The wave of new energy price reductions, which began in early 2023, began to spread throughout the automotive market.
On March 6, "Hubei opened the strongest car purchase discount season in history" - many models of Dongfeng joint venture + independent began the "crazy fire sale mode". Among them, Dongfeng Citroen C6 has a maximum discount of 90,000 yuan, and the original 200,000-level model can now be won for 120,000 yuan, and the price is almost cut.
Today, let's talk about what is behind the "fuel vehicle price reduction"? Of course, if you want to see the industrial logic behind the price reduction of new energy vehicles, please see our previous article: "The tide of price reduction will be surging, who is most anxious?" 》。
01
The consumer market for new cars in January-February was too weak
On March 8, the passenger car association announced the latest data: passenger car production in February was 1.664 million units, +11.6% year-on-year and +23.6% month-on-month. OEM wholesale sales were 1.618 million units, +10.2% y/y and +11.7% m/m. Retail sales of passenger cars reached 1.39 million units, +10.4% y/y and +7.5% m/m. Passenger car exports (including finished vehicles and CKD) were 250,000 units, +89% y/y and +8% m/m.
On the surface, this set of data is positive both year-on-year and month-on-month, but it should be known that the Spring Festival in 2022 is from February 1 to 6, while the Spring Festival in 2023 is in January. Such year-over-year and month-on-month data are actually "distorted".
If we combine the January-February data, we know how weak the market for new car consumption is.
Data from: Passenger Union Association The author collates the tabulation
Total passenger car retail sales for January-February 2023 were 2.683 million units, compared to 3.336 million units in the same period last year, -19.6% y/y. Among them, retail sales of fuel vehicles were 1.912 million units, compared with 2.711 million units in the same period last year, -29.5% year-on-year; NEV sales were 771,000 units, compared to 624,000 units in the same period last year, +23.5% y/y.
The penetration rate of new energy in January-February 2023 was 28.7%, an increase of 10 percentage points compared to 18.7% in the same period last year.
It can be said that the sales data of the first two months, in addition to the positive growth of new energy, the sales of fuel vehicles are accelerating.
After reading the data of the passenger association, we can compare it with the latest risk volume data, and we will find that the terminal performance in January-February 2023 is weaker.
We used the latest risk volume data from January 1 to March 5, 2023 compared to the data from January 1 to March 6, 2022 (although the difference is 1 day, but it has little impact on the overall data and trends).
Data from: Shangli Quantity The author collates and tabulates
Data for the first 10 weeks of 2023 shows that the overall terminal sales of passenger cars were 2.684 million units, compared with 3.596 million units in the same period last year, -25.4% year-on-year. Among them, the terminal sales of fuel vehicles were 1.932 million units, compared with 2.963 million units in the same period last year, -34.8% year-on-year; Terminal sales of NEVs were 752,000 units, compared to 633,000 units in the same period last year, +18.8% y/y.
The terminal new energy penetration rate in the first 10 weeks of 2023 was 28.0%, an increase of 10.4 percentage points compared to 17.6% in the same period last year.
Through these two sets of data, we can see: first, the overall market has declined by more than 20% year-on-year, which is enough to show the weakness of the new car market at the beginning of 2023; Second, new energy alternative fuel vehicles are not just a trend, but the mainstream; Third, the overall market for fuel vehicles is rapidly collapsing.
02
The replacement of fuel vehicles by new energy has become the mainstream
1. In the past five years, the sales of fuel vehicles have continued to decline
According to the data of the retail caliber of the Passenger Association, in 2018, the sales of fuel vehicles were 21.22 million units, accounting for 94.9%, followed by four consecutive years of continuous decline, and by 2022, the sales of fuel vehicles will only be 14.11 million units, accounting for 68.6%. In five years, the sales of fuel vehicles fell by 33.5%, and the share fell by 26.3 percentage points.
Data from: Passenger Union Association The author collates the tabulation
Especially after entering 2022, fuel vehicles have experienced a wave of accelerated decline, and this is still driven by the policy of halving the purchase tax of fuel vehicles.
Fuel vehicles have begun to become the most frustrated of the "great changes unseen in a century". What's more, starting this decline by 2022 is all-encompassing.
2. In 2022, new energy in different price segments will begin to replace fuel vehicles
If before 2022, the replacement of fuel vehicles by new energy is mainly concentrated in the "dumbbell-type" market, on the one hand, in the mini vehicle market below 50,000 yuan, the sales of A00-level pure electric cars represented by Wuling Hongguang MINI EV quickly exceeded 1 million units; On the other hand, in the high-end market of more than 300,000 yuan, new forces represented by Tesla + Wei Xiaoli have also begun to rise rapidly.
Then after entering 2022, there are corresponding new energy models in all price segments have begun to rise, even 5-150,000, the segment with the highest share of traditional fuel vehicles, has been further diverted because of the hot sales of BYD's A-class plug-in hybrid sedan and A0-class pure electric sedan.
Data from: Passenger Union Association The author collates the tabulation
In particular, in the 200,000-400,000 price range, the sales share of new energy + HEV models has begun to approach the share of fuel vehicles.
The main market space of fuel vehicles has been suppressed by new energy in the 5-200,000 market segment, mainly the A-class and B-class car markets of traditional fuel.
3. All-round replacement of fuel vehicles by new energy
Looking at the overall market pattern at the beginning of 2023, we will find that the market's perception of fuel vehicles and new energy has completely changed - from new energy is the trend to "new energy is the mainstream".
The core reasons are mainly the following two points:
First, the experience of new energy vehicles for fuel vehicles is subverted:
Whether it is the cost of use, driving experience, or the experience of intelligent cockpit, new energy is a crushing level for fuel vehicles. In particular, the use experience of "urban electricity and long-distance oil" brought by the technical combination of "large battery + plug-in hybrid" can be said to be a "dimensionality reduction blow" for traditional A-class and B-class fuel vehicles.
On February 10, after BYD launched the 99,800 yuan champion version of the Qin Plus-DMi, it completely shattered the illusion of reducing the price of traditional joint venture fuel vehicles and ensuring sales with the strategy of "fuel and electricity at the same price".
Second, the reconstruction of the value of new energy vehicles:
In the traditional fuel vehicle system, whether it is a luxury brand or a joint venture brand, it mainly relies on "engine + gearbox" to build consumers' cognition of power and value, forming the following value perception chain (or contempt chain) - V12 > V8 > V6 > V4.
However, power is no longer scarce in new energy vehicles, basically a dual-motor + four-wheel drive model can run into the 5-second club, for joint ventures and luxury brand fuel vehicles - the "technology premium" is very completely broken.
When all consumers begin to pay more and more attention to the intelligence represented by the "intelligent cockpit", it has already announced the "unofficial death of fuel vehicles" - those luxury brands that cannot provide remote OTA, remote control, and even car navigation can not do well, when their final fig leaf - "brand premium" has also been completely eliminated by the new value system of new energy vehicles, and the only thing left may be the fine decoration of the interior and the belief in the brand LOGO.
We will see that from 2023, the replacement of fuel vehicles by new energy will be all-round (from A00 to C-class), full-price segment (from 50,000 to 500,000), and all-form (from SUV to sedan to MPV). For many luxury brands, when the "technology premium" and "brand premium" no longer exist, what awaits them can only be decline, continuous decline, accelerated decline.
03
The China 6B became the last straw that crushed the fuel vehicle
As early as 2020, the phased implementation of China VI standards has been announced: China VI A will be officially implemented from July 1, 2020, and China VI B will be officially implemented on July 1, 2023. The biggest difference between China VI A and China VIB is that the emission requirements have been greatly improved, especially in China VI A, many indicators are the same as China V, but in China VI B, there is a significant improvement.
Data from: Internet
In fact, from the perspective of policy announcement and preparation time, enough time has been reserved for the industry. But if from an inventory point of view, this is not the case.
According to data released by the Automobile Dealers Association and the Passenger Association, as of February 2023, the inventory of the overall passenger car market (calculated by production-retail-export) was 3.01 million units, which is already 540,000 units less than the 3.55 million units at the end of December 2022, but this inventory still reached 65 days, that is, more than 2 months of inventory (equivalent to a stock-to-sales ratio of 2.24).
Data from: China Automobile Dealers Association The author collates the tabulation
If we continue to subdivide the structure of inventory, the inventory of new energy vehicles is at the level of 450,000 units, which is equivalent to the "inventory-to-sales ratio" being lower than 1.
The inventory of traditional fuel vehicles has reached about 2.50-2.6 million units (excluding the inventory of some HEVs), according to the sales data of fuel vehicles in 2023, the "inventory-to-sales ratio" has exceeded 2.4, even according to the average monthly sales of 1.2 million units in 2022 (divided by 1411 by 12 months), the pressure on the inventory of these 2.5 million fuel vehicles is very great (the "inventory-to-sales ratio" is 2).
This means that assuming that all fuel OEMs stop producing fuel vehicles from March, the inventory of 2.5 million units can also maintain fuel vehicle sales for the next two months. Not to mention, these 2.5 million inventory China VI A models must be destocked before July 1, otherwise they will be smashed into their own hands.
On the one hand, the automobile industry can be described as a pillar industry for many cities (the pillar of employment + taxation); On the other hand, a large number of China VI A fuel vehicles in stock must be sold at the specified time.
These two factors work together to make China VI B, after new energy, become the last straw that crushes fuel vehicles.
Therefore, we will see this wave of "fuel vehicle sale" model in Hubei. In the future, we will also see some traditional fuel vehicle provinces follow the "fuel vehicle price reduction tide", such as Anhui, Jilin and so on.
04
2023: Divide the high, but also decide life and death
2023 is a year of "both high and low, life and death" for the entire Chinese passenger car market - traditional fuel vehicles have entered the dusk, and new energy has begun to become the mainstream.
When new energy vehicles establish sufficient experience advantages and value advantages, it is not only the "technical value" of internal combustion engines and gearboxes that will decline with fuel vehicles, but also their "brand value" will be hit hard for many luxury brands.
What greets fuel vehicles is not only the decline in sales, the collapse of prices, but also the "annihilation and reconstruction" of brand premiums.