Fuel vehicle fuel tax trillions every year, both purchase and traffic restrictions, passenger association: it is recommended that new energy vehicles "with the same car and the same right", such cities gradually liberalize the purchase of fuel vehicles!

Edited by Li Zedong

According to the WeChat account of the Passenger Car Association on February 8, the Passenger Car Association released an analysis of the national passenger car market in January 2024.

According to the Passenger Association, the number of cars in some cities with purchase restrictions has lagged far behind that of other cities without purchase restrictions. In the future, there is still huge room for growth in domestic auto market consumption, among which the growth potential of small and medium-sized cities and county and township markets is huge, and there is also room for improvement in automobile consumption in megacities. The process of urbanization of the Chinese population will continue, considering that cities with 4 million to 5 million people can still actively overcome the pressure of congestion, it is recommended to consider cities with less than 4 million holdings to gradually relax the purchase restrictions on fuel vehicles.

Image source: WeChat account of the Passenger Association

Review of the national passenger car market in January

In January 2024, the retail sales of passenger cars reached 2.035 million units, up 57.4% year-on-year and down 13.9% month-on-month.

In January 2024, the auto market retail sales achieved the expected good start trend, and the important factor for the year-on-year increase of 57.4% was the difference in pre-holiday consumption time brought about by the Spring Festival. In December, some sales overdrafts affected sales in January, and then there was the expected rebound in the prices of some models, and the reduction of local consumption vouchers and other activities to promote consumption, all of which constituted a trend that was not conducive to the volume in January.

At the national level, policy guidelines for the automotive industry have been issued frequently, aiming to further stabilize and expand automobile consumption. The Ministry of Commerce has promoted the "100 Cities Linkage" Auto Festival and the "Thousands of Counties and Towns" new energy vehicle consumption season activities, and the consumption promotion policies in many places have continued to exert force, and the joint efforts of corporate promotions have formed a stable support for the auto market at the end of the year.

There is a significant difference in the month-on-month trend between joint ventures and independent automakers. As the joint venture automakers in the auto market generally sprinted strongly in December, while the domestic automakers were relatively stable in December, the retail sales of fuel vehicles formed by joint venture automakers in the auto market in January fell by 15% month-on-month, while the retail sales of fuel vehicles of independent automakers increased by 23% month-on-month. Therefore, Geely, Chery, Chang'an and other companies had a strong trend in January. Entry-level fuel vehicles are currently extremely cost-effective, but the consumption of first-time buyers before the Spring Festival is obviously not booming.

In January, the retail sales of self-owned brands were 1.12 million units, a year-on-year increase of 77% and a month-on-month decrease of 10%. The domestic retail share of domestic brands was 55.1%, up 5.9 percentage points year-on-year, and the cumulative share of domestic brands in 2023 was 52%, an increase of 4.6 percentage points year-on-year. In January, the wholesale market share of domestic brands was 60.5%, an increase of 8.2 percentage points over the same period last year.

In January, the retail sales of mainstream joint venture brands were 670,000 units, a year-on-year increase of 43% and a month-on-month decrease of 15%. In January, the retail share of German brands was 19.2%, down 3.8% year-on-year, and the retail share of Japanese brands was 16.7%, unchanged year-on-year. The retail share of the U.S. brand market reached 6.5%, down 1.3 percentage points year-on-year.

Retail sales of luxury cars in January reached 240,000 units, up 30% year-on-year and down 22% month-on-month. Last year, the shortage of luxury cars affected by the shortage of chips gradually improved, but the demand for traditional luxury cars was not very strong.

Production of new energy passenger vehicles reached 734,000 units in January, up 85.1% year-on-year and down 33.3% month-on-month. Wholesale sales of new energy passenger vehicles reached 682,000 units in January, up 76.2% year-on-year and down 38.8% month-on-month. Retail sales of new energy vehicles in January totaled 668,000 units, up 101.8% y/y and down 29.5% m/m. NEV exports in January totaled 95,000 units, reflecting a 27.1% y/y increase and a 6.9% m/m decline.

Outlook for the national passenger car market in February

There are 18 working days in February this year, which is 2 days less than the 20 working days in February 2023. Due to the influence of weak automobile consumption before and after the Spring Festival holiday, most car companies will take a few more days of annual leave before and after the Spring Festival, so the effective production and sales time in February this year is very short, and it can be expected that the sales volume of the auto market in February will be in the absolute bottom period of the year.

Before the Spring Festival is the golden period for the first buyer group to buy a car, due to the property market, the stock market is not prosperous, the consumption mentality of residents is relatively conservative, the entry-level fuel vehicle market is weak, and the consumption before the Spring Festival is especially not strong. Recently, due to the rain, snow and freezing weather in the Yangtze River Basin, the energy supplement and battery life shortcomings of electric vehicles have temporarily affected consumer purchase confidence.

This year, the number of people returning to their hometowns during the Spring Festival is large, and the pace of resumption of work after the holiday is relatively fast, and some middle-aged and elderly migrant workers are gradually considering local employment and entrepreneurship, which will bring certain benefits to the car market after the Spring Festival.

Traffic congestion in big cities is basically based on the school holidays as the demarcation point, and there is a certain wave of car purchases before the start of school after the Spring Festival over the years, which is conducive to the gradual recovery of the economic electric vehicle market.

In 2024, the price war in the national passenger car market will remain fierce

In the past few years, the price war in the national passenger car market is generally about 4 points higher than the promotion growth level at the end of each year compared with the end of the previous year. However, in 2023, the price war in the national passenger car market will continue to be fierce, reaching a 6-point increase in promotion. Prices stabilized at the end of the year after August of previous years, but last year's price war became more intense in the second half of the year, forming the characteristics of super price promotion at the end of the year to drive high retail growth in December.

The fundamental reason for the recent price war in the passenger car market is that new technologies replace old technologies, and the process of replacing fuel vehicles with new energy vehicles.

With the rapid increase in the penetration rate of new energy vehicles, the scale of the traditional fuel vehicle market is gradually shrinking, and the contradiction between the huge traditional production capacity and the shrinking fuel vehicle market has brought more fierce price wars. Scale determines the cost and the survival status of the enterprise, and most manufacturers give priority to ensuring their share, which will inevitably lead to further intensification of price competition.

In the past two years, a huge breakthrough has been made in the export of passenger cars, with the total export volume rapidly breaking through from less than one million in 2020 to 4 million in 2023. In the past two years, joint venture car companies have also gradually launched new energy transformation models, in order to obtain a time buffer, use price reduction promotions to maintain market share, to ensure the launch time of new energy models and customer base.

The scale of the new energy vehicle market continues to expand, with the promotion of the strategy of car companies with the whole vehicle as the king, the sales of major brand bicycles have increased rapidly, and the integration of the industrial chain and new technologies such as integrated die-casting have brought huge differences in cost sharing.

The cost of electric vehicle batteries accounts for about 40% of the cost of the whole vehicle, and the price of lithium carbonate has skyrocketed to nearly 600,000 yuan/ton in the first two years, and has gradually fallen to below 100,000 yuan recently, creating space for the decline of the overall cost.

With the gradual maturity of the market segments of various technical lines of new energy vehicles, new models have greatly enriched consumer choices, and the homogenization brought about by the increase in product supply will also intensify competition. This year, the price war is likely to be carried out in a multi-mode mix such as price reduction promotion and positioning exploration, and new energy manufacturers will package more rights and interests to stabilize product prices.

Through rapid product iteration, the new electric vehicle promotes the high-end of the brand, continuously improves the product configuration and battery life under the premise of the same price or even a slight decrease, and improves the user's cost-effective experience with product strength.

2024 is a critical year for new energy vehicle companies to gain a firm foothold, and the competition is destined to be very fierce. From the perspective of fuel vehicles, the cost of new energy has fallen, and the "same price of oil and electricity" has brought huge pressure to fuel vehicle manufacturers, and the upgrading of fuel vehicle products is relatively slow, and the degree of product intelligence is not high, and more relies on preferential prices to continue to attract customers; from the perspective of NEV, with the decline in lithium carbonate prices, the cost of batteries has decreased, and the cost of car manufacturing has decreased; and with the rapid development of the new energy market, the scale effect has been formed, and the products have more profit margins.

Gradually relax purchase restrictions and stabilize the consumption of fuel vehicles

According to the website of the Ministry of Public Security, by the end of 2023, the number of motor vehicles in the country reached 435 million, including 336 million cars, and the number of motor vehicle drivers reached 523 million, of which 486 million were car drivers. In 2023, there will be 24.56 million newly registered cars and 24.29 million newly licensed drivers nationwide.

By the end of 2023, the number of cars in 94 cities will exceed one million, an increase of 10 cities compared with 2022, of which 43 cities will exceed 2 million, 25 cities will exceed 3 million, and 5 cities including Chengdu, Beijing, Chongqing, Shanghai, and Suzhou will exceed 5 million. In 2023, there will be more than 5 million holdings, and 3 out of 5 cities will not be restricted from purchase. At the end of 2022, the 4 cities that have reached 4 million to 5 million holdings have no purchase restrictions.

At present, the number of cars in some restricted cities has lagged far behind that of other non-restricted cities. In the future, there is still huge room for growth in domestic auto market consumption, among which the growth potential of small and medium-sized cities and county and township markets is huge, and there is also room for improvement in automobile consumption in megacities. The process of urbanization of the Chinese population will continue, considering that cities with 4 million to 5 million people can still actively overcome the pressure of congestion, it is recommended to consider cities with less than 4 million holdings to gradually relax the purchase restrictions on fuel vehicles.

Fuel vehicles have to pay trillions of fuel taxes every year, both to limit the purchase and to restrict. In the case that the sales of new energy vehicles have reached 35%, it is necessary to consider the same rights as the same vehicle, stabilize the normal consumption of fuel vehicle users, and achieve comprehensive and sustainable growth of automobile consumption.

National Business Daily