The moment of history has arrived! BYD surpassed FAW-Volkswagen in sales in April to win the full championship

Author: Pang Yicheng Li Yanjiao

In April, when the entire auto market was in a sad song, BYD miraculously achieved growth against the trend. On May 3, BYD announced that it sold 105,475 new energy vehicles in April, a slight increase of 1.1% month-on-month, which is the second consecutive month of BYD sales exceeding 100,000 units after March, another record high.

At the same time, the competition pattern of China's auto market has undergone unprecedented changes under the sudden impact of the epidemic. On May 6, FAW Electric asked the China Association of Automobile Manufacturers and the Association of Automobile Manufacturers to verify that FAW-Volkswagen, Changan Automobile, Geely Automobile, GAC Toyota, SAIC-GM, SAIC Volkswagen and other traditional giants had a cliff-like decline in sales in April.

On the same day, the China Automobile Association released a sales estimate that the sales volume of the automotive industry in April is expected to reach 1.171 million units, down 47.6% month-on-month and 48.1% year-on-year. Previously, the passenger car retail market was expected to be around 1.1 million units in April, down 31.9% year-on-year.

Image source: Automobile Commune

Although the full sales data of each label in April has not yet been released, a clear judgment can be made: BYD surpassed FAW-Volkswagen to win the april total sales championship of the Chinese auto market, and achieved its internal target of winning the championship half a year ahead of schedule. This is not only a historical moment for BYD, but also a historical moment for the Chinese auto market.

The coming "intersection" of oil and electricity

Total sales of fuel passenger cars have been in the consolidation period for many years. Strictly speaking, since July 2018, the main body of China's auto market, fuel passenger cars, has begun to turn around and enter a period of consolidation and contraction, which has been up to 46 months so far.

In these 46 months, the market has declined, but leading brands such as FAW-Volkswagen, Changan Automobile, Geely Automobile, Great Wall Motors, and several Japanese joint ventures have performed relatively well, with monthly sales basically stable at 80,000 to 100,000 units, and Japanese companies have even had good growth. Compared with them, BYD's sales (oil cars and trams combined) have been hugely different for a long time, ranking in the top 10.

Therefore, BYD's victory in April has made many people feel sudden. In fact, the great changes did not begin now, but 15 months ago.

This comparison chart shows that in the past 15 months, in the traditional top four (FAW-Volkswagen, Changan Automobile, Geely Automobile, Great Wall Motor), Changan, Geely and Great Wall Motor, the monthly sales of Changan, Geely and Great Wall have consolidated in the range of 70,000 to 140,000 units, while FAW-Volkswagen has fallen rapidly from a monthly sales level of 230,000 units to 100,000 units by July 2021. The sales curve of the traditional top four in the past 15 months is precisely what the big brother FAW-Volkswagen looks the most dangerous.

In contrast, since January 2021, BYD's sales curve has continued to grow rapidly, breaking through the sales curves of Great Wall, Changan and Geely at three time points in August 2021, November 2021 and February 2022. That is to say, in the six months since August last year, BYD's monthly sales have surpassed the Great Wall, Changan and Geely, and by February this year, it has quietly come to the second position of the total volume, second only to FAW-Volkswagen.

In March, Changan Automobile rebounded rapidly, surpassing BYD to come to second place. However, in the immediate April epidemic, Changchun and Shanghai were locked down, and the two regions where China's fuel vehicle supply chain was concentrated: the Yangtze River Delta and Geely Province, were severely impacted, and the traditional four inevitably fell into production difficulties. According to conservative estimates, the April sales of the top four have been cut off. Japanese and American counterparts are not much better.

Therefore, the sales of 100,000 units in the Chinese auto market in April, is a miraculous number, and BYD is sure to win the championship.

You could say that God did BYD a favor and let it win the championship early. But this statement may obscure a more important fact: even if there is no epidemic, BYD surpasses FAW-Volkswagen, it is sooner or later - the "oil-electricity intersection" that determines the future pattern of the market is coming.

Why is only BYD not injured?

The question is: in the car market in April, everyone was hit hard, why did only BYD look uninjured?

Let's answer one point first: If there is no epidemic, how much can BYD sell in April? According to the information we have, the sales target for the beginning of April is 130,000 units. According to other sources, as of April, the total number of ORDERs backlogged by BYD has climbed to 500,000 units.

So, BYD is not uninjured. The pandemic has also had a considerable impact on its supply capacity, at about -25%, half below the industry average. How does it do it?

In the "BYD Domestic Production Base Distribution Map" compiled by us, you can find the answer.

First of all, it does almost everything on its own. There are 23 BYD production bases across the country, and all the core components related to the production of electric vehicles, including battery materials, batteries, motors, electronic controls, conventional auto parts, automotive electronics, etc., it is done by itself, quite "self-reliant, self-contained" weather, it is easy to think of its "foundry crazy" founding gene.

Secondly, good luck. Most of these bases are in South China, Central China, Northwest China, Southwest China, the Yangtze River Delta and Jilin Province are not many, and only ningbo, Changzhou and Changchun are really affected by the epidemic.

The above two reasons have allowed BYD to reduce the impact of the epidemic on vehicle production to the lowest level in the industry.

Is this championship a flash in the pan?

The appearance of the April intersection sparked a heated debate within the First Electric Newsroom. One school of view believes that this is an accidental event, and after May, the traditional haoqiang, represented by FAW-Volkswagen, will quickly recover the lost ground and return to the leading position. And BYD's championship is only a flash in the pan.

This judgment may be overly optimistic. Since April, the new crown epidemic has spread in many places, and the production of OEMs and parts suppliers in the northeast, Jiangsu, Zhejiang and Shanghai regions has been greatly affected, and the shortage of supply has gradually affected the production of complete vehicles and terminal sales nationwide. At present, the white list of resumption of work and production in Jiangsu, Zhejiang and Shanghai has been released, enterprises have resumed production one after another, and logistics and transportation have been gradually unsealed, but it will take a long time for the overall industrial chain to recover to the pre-epidemic level.

"Shanghai's car companies and suppliers can resume small-scale normal production in May," said Zhang Xiang, an industry observer, on May 6, "by June, the production capacity of Shanghai's car companies and suppliers will return to the level before the epidemic." But at the same time, many institutions have spoken out through public channels: there are still difficulties in resuming work and production.

Capacity returned to pre-pandemic levels in June, which should be the most optimistic estimate for the automotive industry as a whole at the moment. The obvious difficulties come from the complex market transmission mechanism required for the start of the industrial chain on the one hand, and from the frequent new epidemic risks in many places on the other hand, as well as the stronger control measures caused by them.

With the most optimistic attitude, it is assumed that FAW-Volkswagen's sales can return to what level in June when production capacity fully recovers? Regardless of the changes in consumer behavior caused by the epidemic, only from the sales curve of the past 15 months, FAW-Volkswagen's most optimistic sales forecast in June, the off-season of traditional fuel vehicle sales, is within 140,000 units.

According to the plan, BYD's production capacity will be released at that time, which can reach 150,000 units per month. Therefore, even if the production capacity is fully restored in June, FAW-Volkswagen will not win. It can be predicted now that throughout Q2 (4, 5, 6 three months), BYD has booked a full amount of the crown.

If BYD can guarantee a monthly production capacity of 150,000 units after June, it will most likely achieve monthly sales of 150,000 units, because the backlog of orders is too much. The reason for this, see "One Electricity Observation | Where is the ceiling for BYD's crazy growth? 》。 If this sales volume can be maintained, in Q3 and Q4 of 2022, BYD will most likely be the top seller in the Chinese auto market. In this way, the April intersection is a historic "oil-electric intersection", representing the emerging power of electric vehicles, once it takes the lead, it will never give the big brother of the past any chance.

The situation is too idealistic, and a tug-of-war can still happen in Q3 to Q4. To completely surpass FAW-Volkswagen, BYD needs to cross two hurdles: production capacity and terminals. In these two aspects, FAW-Volkswagen, as a joint venture plant that has been deeply involved in the Chinese market for 30 years, is one position ahead of BYD. Therefore, from the basic plate of production and marketing, BYD still needs time.

Another key challenge is that its key product line, the DM-i series, is beginning to be used as an offensive focus by its peers, as evidenced by the launch of the Harvard DHT and Emgrand Thor at rocket speed in April. Great Wall and Geely have both taken out their strongest product lines to bundle oil-electric hybrid technology to intercept BYD's backlog of orders. This trick is very effective in the short term.

How can BYD, which is regarded as an impact target, still achieve extraordinary growth in orders under the eyes of the crowd? It is reasonable to speculate that after the backlog of orders is digested from Q2 to Q3, BYD's order-to-production ratio (order-to-order capacity) will gradually return, from the current 4 to 1.5.

In this process, FAW-Volkswagen does have the opportunity to overtake, such as through large-scale promotion and new behavior. However, the trend is difficult to reverse. Even if FAW-Volkswagen achieves a rebound in a certain month in Q4, its era, the era of fuel vehicles, is coming to an end at a speed that everyone can see with the naked eye.

Summer is here. When you walk on the streets of Beijing, look at the waiters who have set up stalls in front of their doors because of the ban on dine-in, and listen to their shouts, you can't help but think back to the summer of 19 years ago. At that time, there were fewer people on the road and banlan roots were more expensive. People wearing masks care the same questions as people today: When will we be able to live a normal life? No one thought that Taobao and JD.com would take off at that moment and completely change the way Chinese spend and live in the next 19 years.

This incident tells us that history will always come in ways that we could not have predicted.