Micro pure electric market cooling: Chery fired the first shot of official surrender Do other brands follow?

The price war in the domestic auto market seems to be spreading to the mini vehicle market.

On March 27, Chery New Energy announced that it will reduce the price of its three mini pure electric vehicles, of which QQ ice cream priced at less than 40,000 yuan will be reduced by 4,000 yuan, and the price of small ants in the early 100,000 years will be reduced by 9,000 yuan. The price of mini cars is low, and the price has been greatly reduced, and some netizens shouted in this regard: I feel that if I miss it, I will shoot my thighs!

Image source: Chery New Energy

On the same day, Yuanbao Automobile also gave a car purchase subsidy to its mini vehicles, that is, the cash of all models of the 2022 Yuanbao series was directly reduced by 5,000 yuan, and after the cash subsidy, the price range of all models of Yuanbao was from 36,900 yuan to 46,900 yuan. It is worth noting that the second yen treasure automobile has launched a 2023 heart version model, the price is as low as 29,700 yuan, which is lower than the lowest price of Wuling Hongguang MINIEV (32,800 yuan), with a slight hint of "lifting the table".

Image source: Yuanbao New Energy

In fact, selling cars at low profits or even at a loss has always been a pain point for mini pure electric vehicles, which is why most mini pure electric vehicles have increased their selling prices after the price of raw materials rose last year. However, from the perspective of the above two car companies, this year's price trend is diametrically opposed to last year, and they have begun to pursue room for exploration. The reason is that, in addition to the reduction in raw material prices this year and the room for car companies to make profits, the intensification of competition brought about by the shrinking market share of micro-pure electric products may also be a major reason.

Micro pure electric has become the segment with the largest decline in new energy

In the past few years, under the rapid growth of domestic new energy vehicles, the sales of micro electric vehicles are extremely considerable. According to data from the Passenger Association, the sales of A00-class pure electric vehicles in 2021 will be about 898,500 units, the highest share in the overall new energy vehicle market, reaching 30%, and the sales of A00-class pure electric vehicles will increase to 1,077,500 units in 2022, but the share will drop to 19%.

After entering 2023, the share of A00-class pure electric vehicles continues to decline, from January to February, the sales volume of this segment is 94,545 units, down 39.3% year-on-year, which is the largest decline of all segments of the new energy market, and the share further fell to 12%. Terminal sales were also the same, with cumulative sales from January to February being 102,500 units, down 30.1% y/y.

Image source: Passenger Association

Cui Dongshu, secretary general of the Passenger Association of China, believes that the reason for the sharp decline in the A00-class pure electric market is the inventory adjustment and the temporary downturn in the market, and some dealers are in a state of high inventory at the end of the year and the beginning of the year.

It should be pointed out that in the market downturn in January and February, many domestic car companies have taken price reduction measures to ease inventory pressure, but may be subject to profit problems, and the wave of price cuts in early March did not roll into the mini vehicle market.

In late March, the sharp reduction in the price of battery raw materials gave the price of pure electric vehicles and even micro pure electric vehicles the opportunity to fall. Entering 2023, the price of battery-grade lithium carbonate began to decline, and it was almost cut in March. According to data released by Shanghai Steel Union, battery-grade lithium carbonate fell by 4,000 yuan / ton on March 28, with an average price of 270,000 yuan / ton, which is nearly 50% lower than last year's high.

Chery New Energy recently fired the first shot of the official price reduction of pure electric cars, mainly due to the price correction of new energy raw materials and the improvement of enterprise cost control and supply chain management capabilities. However, in addition to Chery New Energy, it remains to be seen whether there will be more mini vehicles to follow up and reduce prices.

There is a view that the price of new energy vehicles will generally show a downward trend this year, because the price of batteries has fallen, but each car company has a different situation for each model, the conduction speed is different, and the "bullet" may fly for a while.

Points are not worth much, and the A00-class pure electric market has fallen into a growth bottleneck

It is worth noting that the bottleneck period of the continuous growth of the A00-class pure electric market share has arrived, and the data of the Passenger Association shows that the share of A00-class pure electric vehicles has continued to decline in the past two years, and the increase in the share of A0-class pure electric vehicles has further squeezed it.

Some analysts said that many companies before the layout and production of micro electric vehicles, not because the vehicle itself can bring much profit, but to value its point advantage, but the current points market has also undergone great changes, new energy vehicle credits from short supply to oversupply change, points are no longer so valuable, coupled with the continuous loss of pure electric mini vehicles, enterprises naturally lost the motivation for large-scale promotion.

Chen Chuan, director of the energy-saving strategy research office of China Automotive Data Co., Ltd., previously judged that A00-class pure electric vehicles do show obvious advantages over traditional fuel vehicles, but their future incremental space is limited. From the perspective of the total plate of Chinese consumers in the A00 market in the past decade or so, the scale is basically no more than 1 million vehicles, and under the development of electrification, the total limit will reach more than 1 million vehicles. Chen Chuan believes that A0-class electric vehicles will become a market segment that will continue to contribute incrementally after A00-class, and he predicts that the total number of A0-class electric vehicles will reach 1.6 million units, of which the range below 100,000 yuan will account for half.

After the growth of A00-level electric vehicles enters the bottleneck period, the competition between brands will undoubtedly be more intense, at present, mini vehicles in the product competitiveness is not much different, competitive advantage is mainly in the price and channel, to see who has a lower price, more cost-effective, but also to see who covers a wider area, more customers.

Terminal sales data show that micro pure electric vehicles are mainly sold to domestic third-, fourth- and fifth-tier cities, such as Shangqiu, Liuzhou, etc., so it may be particularly important for micro-electric vehicle companies to continue to expand channels in third-, fourth- and fifth-tier cities in order to enhance their competitive advantage.

Sales of 6 of the top 10 brands declined, and the micro electric vehicle market ushered in a knockout round

The overall car market is sluggish and the competition between brands is intensifying, so how has the pattern within the micro pure electric market segment changed?

According to terminal sales data, the cumulative sales of domestic micro pure electric cars from January to February this year were about 102,500 units, of which the top ten brands in terminal sales accounted for 97.7%, and it can be said that this market segment has been relatively concentrated. In addition, 6 of the top ten brands saw a year-on-year decline in terminal sales from January to February, which shows that micro-electric vehicles have not been spared under the downturn in the car market.

From the ranking point of view, Wuling is still the dominance of the micro electric vehicle market, with terminal sales of 50,219 units in the first two months, accounting for 49% of the share, and its year-on-year decline is the smallest among all brands.

Wuling mainly relies on the competitive advantage of many models and low price. The data shows that Wuling has a total of four models on sale: Hongguang MINIEV, Nano EV, Bingo and Clear Sky, and there are more than 20 specific models. Wuling's highest-selling model is still the Hongguang MINIEV, which sold 48,273 in the first two months, accounting for 96% of the brand's overall sales.

In terms of price, 80% of Wuling's sales volume is less than 50,000 yuan, and it is mainly concentrated in the price band of 38,800-49,800 yuan, and the corresponding models are mainly Hongguang MINIEV's macarons, pleasure models, free models, etc. The sales of GAMEBOY, Disney Zootopia, and convertible versions with a terminal price of more than 60,000 yuan do not account for a high proportion of the Wuling brand.

In the list, Chang'an's performance in this market segment improved the most. In the first two months, Changan's cumulative sales were 20,823 units, a year-on-year increase of 61.5%. Changan has a total of Changan LUMIN and Benben E-Star two models on sale, of which LUMIN terminal sales in the first two months reached 18,020 units, and Benben E-Star was 2,802 units. In addition, in the sales ranking of mini pure electric vehicles, Changan LUMIN's sales rank second, second only to Hongguang MINIEV, which shows that with the launch of LUMIN, Changan's position in the mini vehicle market has been improved.

Changan LUMIN Image source: Changan Automobile

In addition, unlike the Hongguang MINIEV, the main sales price of Changan LUMIN is higher. The data shows that the transaction price of Changan LUMIN terminal has a total of 49,900, 54,900 and 69,900 three levels, of which 90% of the sales come from 54,900. On the contrary, the terminal transaction price of Benben E-Star is lower than that of LUMIN, and the main sales price is 29,800 yuan.

With the launch of the Panda Mini, Geely has also gained a place in the mini car market. In the first two months of this year, Geely relied on the Panda mini terminal sales reached 7,858 units, ranking fourth in the brand sales list, and the Panda mini train sales list ranked third, second only to Changan LUMIN. In addition, in terms of price, the main sales price of Panda mini is 55,800 yuan, which is comparable to Changan LUMIN.

Compared with the above brands, Chery, which originally ranked second, has declined more this year. Data show that Chery's terminal sales in the first two months were 11,066 units, down 58.5% year-on-year. Chery mainly has QQ ice cream, eQ1, Wujie Pro three cars on sale, of which eQ1 and QQ ice cream sales are 3223 and 7370 respectively, Wujie Pro was only launched at the end of November last year, so its 470 sales performance still has room for improvement.

Image source: Chery New Energy

In addition, Chery's three models have a relatively clear price coverage range, according to the data, QQ ice cream mainly covers 3-50,000 yuan, eQ1 mainly covers 6-80,000 yuan, and Wujie Pro covers 6-110,000 yuan. A few days ago, Chery officially reduced the price of these three models, and it is expected to accumulate more orders in the second quarter to reverse the decline.

From the overall list, there are 24 micro pure electric brands with terminal sales data from January to February this year, 5 fewer than the same period last year. In addition, terminal sales are more concentrated to the head brand, new entrants Changan and Geely quickly squeezed into the forefront of the market with brand, channel and product strength advantages, to a certain extent, the entrant-take-all situation has entered the end, and the micro electric vehicle market is also experiencing a knockout round.