount of 11.5 billion yuan. this is also the first automobile company to invest in yinwang.

but for avita, the support of huawei's brand and technology is always a "plus point", and the product sales still depend on its own brand promotion and channel building.

2. channel changes are difficult

as a high-end brand with a background in traditional car companies, the problem with avita is that its brand and channel construction system is difficult to match its high-end positioning, and it is always pushed and changed by the market.

according to tanke travel, avita has completed a rapid transformation in terms of channels. according to avita, it has not completely switched to a dealer model, but has adopted a "direct sales + agency" model. currently, a large number of direct sales stores have been converted to dealer agents.

this operation can certainly reduce personnel and fixed costs, but it is a challenge for avita's brand building and channel stability.

at present, among the many avita stores in beijing visited by "tanke travel", only two directly-operated stores remain, and the others have been transferred to the management of agent dealers.

(photo/avita official weibo)

although they are all under avita's unified sales system, price control issues have gradually emerged with the change of business model.

many avita sales consultants told tanke travel that the stores uniformly implement the avita brand's preferential system, such as a 22,000 yuan discount on some avita 12 models and three years of interest-free policies. however, sales consultants in dealer agency stores also said that under certain conditions such as beijing license plate indicators, the store can still apply for some discounts.

in this regard, industry insiders said that no matter how strict the price control system and sales system are, there is always room for price adjustment in the dealer model. in order to achieve sales goals, management is prone to a certain degree of chaos. "the only purpose of dealers is to sell cars."

under the previous self-operated model, avita delivered a total of 29,600 new vehicles in 2023, with a delivery rate of only 29.6%, far below expectations.

however, the rapid channel transformation since this year has not quickly shown its impact on terminal delivery.

according to public information, after starting its transformation in april this year, avita completed the communication and transformation work for 115 pmas (primary marketing responsibility areas), 216 stores and 1,430 people in just two months.

avita previously disclosed that while completing the channel transformation, the retention rate of car-viewing leads increased from 20% in may to 25% in june. by increasing the retention rate, the number of natural store leads increased by 10% month-on-month; the test drive rate increased from 15.5% to 18% in june.

however, from the sales perspective, data shows that since april, the delivery of new avita cars has been showing a month-on-month downward trend.it fell from 5,247 vehicles in april to 3,712 vehicles in august.

3. high-end products that are out of reach

in fact, whether in the era of new energy vehicles or in the era of fuel vehicles, high-endization is an unspeakable pain point for traditional car companies.

a closer look at the development history of avita shows that its predecessor was changan automobile and a new car-making power brand.niochangan automobile and weilai jointly created changan automobile and weilai. at the beginning of its establishment, changan automobile's intention was to use its own manufacturing capabilities and weilai's high-end brand potential in the new energy vehicle market to jointly create a new high-end new energy brand.

however, the cooperation between the two parties did not last until the mass production stage. due to various cooperation differences, changan weilai changed its name to avita technology, becoming changan automobile's attempt to explore high-end smart electric vehicles in cooperation with huawei and catl.

the early twists and turns also seem to foreshadow the difficulty of building a high-end brand.

before avita, changan automobile did not have the genes of a high-end brand, and it did not have a 300,000-level product series, whether it was a fuel vehicle or an electric vehicle.

fundamentally speaking, avita lacks a certain degree of high-end brand recognition. in the eyes of sales consultants, changan automobile, the company behind avita, is also a synonym for an established automaker and quality and reliability.

however, the manufacturing experience of the traditional automobile industry cannot provide strong support for high-end brands. in the era of new energy vehicles, intelligence, brand power, and service experience are more favored by consumers.

some analysts said that the avita brand has always lacked some uniqueness and brand characteristics. "for example, in terms of the brand proposition of 'please yourself', apart from the pile of products, its attributes in terms of emotion and interaction are not outstanding."

in terms of positioning, avita also lacks more precise user positioning and user groups.

recently, avita's new model, avita 07, was unveiled. with this model, avita for the first time ventured into the extended-range route, trying to open up the market with a new track.

although the new car has not yet been officially released, the declaration information shows that in terms of hardware, the "chinese content" of the avita 07 is lower than that of the previous two models, and huawei appears more frequently in the applications of smart cockpit and smart driving.

(photo/avita official weibo)

according to the sales consultant's prediction, the price of the new 07 will be lower than the 11 and 12 models currently on sale. "it is estimated to be around 250,000 yuan."

however, this downward pricing approach, while catering to consumers, is also weakening the brand's high-end attributes to a certain extent.

4. a life-or-death battle

whether in terms of product series or brand building, avita is still a relatively new brand.

but for changan automobile, its new energy transformation journey has lasted for seven years.

seven years ago, zhu huarong, chairman of changan automobile, took the lead in calling for a comprehensive new energy transformation, which was called the "shangri-la plan". the specific goal was to complete the construction of three new energy dedicated platforms by 2020; by 2025, to completely stop selling traditional fuel vehicles and achieve electrification of the entire product spectrum.

zhu huarong personally took charge of integrating changan automobile's existing new energy business and reorganizing the entire changan new energy team.

in the past seven years, changan automobile has successively launched changan new energy, avita,dark bluebut except changan new energy, avita, deep blue and qiyuan brands were all established after 2021.

after the avita brand was launched in november 2021, the deep blue brand was quickly launched in april 2022. in august 2023, qiyuan was upgraded from a product series model to a brand. the pace of small steps and fast running confirms changan automobile's eagerness in the development of new energy.

(photo/qiyuan official weibo)

the market is changing rapidly, the popularity of new energy vehicles is greater than ever before, and changan automobile is under increasing pressure to support its many businesses.

public data shows that since its establishment, avita has lost 150 million yuan in 2020, 209 million yuan in 2021, 2.015 billion yuan in 2022, and 3.693 billion yuan in 2023. together with the loss of 1.395 billion yuan in the first half of this year, the cumulative loss has reached 7.462 billion yuan.

under the pressure of years of losses and continuous investment, avita's pressure has only increased. now, channel reform and product updates have demonstrated its strategic shift to embrace the market and consumers.

zhang xiang, secretary general of the international intelligent transportation technology association, said that avita is a brand that must be developed. it is a battle that concerns the survival of changan automobile and it can only win, not lose.

at present, avita is under great pressure in terms of both brand and market sales. where is changan automobile's hope? where is avita's hope? it is still unknown.

*the title image in the article comes from: avita official website.