After 3-5 years, the joint venture accounts for only 10%!Wang Chuanfu's "God Prediction": Volkswagen can only sell 300,000 yuan a year|Spiegel Pro
Wang Chuanfu, chairman of BYD, made a surprising prediction.
On March 27, BYD held a 2023 financial report investor communication meeting. At the meeting, Wang Chuanfu, chairman of BYD, threw out a point of view: he believes that the new energy industry has entered the knockout round, and 2024-2026 is a decisive battle in scale, cost and technology. In the next 3-5 years, the share of joint venture brands will drop from 40% to 10%, of which 30% is the future growth space of Chinese brands.
This prediction frightened many joint venture car companies. So, what does this 30% share reduction mean for the current Chinese auto market?
From the perspective of the auto market in 2023, the overall passenger car sales will be 21.69 million units, an increase of 5.4% year-on-year, and 84 sub-brands will achieve cumulative growth compared with the same period last year. According to the retail data, the top 10 sub-brands are: BYD, SAIC Volkswagen, FAW-Volkswagen, Changan Automobile, Geely Automobile, GAC Toyota, FAW Toyota, BMW Brilliance, SAIC-GM-Wuling, Dongfeng Nissan, the top 10 sold a total of 10.188 million units, accounting for 47% of the sales, and half of the top 10 brands achieved growth compared with last year.
BYD, which is in the top position in sales, will sell more than 2.388 million units in 2023, a year-on-year increase of nearly 49%, and has a market share of 11% in the narrow passenger car market. According to the data of the Ministry of Industry and Information Technology, in 2023, the market share of China's own brand passenger cars will continue to rise, with a cumulative sales of 14.596 million units in 2023, a year-on-year increase of 24.1%, and an annual market share of 56%, an increase of 6.1 percentage points over the previous year. In 2023, 799,000 vehicles will be imported, accounting for 3.6%, while the remaining joint ventures will account for about 40%, 40.4% to be exact.
Therefore, it can be seen that the 40% share of the joint venture mentioned by Wang Chuanfu includes ordinary joint ventures and luxury brands made in China, including BMW Brilliance, a brand with 75% foreign capital. According to the maximum time limit for the proportion of joint venture vehicles to drop from 40% to 10% in the next 3-5 years, this structural change will be completed by 2030. What will change on the market side?
If the entire automotive market does not grow, it will remain at its current level of 21 million units. Then, a market share of 10% means only 2.1 million units sold. Imported cars remain unchanged at 760,000 units, so the sales volume of the entire foreign brand is about 2.9 million units.
First of all, the domestic luxury car market (including Tesla, excluding domestic high-end) will sell 3.74 million units in 2023, a year-on-year increase of 7.9%, with a market share of 17.3% (excluding Tesla's sales of 3.13 million units, a year-on-year increase of 3.5%, and a market share of 14.4%), with sales hitting an eight-year high, of which the sales of fuel models will be 2.78 million units, a year-on-year decrease of 1.4%, accounting for 74% of the luxury car market share, and the sales of pure electric models will be 830,000 units, a year-on-year increase of 60% , adding 310,000 new vehicles, accounting for 22% of the luxury car market share, compared to 15% in the same period last year.
In this statistics, of course, the three brands of Lotus, Polestar and Volvo can be excluded, because these three are controlled by Geely Group and can be regarded as China's own brands. Among them, Volvo sold 164,000 units, while Lotus sold about 3,600 units and Polestar sold about 1,000 units. From this point of view, the sales volume of pure foreign brands in the luxury car market in 2023 will be 3.571 million units.
On the other hand, BBA dominates the luxury car market. In 2023, BMW sold 824,900 units, Mercedes-Benz 765,000 units, and Audi 728,600 units. The three sizes are 2,322,600 units, with the luxury car market accounting for 62.1%. According to the same data from the Passenger Car Association, among the imported cars in 2023, BMW will sell a total of 187,231 imported cars in 2023, with a growth rate of 23%, Mercedes-Benz will sell a total of 174,273 imported cars in 2023, with a growth rate of 11%, and Audi will sell 62,212 imported cars in 2023, with a growth rate of 41%. Based on this, it can be estimated that the number of BMW, Mercedes-Benz and Audi in domestic cars is 637,600, 590,000 and 664,607 respectively, and the sales volume of the three in domestic cars is 1,892,900.
After excluding luxury cars, the rest is ordinary joint venture brands, with overall sales last year of about 8,762,760-3,740,000, or 5,022,000 units. In terms of sales volume, Volkswagen, General Motors, Toyota, Honda, Nissan and other joint venture brands are the largest sales companies. Among them, the Volkswagen passenger car brand has the largest share. According to the data, Volkswagen and Jetta will deliver a total of 2,398,600 vehicles in China in 2023, a year-on-year increase of 0.1%.
After clarifying these figures, let's take a look at the prediction that only 10% of joint venture brands will be left in 5 years. Of the 2.9 million units sold including imported cars, the overall size of foreign-owned luxury cars is only 935,000 units, and the BBA is only 580,000 units based on the market share of 62.1%. On average, the market size is only about 190,000 units per company, and if imported cars are excluded, this means that the total scale of BBA's locally produced products is only 473,000 units, with an average scale of 157,000 units. The annual sales of all three BBA companies have plummeted by more than 500,000 units!
According to the calculation that there is only 10% of the living space left in the joint venture, the ordinary joint venture will be even more miserable. The same is the same proportion of shrinking the market. At present, the general joint venture is 5.022 million units, reducing the market size by 75%, and a figure of 1.2555 million units will be obtained. Even the largest Volkswagen will only have 600,000 units in 2029, and there will only be 300,000 units in the north and south. Last year, Volkswagen sales in both the north and the south were more than one million units, and if it falls to 300,000 units a year, it will repeat the sad scene of Ford and Hyundai! This kind of downsizing will bring about terrifying changes in the industrial chain.
Of course, the market cannot change exactly according to the same proportion, and there are too many variables in the future, such as luxury cars may continue to stop growing at a certain scale, maintain a certain market share or decline by a certain amount. In ordinary joint ventures, some brands may continue to decline or even withdraw from the Chinese market. But if BBA can maintain an annual sales scale of 2 million vehicles, Wang Chuanfu's prediction will be difficult to achieve.
As far as the global market is concerned, local brands do have a dominant position in each country. In South Korea, Hyundai-Kia Group dominates the domestic market, with a market share of 86.5% in 2022. In Japan and Germany, the proportion of local brands in these countries has long been more than 70%. However, in the larger U.S. market, the situation is slightly different, with the market share of domestic U.S. auto brands and foreign auto brands remaining relatively balanced.
Of course, for local brands to achieve high market share, local car brands must be very strong. For example, Toyota, Honda, Nissan in Japan, Hyundai Kia in South Korea, Volkswagen in Germany, Porsche, Mercedes-Benz, BMW, Audi, etc., are all world-famous enterprises, and the market is not only in the local area, which needs to be noted. Finally, it should be pointed out that if the joint venture brand market is compressed to 10%, then not only the vehicle market, but also the parts market will be turned upside down, and the entire global auto market will be fully controlled by China.