At the beginning of the year, for the direction of China's auto market in 2022, everyone believes that it will continue the upward trend of last year. In January this year, the China Automobile Association predicted that the total sales of mainland vehicles this year are expected to reach 27.5 million units, an increase of 5.4% year-on-year.
In January this year, the auto market was indeed stable and improving, and according to data from the China Automobile Association, car sales were 2.531 million units, an increase of 0.9% year-on-year. However, in February and March, the Conflict between Russia and Ukraine and the epidemic followed. Most of the car companies' production rhythm has been broken, and the performance and sales volume are under huge pressure.
According to the incomplete statistics of Gaz Automobile, the 16 Chinese listed car companies in the table show that 60% of the net profits are in a state of decline, and the highest decline in the same period is close to 80%. In addition, the performance of 16 car companies as a whole also shows a ladder-like feature, with 3 car companies with a net profit of more than 3 billion yuan, but most of the others are below 200 million yuan, and 5 are in a state of loss. Among them, Beiqi Blue Valley bottomed out with -957 million yuan, and Xiaokang shares also lost 839 million yuan.
In view of the impact of the epidemic on the auto market, the industry generally has no confidence in the performance and sales of car companies in the second quarter, and most of the listed car companies will be affected by the second quarter financial reports and even the annual results.
The "epidemic" is difficult to hide the decline of fuel vehicles
For the decline in performance and sales in the first quarter, some car companies, including Great Wall Motors, blamed the impact of the epidemic.
Great Wall Motor's net profit in the first quarter was 1.634 billion yuan, down 0.34% year-on-year. In this regard, Great Wall Motors explained that due to the impact of the epidemic in many parts of China, many parts suppliers have been affected, resulting in limited production capacity of factories. The pandemic has led to a reduction in sales revenue, which in turn has affected net profit.
SAIC Motor, which saw a decline in net profit of nearly 20%, did not explain too much in its financial reports as the reason for the double decline in net profit. However, it responded to the net cash flow from operating activities of -9.143 billion yuan in the first quarter, down 555.3% year-on-year: subsidiary SAIC Motor Group Finance Co., Ltd. expanded the scale of loans; in the first quarter, due to the reduction in sales revenue due to the impact of the epidemic.
However, in the view of senior analysts of Gaz Automobile, the impact of the epidemic on traditional car companies is not as great as that of new energy companies. SAIC Motor, Great Wall Motor and other car companies that mainly profit from fuel vehicles, the decrease in net profit in the first quarter was mainly caused by the decline in sales, "the amount can not be raised, weak profit is inevitable."
Image source: Gaz Cars
The different market performance of fuel vehicles and new energy vehicles in recent years confirms this view. In 2021, China's annual automobile sales can end three consecutive declines (a slight increase of 3.8% year-on-year), the key lies in the new energy vehicles (an increase of 1.6 times year-on-year). In the first quarter of this year, new energy vehicles continued to maintain a high growth rate, with cumulative sales of 1.257 million units, and the market share rose to nearly 20%. In contrast, in the fuel vehicle market, the cumulative sales volume in the first quarter fell by 12% year-on-year.
The help of new energy to the revenue of car companies was reflected in the first quarter financial report of GAC Group. The financial report emphasized that the sales volume of the new energy vehicle brand GAC Aeon increased significantly, helping its net profit in the first quarter to increase by 27.17% year-on-year to 3.008 billion yuan. GAC Aeon's cumulative sales in the first quarter were 44,900 units, up 1.5 times year-on-year, and sales continued to exceed 10,000 units in April. The sales volume of Xiaokang shares achieved a slight increase year-on-year, which was also driven by the new energy vehicle brand.
As we all know, the impact of chip shortages and rising raw materials on the automotive industry will always be solved. Volkswagen and BMW predicted in the first quarter financial report released on May 5 that the chip supply bottleneck will ease in the second half of the year at the earliest. However, the overall market for fuel vehicles is not clear according to the current trend, and companies such as Great Wall Motors and SAIC Motor Group urgently need to quickly gain a foothold in the new energy vehicle market to fill the performance dilemma caused by the decline in sales of fuel vehicles.
At the same time, commercial vehicle companies are also facing the problem of declining sales performance. According to the data, there are two companies whose net profit has fallen by more than 70% in the same period, namely China National Heavy Duty Truck and FAW Jiefang. Although companies such as Jianghuai and Jiangling emphasize the combination of business and passenger, due to the unsuccessful transformation of passenger cars, the net profit in the first quarter also fell sharply.
This is mainly related to the poor environment of the entire commercial vehicle market. Some insiders said that under the influence of multiple factors such as the switching of the National VI standard, the start of infrastructure projects, and the treatment of excess limits, the production capacity of the commercial vehicle market has been released in advance in the first half of last year, and the China Automobile Association has predicted at the end of last year that the downward trend of the commercial vehicle market in 2022 is inevitable. However, it is worth noting that the new energy commercial vehicle market continues to rise. According to the latest data from the China Automobile Association in March, the sales volume of the new energy commercial vehicle market increased by 97.87% year-on-year to 49,000 units.
Changan BYD doubled its growth
Even if the overall net profit decline of the auto market in the first quarter is the norm, there are always some companies that have achieved a contrarian upward trend. Changan Automobile and BYD saw impressive net profit growth, with the former quadrupled to RMB4.536 billion and the latter doubling to RMB808 million. However, the main reasons for the increase in net profit between the two sides are different.
In Changan Automobile's view, if it were not for the shortage of chips and the rise in raw material prices, which would have affected production costs and production capacity, its sales and performance might have been able to go to a higher level. Changan Automobile's production and sales data in March showed that the cumulative sales volume in the first quarter reached 651,500 units, a slight increase of 1.63% year-on-year.
Image source: Changan Automobile
Some insiders believe that the UNI series, which has an average monthly sales of more than 10,000, has helped Changan Automobile to increase its bicycle profits to a certain extent. In the past, Changan Automobile's gross profit margin was mostly around 10%, but in the first quarter of this year, it rose to 18.21%, surpassing Great Wall Motor's 16.7%.
However, a careful analysis of Changan Automobile's first-quarter financial report will find that the biggest contributor to its net profit rise comes from non-operating profit and loss items. In its non-recurring profit and loss items column, Avita Technology made a profit of 2.128 billion yuan through capital increase, accounting for nearly 50% of Changan Automobile's net profit.
This is not the first time that Changan Automobile has made a significant profit with non-recurring profits and losses. According to the 2020 semi-annual report, the stock price of Ningde Times held by Changan Automobile rose, and the strategic investment was introduced for Changan New Energy, selling 50% of the equity of Changan Peugeot Citroen, with a total profit of 5.22 billion yuan.
The difference is that more of the doubling of BYD's net profit comes from rising sales revenue. Its cumulative sales in the first quarter reached 291,400 units, an increase of 179.78% year-on-year, and its sales in April once again exceeded the 100,000 mark.
Image source: Gaz Cars
At this stage, BYD is less affected by the epidemic, mainly because it has achieved self-sufficiency in core components such as three electricity and semiconductors to a certain extent. On the market side, BYD's current main product highlights such as blade batteries and DM-i hybrid systems have been generally recognized by consumers, and the sales of many new energy models are rising, and some insiders have bluntly said that BYD may be the only Chinese brand car that can compete with Tesla.
The pressure on the second quarter and even the annual performance intensified
However, as the impact of the epidemic is further highlighted, in the next period of time, the revenue of most car companies may intensify the decline.
The epidemic has affected the core areas of auto parts such as Jilin, Guangdong and Shanghai, resulting in the suspension of the automotive supply chain, which in turn has affected the production of car companies. In early April, several car companies, including Weilai and Great Wall, said that the supply of parts and components was suspended due to the suspension of production.
The impact of the epidemic on the automobile market exceeded expectations, and the Gaz Automobile Research Institute analyzed, considering the macroeconomic impact, the impact of the epidemic and the recovery of the automobile industry, under the neutral scene model, it is expected that the production of domestic passenger cars will be reduced by 640,000 units in 2022.
The forecast is being corroborated, and on May 6, SAIC Motor, which is in the storm zone of the epidemic, released its latest production and sales data, and its sales in April were only 166,600 units, down 60.3% year-on-year. A few days ago, Weilai, Xiaopeng and others released April deliveries showed that they all declined month-on-month. As Weilai said, the demand for new car orders is still growing, but it needs to further overcome the pressure caused by the epidemic and supply chain.
Although it has been a period of time since the resumption of work and production in Jilin, Shanghai and other places, the repeated epidemics have affected the actual effect of enterprises resuming work and production. Taking Shanghai as an example, senior analysts at the Gaz Automotive Research Institute predict that if the epidemic in Shanghai can be alleviated in mid-May, the normal production of the Yangtze River Delta automotive supply chain will be achieved as early as early June.
Image source: Gaz Cars
Some insiders believe that the repeated epidemic will lead to a decrease in consumer demand, and the probability of a sharp rebound in the terminal of the automobile market like in 2020 is not large. Gaz Auto visited some 4S stores in Beijing and found that FAW-Volkswagen, Mercedes-Benz and other 4S stores have increased their marketing efforts during the epidemic, but the passenger flow is pitifully small. After countless rounds of baptism of the epidemic, consumers have begun to tighten consumption and take "stability maintenance" as the primary consideration.
Obviously, the start of the auto market in 2022 did not continue last year's upward trend as everyone expected. Sporadic outbreaks in January, escalation of the situation in Russia and Ukraine in February, and intensification of the epidemic in March brought about a further rise in raw material prices and the shutdown of the automotive supply chain in the epidemic area. Coupled with the continued shortage of chips and other issues, it has once again hit the Chinese auto market hard.