Just after the end of April, bad news came from the domestic auto market. The China Association of Automobile Manufacturers (CAAM) predicts that China's auto sales in April 2022 may only sell 1.17 million units, a sharp decline of 48% year-on-year.
Sales continued to decline and widened
In fact, since March this year, the domestic auto market has declined. According to the China Automobile Association, domestic automobile sales in March were 2.234 million units, down 11.7% year-on-year.
The decline in March is representative, unlike the Spring Festival holiday in February and the outbreak in April, the working day in March is relatively complete, and the market situation is relatively stable.
According to past experience, domestic automobile sales have usually shown an upward trend since March. However, the performance of the car market in March this year was not satisfactory, with a decline of more than 10%, reflecting the unusual downturn in the car market and revealing the current economic downturn.
In April, due to the impact of the epidemic, the sales performance of the domestic automobile market further deteriorated. According to the data of the Association of Passenger Vehicles, the retail sales of domestic narrow passenger cars in the first week of April fell by 32% year-on-year, the sales volume in the second week fell by 39% year-on-year, and the third and fourth weeks fell by 46% and 28% respectively.
According to the Association of Passenger Vehicles, domestic retail sales of passenger cars in April were 1.042 million units, down 35.5% year-on-year.
Seeing this series of data that continues to decline sharply, we can't help but think of the state of the market in the early days of the outbreak in 2020.
In February 2020, affected by the new crown epidemic, the national automobile sales in that month were only 250,000 units, down 78.7% year-on-year, but with the effective control of the epidemic, the domestic automobile market quickly entered the recovery stage.
After the car market presses the pause button again, will it resume as quickly as in 2020? After in-depth comparison, it will be found that there is a fundamental difference between the two, and today's car market is facing greater pressure than in those days.
In the third year of the epidemic, is the car market still good?
Different from the car market environment at the beginning of 2020, this wave of epidemic outbreaks, in the first half of the year of the "golden three silver four" car purchase golden period, not only suppressed the car market recovery signs, but also disrupted the new car release of car brands, which is difficult to predict the loss caused by car companies.
Not only that, due to the sharp rise in raw material prices in the international market, insufficient supply of chips and other issues, the continuous impact on upstream supply chain enterprises, superimposed on the epidemic prevention requirements of this round of epidemics, has intensified the difficulty of vehicle production of car companies.
A car is not a part that can be produced.
The hardships on the production side are also transmitted to the retail channel.
In terms of sales, due to the meticulous deepening management of epidemic control, the passenger flow of automobile dealers has been interrupted, and it is difficult to complete the whole process of sales such as car viewing, inquiry, test drive, and car ordering. Consumer demand for car purchases is severely constrained, and car dealers are also facing severe survival pressure.
A group of surveys by the China Automobile Association shows that dealers have closed their stores due to epidemic prevention and control in 34 cities.
Sales were blocked, and after-sales were equally sluggish.
In the era of the epidemic, working from home, not allowing to leave the city, and reducing the gathering of people have become the norm, and the frequency of car use has dropped significantly, resulting in a significant decrease in the number of vehicles entering the 4S store for after-sales repair and maintenance. Even with the maintenance of vehicles, the basic conventional projects are mostly, the depth of maintenance is reduced, and the revenue of 4S stores has dropped sharply.
It can be seen that whether it is production, sales or after-sales, the epidemic has caused a greater impact on the upstream and downstream of the automobile industry chain. But at present, the most urgent problem is not only to smooth the automotive industry chain, but also to recover the weakening of automobile consumer demand.
The epidemic has been repeated, and everyone has no money
Since the epidemic has been repeated for more than two years, it has consumed not only the automotive industry chain, but also the confidence of consumers.
According to data from the National Bureau of Statistics, in March this year, the total retail sales of consumer goods in China fell by 3.5% year-on-year, and the monthly consumption data showed a negative growth phenomenon rarely seen for many years.
Wang Jun, director of the China Chief Economist Forum, said that the negative growth of consumption in March shows that China's demand contraction has not only not been effectively alleviated, but also continues to strengthen, and the lack of consumption recovery is a prominent problem facing China's macroeconomy.
The domestic automobile market is also facing the problem of sluggish willingness of consumer cars to buy cars. Looking back at the beginning of 2020, although the epidemic suddenly shut down the consumer market, people still had a strong willingness to spend when they had money in their hands.
However, after more than two years of tossing and turning the epidemic, the income of ordinary people has dropped sharply, to put it bluntly, there is no money, and naturally, the willingness to buy a car will gradually decrease.
Therefore, when the vehicle manufacturer struggled to resume work and production, and the dealer had a car to sell, people found that the car could not be sold. Recently, a report released by the China Automobile Association also confirmed the downturn in the automobile consumer market.
In April, the Inventory Warning Index of Chinese auto dealers was well above the 50% boom-bust line.
According to the report, the inventory warning index of Chinese auto dealers reached 66.4% in April 2022, reaching a new high this year. Sluggish consumption willingness, high inventory pressure, if not improved in time, will inevitably trigger a series of chain effects:
For example, dealers are eager to sell goods, causing prices to plummet and seriously discourage producers; for example, due to automobile overcapacity, many employees face the risk of unemployment, resulting in a sharp decline in consumer enthusiasm. This cycle has plunged the entire market into a weak state.
A bailout is imminent
It is no exaggeration to say that China's auto industry is facing unprecedented challenges, which are not only challenges for auto companies, but also for the government and consumers.
In the foreseeable case that the epidemic will not be cleared in the short term, how to build a safer and more anti-risk industrial chain is a difficult problem that car companies need to overcome.
At the level of boosting consumption, the government has also introduced relevant documents to encourage automobile consumption, such as free parking, free high-speed traffic, the cancellation of second-hand car purchase restriction policies, and subsidies for new energy vehicles.
Of course, if you want to "cure the root causes", the key is to ensure that enterprises and consumers return to orderly production and work. In the final analysis, when people make money, they will have the desire to consume, and if food and clothing cannot be solved, they will talk about the pursuit of a "better life".
As a pillar industry of the national economy, the role of the automobile industry in promoting the economy is self-evident, I believe that with the efforts of car companies, the government and other aspects, the current downturn in automobile sales will be changed, we will wait and see.
Text | Huluwa
(This article is the author's personal opinion only and does not represent the position of DearAuto.) )
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Mr. Li Guoyong of Guangdong Green Law Firm