The car market logic behind the "stop falling and rise"

On January 12, the China Automobile Association released data showing that from January to December 2021, the cumulative production of automobiles reached 26.082 million units, an increase of 3.4% year-on-year, and the cumulative sales of automobiles reached 26.275 million units, an increase of 3.8% year-on-year.

Under the multiple blows of rising raw material costs, repeated epidemics in various places, and lack of cores affecting production, why can the automobile market recover strongly in 2021 and achieve "stop falling and rebound"? What car market logic is revealed behind it?

On the one hand, independent brands are rising strongly in the market. Driven by the recovery of the international market and the improvement of the competitiveness of Chinese brands, China's automobile exports have performed well, and since April 2021, they have repeatedly set new historical records, and the annual export volume has exceeded the 2 million vehicle mark for the first time. However, Chinese brand cars are affected by the positive factors of the new energy market and overseas markets, which directly bring about a significant sales pull, and the market share has increased to 44%, close to the best level in history. At the same time, the road to high-end independent brands has achieved remarkable results, and a larger market space has yet to be tapped.

On the other hand, new energy vehicles have become a new increment to drive the recovery of the car market, and have formed a partial substitution effect on the fuel vehicle market. In 2021, the annual sales volume exceeded 3.5 million vehicles, and the market share increased to 13.4%, further indicating that the new energy vehicle market has shifted from the previous policy-driven to self-reliant market pull, and the natural law of survival of the fittest will also apply to new energy vehicles.

It is worth mentioning that the luxury car market is still performing solidly. Under the general trend of consumption upgrading, luxury cars known for their sense of quality have been more favored by the consumer market, and luxury brands have accelerated their electrification offensive in the Chinese market, adding more variables to the future market development.

Nanfang Daily reporter Gong Qianshu Wei Hongquan

Planner: Guo Xiaoge

Independent brands are proud of the spring breeze Multinational car companies have mixed feelings

According to the data of the China Automobile Association, the market share of independent brand cars has exceeded 44% in 2021, close to the best level in history. At the same time, the market share of Ashkenazi and Japanese brands has declined year-on-year, and it is currently 20.6%.

On the one hand, the spring breeze of independent brands is triumphantly advancing, and on the other hand, multinational car companies are facing "lack of core" and striving to maintain production capacity and seek development.

The top three automobile companies in the automobile sales ranking released by the China Automobile Association, SAIC, FAW and Dongfeng all experienced a year-on-year decline in sales. In 2021, the sales of enterprises that rely more on joint venture models generally declined, local enterprises such as Changan and GAC that have made more efforts in independent brands and new energy in recent years have shown growth momentum, while private enterprises such as BYD and Great Wall have achieved substantial sales growth.

Judging from the sales data released by various enterprises, there are many good news for independent brand head enterprises. Changan Automobile ranks first in the sales volume of Chinese car companies in 2021, with cumulative sales of about 2.3 million units. Among them, the annual cumulative sales of Changan's Chinese brand cars were 1.75 million units, up 16.7% year-on-year; Great Wall Motors sold more than one million vehicles for six consecutive years, and Haval H6 sold 370,000 vehicles in the whole year. Chery Automobile, a veteran car company, also returned to the forefront of the list, with cumulative sales of 962,000 units in 2021, an increase of 31.7% year-on-year.

Multinational car companies are mixed in 2021. Toyota is the only Japanese brand to achieve positive sales growth in China, with cumulative sales of 1.944 million units in 2021, an increase of 8.2% year-on-year, followed by Honda and Nissan sold 1.562 million units and 1.382 million units, down 4.0% and 5.2% year-on-year, and Mazda fell 14.3%.

GM's 2021 sales figure is "about 2.9 million vehicles", compared with the "more than 2.9 million vehicles" in 2020, the decline has become inevitable. Looking back at the past year, the haze of the epidemic and lack of cores lingered, chips directly restricted production, and the rising cost of supply chains has become an unspeakable pain for multinational car companies.

Volkswagen's announcement shows that 3.3 million vehicles will be delivered in China in 2021, down 14% year-on-year. Adding to the global giant's embarrassment, global deliveries fell 405 percent to 8.88 million units, the lowest since 2011, as "despite strong orders, shortages of parts hit production." Supply chain bottlenecks have made large multinational car companies more constrained.

In the second quarter of 2021, FAW-Volkswagen reduced production by 20,000 units in addition to the shortage of ESP chips, and also affected the production of 29 models due to the shortage of 10 kinds of chip resources, resulting in a production reduction of up to 30% in the second quarter. In order to ensure the production and delivery of new car orders, many car companies choose to allocate chips to lucrative high-end models, or temporarily "reduce the allocation" of some new cars. In stark contrast, BYD, which is self-sufficient in chips, has kept up with production, which is also the main reason for the strong growth.

The analysis pointed out that in the past year, independent brands have adopted more flexible supply chain control measures and seized the opportunity to open up product sales, while the output of joint ventures is greatly affected by the overall supply chain system of multinational companies.

However, in December, the data of the Association showed that luxury cars and mainstream joint venture brand retail sales increased by 18% and 19% respectively month-on-month, under the influence of multiple positive factors such as the suspension of chip shortages, the promotion momentum at the end of the year, and the strength of new energy, multinational car companies in the Chinese market also have the power to fight back, who retreats and who enters, how the head enterprises and the tail end of the echelon evolve, and the dispute between independent brands and multinational car companies will become more and more exciting.

Rapid growth of new energy Fuel vehicles are making every effort to maintain stability

In the car market in 2021, the most eye-catching thing is the rapid increase in sales of new energy vehicles. According to the data of the Association of Passenger Vehicles, from January to December, the wholesale number of new energy passenger cars was 3.312 million units, an increase of 181.0% year-on-year. From January to December, the retail sales of new energy vehicles were 2.989 million units, an increase of 169.1% year-on-year. The doubling growth model of new energy vehicles has undoubtedly become a new increment driving the recovery of the automobile market this year.

This also means that the trend of new energy vehicles and traditional fuel vehicles has formed a strong differentiation characteristics, new energy vehicles have produced a partial substitution effect on the fuel vehicle market, and through the user's market-oriented choice to prove that consumer demand is changing, driving the car market to accelerate the pace of transformation to new energy.

Why can new energy vehicles grow against the trend in the context of the overall decline of the automobile market? It is precisely because of the "new four modernization" trend of automobiles that has emerged in the Chinese market. Consumers' demand for intelligence and electrification is constantly improving, and new energy vehicles are constantly breaking through with independent innovation technology, and continue to exert efforts in intelligence, brand marketing, channel construction, etc., strengthening brand image, deepening user stickiness, and meeting consumers' deep-seated car needs with strong product strength.

The surge in sales of new energy vehicles in 2021 is also a concrete manifestation of the success of the transformation of independent brands. BYD's overall sales last year were 584,020 units, winning the first place in China's new energy vehicle market, an increase of 221.3% year-on-year. SAIC-GM-Wuling followed with sales of 431,130 units, up 177.3% year-on-year. You know, in the past few years in the new energy vehicle market, Tesla has been far ahead, and now the rise of multiple independent new forces has successfully "broken the defense".

Tesla, which was surpassed by BYD and SAIC-GM-Wuling, achieved the delivery of 320743 vehicles in the whole year of 2021. The new car-making force "Wei Xiaoli" also handed over a satisfactory report card: in 2021, the total delivery volume of Xiaopeng Automobile reached 98,155 units, an increase of 275.2% year-on-year; ideal cars delivered a total of 90,491 vehicles in 2021, an increase of 177.4% over 2020; NIO delivered 91,429 new cars in 2021, an increase of 109.1% year-on-year.

With the further decline of new energy subsidies, the "policy dividend" of the new energy vehicle market continues to fade. In the future, new energy vehicle companies will not only face the challenges of supply chains such as chip shortages and raw material price increases, but also need to balance the relationship between high-cost expansion and cost pressure, continue to expand sales scale, and face the continuous competition of traditional car companies. The market competition of "real knives and real guns" has officially begun.

However, Cui Dongshu, secretary general of the All-China Passenger Transport Association, is still optimistic about the prospects of the new energy vehicle market. He said that china's total sales of new energy vehicles will continue to soar in 2022 and continue to maintain the leading position of more than 50% of the world's super share.

Luxury cars are still strong The performance of the middle and low end is dismal

According to data from the China Association of Automobile Manufacturers, high-end brand sales reached 376,000 units in December, up 28.8% year-on-year, and high-end brand passenger car sales in 2021 were 3.472 million units, up 20.7% year-on-year. With the continuous improvement of residents' income level, the automobile market has shown a clear trend of consumption upgrading, making this year's luxury car sales still firm.

From the sales of the three luxury giants BBA, Mercedes-Benz sold 2.093 million vehicles globally in 2021, down 5% year-on-year, and Mercedes-Benz sold 758863 new cars in China, down 2% year-on-year. Despite a slight decline, Mercedes-Benz sales are still strong under the dilemma of global core shortage, and the Chinese market accounts for the highest proportion of sales.

BMW's supply chain is more tenacious, in 2021 BMW Group to cope with the epidemic recurrence, chip shortage and many other challenges, once again set a new high in the Chinese market sales, a total of 846237 delivered, an increase of 8.9% year-on-year, the total sales volume ranked first in BBA.

The Audi brand delivered 701,300 vehicles in China in 2021, and the Audi Q8, Audi RS 7, Audi RS 6 and other models set their own record for best sales in history. With the delivery of SAIC Audi models and the next phase of electrification offensive, the Audi brand is expected to achieve further growth in 2022.

Compared with the substantial growth of the luxury car head market, the sales volume of the second echelon of luxury brands has opened up a large gap, but it still shows a growth trend. In 2021, Cadillac achieved annual sales of 233117 units, an increase of 1.4% year-on-year, Volvo Cars Chinese mainland sales in December reached 14,622 units, an increase of 9.05% month-on-month, and total annual sales of 171393 units, up 3.1% year-on-year.

Compared with the eye-catching achievements of luxury brands, low-end brands have performed very dismal. In recent years, under the demand for consumption upgrading, the requirements for intelligent and high-quality products have been continuously improved, and the products of "low-price strategy" no longer meet the needs of the current market. For example, BAIC BJEV, which used to be low-end products, plunged 6,369 electric vehicles from January to December 2021, down 51.84% year-on-year; the cumulative sales volume was 26,127 vehicles, and the operating conditions continued to lose money, and the lack of product strength was the biggest "hard injury".

Cars, SUVs "equal strength" MPV blue ocean urgently needs to break the situation

According to data from the China Automobile Association, in 2021, sedan sales were 9.934 million units, SUV sales were 10.101 million units, and MPV sales were 1.055 million units.

However, specific to the respective market segments, there are different differences. Taking the car market, where joint venture brands occupy the main force, as an example, the head models have shown a downward trend. Xuanyi became the sales champion of the 2021 sedan with 513207 units, down 5.1% year-on-year; the new Langyi was followed by 432035 units, down 3.8%; corolla fell 7.5% year-on-year, new Bora fell 27.2% year-on-year, Sagittarius fell 24.9% year-on-year, and the overall performance of the joint venture brand sedan was weak. On the contrary, the sales of new energy cars and luxury cars have risen, Wuling Hongguang MINI's sales in 2021 395451 vehicles, up 250.7% year-on-year, BYD Qin's annual sales of 188921 vehicles in 2021, up 226.8% year-on-year, and independent brands have turned around rapidly in the new energy market, bringing huge increments to the market.

Borrowing the "Dongfeng" of consumption upgrading, luxury brands continue to increase sales, BMW 5 Series sales in 2021 171852, up 8.3% year-on-year, BMW 3 Series sales in 2021 170249, up 12.1% year-on-year, leading the luxury car market.

Compared with the sedan market dominated by joint venture brands, the SUV market shows the advantages of its own brand. Haval H6 sales of 352857 units in 2021, down 3.2% year-on-year, Changan CS75 sales in 2021 274742 units, up 4.8% year-on-year, BYD Song sales in 2021 201682 units, an increase of 12.7% year-on-year, Changan CS55 2021 sales of 136985 units, an increase of 26.7% year-on-year... Independent brands not only hold a strong position in the SUV market, but also pull the market to achieve overall growth.

From the perspective of market division, sedans still account for the highest proportion, the data of the Association of Automobiles shows that the market share of sedans from January to November was 48.8%, the market share of SUVs was 45.8%, and the market share of MPV was 5.4%, compared with the previous three quarters, the market share of sedans has increased, while SUVs have declined.

Among them, the sales volume of the lowest-end mini car market and the mid-to-high-end market has increased the most obviously. A00-class sedan sales of 772,000 units, an increase of more than 236.9%, market share accounted for 4.3%; B-class SUVs increased by 25.5% year-on-year, C-class sedans rose 17.8% year-on-year, and B-class sedans increased by 11.0% year-on-year, all exceeding the overall growth rate of the market. The A0 class sedan, A0 class SUV and A class sedan fell significantly, with the A0 class sedan down 1.6%, the A0 class SUV down 3.3%, and the A class sedan down 5.4%.

This means that in the future, there are still many opportunities in the mid-to-high-end market and the mini car market, and the "waist" market urgently needs to find new breakthroughs.