Last weekend, Tianjin FAW invited dozens of media reporters from Beijing and Tianjin for a two-day training session in Miyun. This event was part of the company’s broader outreach strategy, which has seen them organize multiple training programs for their employees this year. In an era of declining demand for luxury sedans, these initiatives seem to signal a strategic shift and a renewed focus on rebuilding brand strength.
Since its launch on August 8 this year, the Xiali N3 has taken on a pivotal role for Tianjin FAW. Not only did it mark the milestone of the 1 millionth Xiali vehicle sold, but it also represents the company’s push into the economic car market. In essence, the N3 is now a key bet for the future of the brand.
Internally, however, Tianjin FAW faces mounting challenges. The auto market has been tough this year, and the company has struggled to maintain profitability. Their product lineup follows a tiered structure: the Xiali series remains the core, while the NBA platform-based Ville and Vizi models target the mid-range segment (around RMB 80,000–100,000). Meanwhile, the joint-venture models like Vios and Corolla sit at the top, with higher pricing. But despite these efforts, the current market conditions have made it difficult for Tianjin FAW to sustain growth.
Financial reports reveal some concerning trends. In 2003, the company sold 117,335 units of the Xiali and NBC series, with earnings per share at 0.181 yuan. However, by the first quarter of 2004, sales dropped to 29,952 units, and earnings per share fell to just 0.01 yuan. Even though sales of the Xiali, Viz, and Ville series saw slight increases, profit margins have shrunk significantly due to price cuts and rising material costs.
In the first three quarters of this year, profits are expected to fall by more than 50% compared to the same period last year. This indicates that the base models—like the Xiali—are not contributing much to overall profitability. The NBC series, once a strong performer, also underperformed. The Ville sold only 8,937 units in the first seven months, while the award-winning Vizi managed just 4,179 units. On the upper end, even the Vios and Corolla, produced in partnership with Toyota, have seen price reductions, further eroding profits.
Compounding these issues, Tianjin FAW's stake in FAW Toyota Motor Co., Ltd. has dropped from 50% to 33.12%, leading to a significant decline in investment income. Last year, this income was crucial in turning a profit, but this year, it’s no longer enough to offset losses.
Externally, the competition in the economy sedan segment has become increasingly fierce. Traditional rivals like Changan and Hafei are still strong, but new players such as Geely and BYD have added pressure. The loss of taxi contracts in Beijing to Wilo was a major blow, not only costing market share but also casting doubt on future opportunities in the commercial vehicle sector.
Amid these challenges, the Xiali N3 has become a symbol of hope. Launched after the 1 millionth Xiali rolled off the assembly line, the N3 is seen as a way to strengthen the brand and retain customer loyalty. According to Su Lianyuan, deputy general manager of Tianjin FAW Sales Co., Ltd., the N3 has already sold over 7,000 units since its launch, providing a much-needed boost.
Despite the lower profit margins of the Xiali models, Tianjin FAW has focused more on this segment rather than the more profitable NBC series. In April, they launched a new 1.1-liter model, followed by the N3 in August. These moves were aimed at repositioning the brand and rationalizing its product range.
Industry analysts suggest that this strategy is closely tied to Tianjin FAW’s reliance on Toyota. Deputy General Manager Tian Liming stated that the current profit levels of Xiali models are still low, and the company’s overall profit structure won’t change soon. In other words, Tianjin FAW will continue to depend heavily on its partnership with Toyota.
The N3 is not just a product—it’s a strategic move to strengthen the brand and reduce dependence on foreign capital. As Song Mingjun, general manager of Tianjin FAW Sales Co., Ltd., said during the recent training session: “Facing a tough market and fierce competition, we must unite and work together to make Xiali a well-known domestic brand and eventually an international one.â€
Reporter: Fan Shengli
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