The A00-class minicar, as the lowest-priced category among passenger cars, represents the threshold for buying a car. In 2017, this category fell into a trough, and a generation of God Car Chery QQ was also discontinued in 2018, basically withdrawing from the historical stage.
However, in 2020, the new king Wuling Hongguang MINIEV Junlin new energy market has brought new vitality to the gradually shrinking market of A00-class mini-vehicles.
Looking at the ten years, the vicissitudes of the mulberry field
In 2012, the sales volume of A00-class mini-cars accounted for about 4%, of which Chery QQ accounted for about 1%, and the remaining best-selling models included Changan Benben, BYD F0, Changhe Suzuki Big Dipper and Changan Suzuki Alto.
At that time, the A00-class mini-car has gradually declined, and then the proportion of sales has decreased year by year, and after reaching a trough in 2017, it has experienced a three-year valley bottom period, until the middle of 2020, the proportion of sales has always remained at about 1%. In July 2020, the emergence of 50 Hongguang MINIEV drove the entire A00-class mini-car market, and the proportion of sales increased rapidly.
According to the latest data from the Association of Passenger Vehicles, the national retail sales of narrow passenger cars in December 2021 were 2.105 million units. In terms of A00-class mini-vehicles, Wuling Hongguang MINIEV sold 51,000 units, accounting for 2.4%. Sales far exceeded the ranked Changan Benben EV (10,000 units), Chery Ant (10,000 units) and Chery QQ Ice Cream (0.8 million units).
Macroeconomics, the trend of the times
When the time span is extended to ten years, many trends are more obvious.
The proportion of sales of A00-class mini cars is reversed from the total sales volume of passenger cars. As total passenger car sales have risen, the share of sales of A00-class minicars has declined.
After summarizing the annual data, this trend looks even more pronounced.
We expand the scope of statistics, from the overall point of view, we can have a deeper understanding of this phenomenon. If we refer to the A00 class and the A0 class as low-end models, and the B-class cars and C-class cars as medium and high-end models, then we can get the sales share trend in the following figure.
In the past 10 years, the proportion of sales of low-end models has been declining, and it will not pick up slightly until 2021. In contrast, the proportion of sales of mid-to-high-end models continues to rise.
With the growth of per capita disposable income of Chinese, this is an inevitable choice for everyone to pursue a more comfortable driving experience. However, another reason is the absence of the corresponding product. In order to pursue higher profits, low-end models with low profit margins will naturally be abandoned by car companies.
Unprofitable, no market
This decade is the decade of rapid development of China's new energy vehicles. However, for A00-class micro-fuel vehicles, it can be described as embattled. Increasingly stringent emission standards, difficult to reduce costs, and unanswerable prices are all revolutionizing the life of A00-class micro-fuel vehicles. The gross profit margin of A00-class fuel vehicles is difficult, and we can peek into BYD's 2011 prospectus. Since Chery is not listed, it is impossible to obtain the financial data related to Chery QQ.
In 2010, the gross profit margin of BYD's automotive business fell by 4.1% overall. BYD attributes it to:
Increased sales discounts and promotions;
Rising costs;
F0's sales accounted for an increase from 23.15% to 29.26%.
The increase in the proportion of sales by only 6% allows BYD to take this as an important factor affecting gross profit margin, which is enough to show that F0's gross profit margin is too low.
In short, Jun calculated that under the assumption that other conditions remain unchanged, if the impact of the first two items on the overall gross margin is 1%, then the gross profit margin of F0 is about 10%; if the impact of the first two items on the gross margin is 2%, then the gross profit margin of F0 is even negative, which is -2%.
It can be seen that the gross profit margin of A00-class micro-fuel vehicles such as Chery QQ and Changan Benben, which are competitors, is not optimistic.
In the darkest hours of 2016-2019, A00-class micro-fuel vehicles were unprofitable, and the A00-class micro-electric vehicles launched at the same time were equally unattractive.
Zotye Sesame, which was listed in April 2017, is priced at a national price of 58,800 yuan. At a time when charging facilities are scarce and consumer acceptance of new energy vehicles is very low, there is really no market for this price.
The price is down, and the market is bigger
In the second section of macro analysis, the trend in 2021 is always different from previous years. In this regard, Jian Yanjun's previous articles analyzed from the result level (see the article for details: electric vehicles carry people who are abandoned by fuel vehicles). This time, Jian Yanjun interprets it from the perspective of drivers.
The biggest driver is price. As an entry-level category for passenger cars, it is the majority of low-income people who need to be considered. Under the dividend of the double integration policy, in addition to the income from car sales, new energy vehicles also have the value of points. This gives the price of A00-class micro-electric vehicles room to further explore, activating this part of the market supply.
Here we need to introduce a statistical data, called: the income of the residents of the whole country according to the income of the fifth part. This statistics will be all surveyed households in order of per capita income level from low to high, divided into five equal parts on average, the lowest 20% of income households are low-income groups, and so on for the lower-middle income group, the middle-income group, the middle-upper-income group, and the high-income group.
The National Bureau of Statistics has been publishing this statistic since 2013, and two data were missing in 2014. But that doesn't affect our analysis. As the 2021 data has not yet been released, the data is as of 2020.
The minimum guidance price of the 2012 Chery QQ3 is 30,900 yuan, which is 34,000 yuan after taking into account the 10% purchase tax; the minimum guidance price of the 2020 Wuling Hongguang MINIEV is 28,800 yuan, and the purchase tax is exempted. Let's draw these two prices into the chart above.
In 2013, the price of Chery QQ was higher than that of the upper middle income group, that is, only about 20% of the country's disposable income could afford to buy a Chery QQ in a year. Until 2017, the per capita disposable income of the upper middle income group reached 34,000 yuan at the same level as Chery QQ, and the proportion of A00-class mini-car sales at this time has reached the bottom.
The Price of Wuling Hongguang MINIEV launched in 2020 is only slightly higher than the per capita disposable income of the middle income group, so at least 40% of the people in the country can buy a Wuling Hongguang MINIEV in a year.
The difference between this 40% and 20% is 20%, corresponding to the total population of China's 1.4 billion, which is 280 million people. Of course, buying a car is basically a family affair, and it is not appropriate to calculate the size of the market based on the number of people. However, this is enough to show that the downward price has fully expanded the market space for A00-class mini-cars, so that more people can afford to buy a car.
The old king abdicated and the new king was crowned
Although the comparison from 2012 onwards is somewhat unfair to the A00-class micro-fuel vehicles, because these models have been sold for many years at the time, but it is also appropriate to explain the problem.
Wuling Hongguang MINIEV sold 395,000 units in 2021, which is basically equivalent to Chery QQ's total sales from 2012 to 2021. The impact of price decline on the expansion of market space is clear at a glance, and Wuling Hongguang MINIEV has also established its own position as the new king in the field of A00-class mini-vehicles.
Chery naturally also saw the benefits, Chery QQ ice cream was officially launched in December 2021, the first month of the delivery of 8390 units of sales report card. As the "descendant of the king", Chery QQ Ice Cream and Wuling Hongguang MINIEV on the "kingship" battle is inevitable, let us wait and see.