Automobile industry

Analysis of China’s passenger car market in November 2020 From China Automobile Circulation Association

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The following is the Analysis of China’s passenger car market in November 2020 From China Automobile Circulation Association recommended by recordtrend.com. And this article belongs to the classification: Automobile industry.

1. Review of national passenger car market in November

Retail: in November, the retail sales of passenger car market reached 2.081 million, an increase of 8.0% compared with last November, achieving the highest growth rate of about 8% in five consecutive months in recent two years. The cumulative growth rate of retail sales from January to November this year was – 8.3%, 2% higher than that of – 10.2% from January to October, reflecting the steady recovery of the industry.

This year, the growth rate of the national passenger car market remained strong from July to November. First of all, the macro-economy and export market have recovered more than expected. Secondly, the retail sales of new energy vehicles doubled and the trend of recovery was obvious, which promoted the automobile market to strengthen.

As the purchase of cars started earlier before the Spring Festival at the end of last year, the retail sales of traditional cars in November this year increased by 57000 units to 1.913 million units. The year-on-year growth rate was only 3.1%, slightly weaker than the 4.4% in October. Recently, new crown cases appeared in some areas, and “external defense input, internal anti rebound” also slowed down the pace of retail warming. In November, the retail sales of new energy vehicles were 169 000, with a year-on-year increase of 97000, with a year-on-year growth rate of 136.5%. The passenger car retail market penetration rate was 8.0%, which became the core driving force for the growth of passenger car retail.  

In November, luxury car retail sales increased by 27.0% year-on-year and 5.0% month on month compared with October, maintaining a strong growth feature. The demand for high-end replacement of consumer upgrading is still strong. German luxury cars tend to stabilize at the end of the year, while American luxury cars such as Tesla, Cadillac and Lincoln perform well.

In November, the retail sales of independent brands increased by 9.0% year-on-year and 9.0% month on month compared with October; the market share was 39.1%, up 0.4% over the same period. The retail sales of self owned brand traditional vehicles were flat on a year-on-year basis, and the growth rate of new energy vehicles doubled. State owned independent performance is strong, and traditional cars of Hongqi, Changan, great wall, Chery and other brands are growing at the same rate.

In November, the retail sales of mainstream joint venture brands increased by 3.0% year-on-year, but by 1.0% month on month compared with October. The shares of Japanese and American brands increased by 3% year on year.

During the period from January to November of 20 years, the total retail sales of passenger car market in China totaled 17.02 million, with a cumulative decrease of 8.3% over the same period of last year. The cumulative sales volume of this year decreased by 1.54 million vehicles on a year-on-year basis, accounting for 8.3% of the total retail sales of last year. The decline in retail sales this year is mainly due to the early spring festival and epidemic factors affecting the first half of the year. The retail sales from July to November increased by 650000 vehicles on a year-on-year basis. If the net increase of 150000 vehicles in November is maintained in December, the retail sales loss is expected to be 1.4 million, a decrease of 7.0%.

Export: in November, 82000 passenger cars were exported, up 87.3% year on year. Among them, the export of self owned brands reached 70000, an increase of 108.0% year-on-year, and the export of joint-venture brands decreased by 37.0%. The export performance of SAIC passenger cars, Geely, great wall and Chery has doubled, among which SAIC passenger cars have a strong export of new energy.

Production: in November, 2.278 million passenger cars were produced, an increase of 8.0% compared with that in November of 19; from January to November, 17.156 million passenger cars were produced, a year-on-year decrease of 8.1% and a reduction of 1.511 million. In November, the production of luxury cars increased by 24.0% year-on-year, joint-venture brands increased by 1.0% year-on-year, and self-owned brands decreased by 7.0% year-on-year, of which the production of independent SUVs decreased by 10.0%.

Wholesale: in November, the wholesale sales volume of manufacturers was 2.263 million, with an increase of 11.3% compared with November last year and 9.2% month on month. From January to November, the total wholesale sales volume was 17.451 million, a year-on-year decrease of 7.8%, a decrease of 1.475 million vehicles. This year’s downturn in the independent brand of traditional cars led to a weak trend at the end of the year.

Inventory: at the end of November, the manufacturer’s inventory decreased by 137000 vehicles, and the channel inventory increased by 99000 vehicles. From January to November, the channel inventory decreased by 120000 vehicles, and the dealers’ inventory continued to be slightly replenished from September to November, and the replenishment in November was relatively strong.

New energy: in November, the wholesale sales volume of new energy passenger cars was 180000, with a year-on-year increase of 128.6%, and a month on month increase of 24.8%. Among them, 30000 plug-in hybrid electric vehicles were sold, with a year-on-year increase of 160.0%. The wholesale sales volume of pure electric vehicles was 150000, with a year-on-year increase of 122.3%.

In November, the strong growth trend of high-end and low-end electric vehicles was obvious, among which the sales volume of A00 class was 48000, and the share increased to 32.0% of pure electric vehicles. Grade B accounted for 23.0%, with a strong year-on-year growth.

In November, the top three enterprises in the new energy passenger vehicle market performed well, with the top three enterprises breaking through 20000 vehicles, including SAIC GM Wuling 36070, BYD 26015 and Tesla China 21604. The top three companies accounted for 46.5% of the total new energy vehicles. New breakthroughs have been made in the retail volume of new energy vehicles. Wuling Hongguang Mini retails 33094 units and Model3 retails 21604 units.

New energy of traditional independent automobile enterprises continued to strengthen, Great Wall Motors, gac-ea’an, etc. also showed high growth, and new energy performance differentiation of large groups intensified. New forces such as Weilai, ideal, Weima, Xiaopeng, Hezhong, zerorun and other new forces still maintain strong growth.

In November, 42000 ordinary hybrid passenger cars were wholesale, an increase of 13% compared with last November.

China’s passenger car market outlook in December

There were 23 working days in December, one more day than that in December of 19, so the growth momentum of automobile market production and sales was relatively large. Although there is a supply side shortage of information, but for many years memory or chip shortage is common, from the experience of the computer industry, it will not have a great impact on production and sales, but it will help to continue to adjust the price discount before the year.

This year, affected by the epidemic situation, the sales targets of manufacturers were generally lowered, and the sales promotion strategies of automobile manufacturers were differentiated at the end of the year. Luxury brands are affected by the supply, and the enthusiasm of the year-end momentum of dealers is not high. Considering that the super high growth rate in January of next year is a foregone conclusion, there will not be a large-scale transfer of sales at the end of this year. Many manufacturers still hope to have a more satisfactory ending this year.

In December, China entered the peak sales period of passenger car market in winter. The core driving force of increment at the end of the years is the sales of self owned brands with low and medium price. In the past two years, the low-end market has shrunk seriously, the differentiation of independent brands is serious, the channels of some independent brands are difficult, the tail effect at the end of the year is seriously hindered, and the market concentration of independent brands continues to increase.

According to statistics, at present, there are 8 provinces, 35 prefecture level city’s local consumption promotion policies expired before the end of the year, which has a certain stimulating effect on automobile consumption at the end of the year. However, due to the relatively late spring festival next year, the hot selling period before the festival is postponed, so the retail sales in December will not be too hot.

In terms of new energy products, with the increase of 20000 new energy number in Beijing and the panic in Shanghai, the rush to buy new energy has a strong momentum. In addition, enterprises still have a strong pursuit for the production and sales of new energy. It is expected that the domestic new energy vehicle market in the last month of the end of the year will continue to grow at a high rate month on month. The willingness of first tier cities, especially Shanghai, to purchase new energy vehicles is expected to continue to rise in the future, or will form a demonstration effect on the second and third tier cities. Judging from the fact that the direct marketing centers of major cities have started to clear up the test drive of Tesla, both the modification of model 3 and X and the batch delivery of model y will inject new vitality into the high-end new energy vehicle market.

3. The forecast of passenger car market in 2021 should be cautious

In 2020, China’s auto market will show a “V-shaped” reversal trend. In 2021, the car market will continue to warm up in 2020 with a strong growth momentum. According to the trend forecast of the production and sales data of the passenger car Federation from January to November, the growth rate of the wholesale and retail sales of passenger cars will be about – 7% in 2020. Considering that the uncertain factors in 2021 are still large, we generally hold an optimistic and cautious attitude towards the trend of 2021. At the beginning of November, the forecasting team of the manufacturers of the Federation of passenger cars predicted that in 2021, the wholesale growth rate of passenger cars in narrow sense was 9%, the retail growth rate was 7%, and the automobile growth rate was 4%.

There are many favorable factors for the market to be optimistic in 2021. First, the contribution of low base is huge. According to the retail data of the travel union, the retail sales from January to June in 20 years decreased by 2.26 million vehicles compared with the previous year, with a year-on-year decrease of 23%. The same increase will be 29% of the low base in 2021. Secondly, the late Spring Festival brought about the release of super demand. The Spring Festival of 2021 will be on February 12, which is a big year of automobile consumption. The hot sales factors before the Spring Festival lead to the strong retail sales before the Spring Festival. It is estimated that the sales growth rate of the Spring Festival factor from January to February should reach more than 75%, so the growth in the first half of 2021 is extremely optimistic. The third is the gradual recovery of overseas market demand. This year’s epidemic situation shows a rapid stabilization in China, while the spread of overseas epidemic situation should gradually subside in the first half of next year. At the same time, the growth of overseas demand will be strong. Fourth, the growth of new energy has made great contribution.

The growth in 2021 is still under pressure. Firstly, during the epidemic period, the policy of promoting consumption in automobile markets around the country is withdrawn. The consumption promotion policies under the epidemic situation in 2020 are very strong, and local governments have also introduced a combination of measures to promote the exchange of old and new ones. However, these policies are basically due to expire in 2020. In the future, it is very difficult for local governments to continue to issue policies to promote consumption. This year, Beijing, Shanghai, Hangzhou and other places have taken short-term measures to increase the number plate, which is difficult to increase in the future. Secondly, the entry-level consumption capacity continued to weaken. At present, the decline in young people’s demand is especially strong at the end of car purchase. With the profound impact of high housing prices, the economic traditional cars continue to shrink, and the independent brands remain depressed. The third is that the demand for additional and replacement purchase is slowing down, the personalized travel demand under the epidemic situation is strong, and the demand for increase and exchange of middle and high-end consumer groups breaks out rapidly, and the growth momentum may decline in 2021. In particular, considering the external environment uncertainty under the Sino US relations, the market forecast in 2021 should be relatively cautious on the basis of optimism.

4. Super high growth of new energy passenger vehicles in 2021

In 2020, China’s auto market presents a “V-shaped” reversal trend, in which new energy vehicles show a trend of low before and high after, with a growth rate of – 43% in the first half of the year and 70% in the second half of the year. The annual sales volume of 1.13 million vehicles is expected according to the data of the passenger Association. This has both the base factor and the new kinetic energy accumulation process of new energy vehicles. In 2020, new energy vehicles and new kinetic energy have been reflected. The high-end Tesla and the Hongguang Mini of micro electric vehicles have become the core driving force of market growth. Its core is to accelerate cost reduction and meet more consumer demand, which is the key driving factor for sustainable development of the industry. Looking forward to 2021, cost reduction is still the key to narrow the gap between new energy vehicles and traditional vehicles in the near future. At this stage, there is no obvious difference between new energy vehicles and traditional vehicles. Many intelligent configurations of traditional fuel vehicles are also idle and wasted, and there is great potential for users to improve their use frequency. From the OTA upgrade of traditional fuel vehicles released by Geely at Guangzhou auto show at the end of November, traditional fuel vehicles are also learning from the usage data accumulation of new energy vehicle users, bringing users freshness and practicability from the software level.

With the further promotion of the double integral policy, there is still a huge increment space for new energy vehicles in 2021 at both ends, and it should be possible to increase 150000 new energy vehicles respectively. There is overlap between the incremental development of urban electric vehicles and the growth of high-end electric vehicles. The electric vehicles in the mainstream market of non restricted cities will gradually start.

With the strict implementation of the double points policy, joint venture brand new energy vehicles will have a certain incremental contribution. Recently, the Japanese and American governments have changed their new energy development strategies, especially the Japanese government’s attitude of strongly supporting the development of electric vehicles has gradually become clear. Japanese automobile enterprises are forced to accelerate the promotion of electric vehicles. The speed of joint ventures in China’s new energy development has the potential of explosive growth. The growth of 2021 will be more flexible.

New force car manufacturing enterprises have also entered a period of stable development. Due to the high-end line, the visual inspection sales volume is likely to increase steadily in a small range.

Traditional automobile enterprises are the core key to the development of new energy. Independent BYD, Wuling and SAIC will continue to strengthen, while joint ventures such as Volkswagen are really committed to new energy, and the potential of new products is also huge.

5. The three cylinder engine is difficult and needs support

Three cylinder engine of passenger car provides higher efficiency, lower fuel consumption and more abundant cabin space than four cylinder engine, which is the future development trend. With the promotion of energy conservation and emission reduction and the pressure of the four stage fuel consumption index, since 2018, the three cylinder engine has been gradually accelerated. In 2018, there were 192 new models with three cylinder engines, and 307 in 2019. However, there were only 82 new models from January to September 2020.

From the retail share of the domestic traditional fuel vehicle market, the proportion of triplex engines decreased from 0.7% in 2016, 1.2% in 2017, 2.9% in 2018 and 6.2% in 2019 to 5.7% this year. Manufacturers actively promote the three cylinder engine, but the market acceptance is not high. Luxury cars, joint venture brands and independent brands have high enthusiasm to promote the three cylinder engine, but the promotion effect is not very ideal.

In recent years, the market performance of some automobile enterprises is relatively high, which is related to the fact that the market acceptance of three cylinder engine is still not high. At present, these enterprises are also promoting the coordinated development of three cylinder engine and four cylinder engine. They do not excessively promote the strategy of three cylinder engine, or do some moderate adjustment of travel based on the radical strategy, so that the three cylinder engine can meet the needs of certain mainstream consumer groups, and the four cylinder engine can meet the needs of some conservative users A balance between energy conservation and emission reduction and consumer demand should have a good role in promoting the development of three cylinder engine and the whole technological progress.

The subsidy for energy-saving vehicles started in 2012 should be a good measure to promote technological progress and product upgrading of small displacement vehicles. The recent policy guidance to encourage energy conservation and emission reduction mainly lies in the support for new energy vehicles, and the incentive policy for low fuel consumption vehicles is not enough to offset the inertia consumption of the market. In the future, there should be some policy incentives to promote the development of energy-saving vehicles, so that the three cylinder engine and other small displacement energy-saving lines can be more quickly accepted by consumers.

6. RCEP is good for the development of automobile industry

On November 15, 2020, ten ASEAN countries, China, South Korea, Japan, Australia and New Zealand formally signed the regional comprehensive economic partnership agreement (RCEP). According to the analysis of the Ministry of Commerce, after the agreement comes into effect, more than 90% of the regional trade in goods will eventually realize zero tariff, and the main measures are to reduce the tax to zero immediately and to zero within 10 years, so that the RCEP free trade zone is expected to fulfill the promise of all goods trade liberalization in a relatively short period of time.

The regional comprehensive economic partnership agreement (RCEP) takes into account the national conditions of different countries, gives special and differential treatment to the least developed countries, and takes into account the demands of all parties to the greatest extent. Therefore, it has a gradual impact on the existing trade environment. In the short term, the direct positive effect is concentrated on the import business of Japanese and Korean parts. Due to the relatively high price of high-end vehicles in China at the present stage, the signing of RCEP is conducive to the import growth of Japanese and Korean automobile enterprises. Therefore, the income of Japanese high-end vehicles will be larger and the impact on the industry will be relatively limited. However, the rate of tariff reduction is slow and steady year by year. At present, luxury cars are mainly German cars, so the overall impact is not big. It is likely that a small part of European brands will accelerate the process of localization. The cooperation of auto parts system is helpful for Chinese auto enterprises to go out and realize sustainable growth.

In recent years, China’s automobile enterprises have developed rapidly in Southeast Asia, so it is necessary to speed up the construction of industrial chain, overseas investment policy and feasibility study of financial instruments, so as to promote the construction of integrated industrial supply chain. In the long run, under the background of China’s continued adherence to the open policy, RCEP may become an opportunity to promote the deepening reform of WTO. With the transformation of new energy, China’s automobile overseas market has great development potential. Read more: China Automobile Circulation Association: China Association of passenger cars circulation market analysis of China in February 2020 China Automobile Circulation Association: national passenger car market analysis in September 2018 China Automobile Circulation Association: national passenger car market analysis in September 2020 China Automobile Circulation Association: August 2020 national passenger car market analysis China Automobile Circulation Association: national passenger car market analysis in January 2020 China Automobile Circulation Association: in depth analysis of national passenger car market in December 2019

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