The share of joint venture cars fell to 40%, and the price war not only knocked down the price of its products?

"There is not much time left for XX", this sentence was originally the most familiar and heart-wrenching phrase for Chinese fans, and now we use it on the declining joint venture car companies, which seems to be nothing wrong.

Especially when we are accustomed to BYD's continuous leading monthly sales ranking of car companies, witnessing the successful transformation and upgrading of leading traditional car companies such as Changan, Geely, and Chery, and being in the Xiaomi exhibition hall that has ushered in sky-high traffic and popularity, this feeling is undoubtedly more obvious.

Indeed, I am afraid that there is really not much time left for joint venture car companies.

The share of independent enterprises is up, and the share of joint ventures is down

The latter's turn needs to face the 40% boom and bust line

According to the latest statistics released by the Passenger Association, the retail sales of independent brands in March this year were 930,000 units, a year-on-year increase of 19% and a month-on-month increase of 51%. The domestic retail share of domestic brands was 54.8% in the month, up 6 percentage points year-on-year, and the cumulative share of domestic brands in 2024 was 55%, up 5.4 percentage points year-on-year.

In March, the retail share of German brands was 20.4%, down 1.5 percentage points year-on-year, Japanese brands were 13.8%, down 2.2 percentage points year-on-year, and American brands reached 8.2%, down 1.8 percentage points year-on-year.

This difference in the increase and decrease of the share did not suddenly appear last month, but an overall trend and real presentation that has continued from 2020 to the present. It used to be an independent brand that needed to face and struggle with a 40% market share of the "boom and wither line", but now it has come to the side of the joint venture brand.

If it is only a slight fluctuation up and down this boom and wither line, there is no big problem, but the actual situation is that 40% of the market share of joint venture brands will most likely continue to be eaten up by independent brands.

Recently, Wang Chuanfu, chairman of BYD, said at the 2023 financial report investor conference, "The accelerated launch of new energy products by Chinese car companies will encroach on the joint venture brand market, and 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." ”

In other words, the independent brand does not intend to leave so much share space for the joint venture at all, but has regarded the remaining three-quarters of the share of the joint venture as its own growth space and the target to grab. If the situation really develops as Wang Chuanfu said, then in 3-5 years, for every 10 cars purchased by domestic consumers, 9 of them may be self-owned brand products.

This exaggerated-sounding share change, is it Wang Chuanfu's beating of chicken blood and drawing a big pie in front of investors, or may the real situation really develop like this?

In fact, Wang Chuanfu's "ninety-one rating law" is not unfounded, not to mention our neighbors Japan and South Korea, the domestic market share of independent brands in these two countries is as high as 93% and 83% respectively. So as a Chinese brand that has attracted special attention from global car companies, it is natural for it to have such goals and determinations.

The penetration rate of new energy is rising

The joint venture is still relying on oil trucks to survive

The significant increase in independent share is due to the rising penetration rate of new energy in the domestic auto market.

Similarly, according to the statistics of the China Passenger Car Association in March, the retail penetration rate of NEVs among domestic brands was 63.3% in March, and the penetration rate of NEVs among luxury cars was 28.4%, while the penetration rate of NEVs among mainstream joint venture brands was only 7.4%.

In other words, unlike domestic brands that rely on new energy vehicles to eat away at market share, mainstream joint venture brands are still in the embarrassing situation of 19 fuel vehicles for every 20 new cars sold, and only one is a new energy vehicle.

In the context of the country's vigorous development of new energy vehicles and related supporting facilities, the market demand and focus have quietly shifted to new energy, and there is no sufficient and excellent new energy products, which has become a key factor restricting the further development of joint venture brands.

We are not deliberately advocating that new energy vehicles must be better than oil vehicles at this stage, of course, there are still many problems to be solved, but only from the perspective of market share, with the continuous rise in the penetration rate of new energy, the penetration rate of joint venture cars that rely on oil vehicles to hit the market will definitely decrease simultaneously. Because the total amount is there, it is normal to have one thing to do without the other.

In addition to the impact of different product positioning and direction, the erosion of the share of the joint venture is also inseparable from the current consumption habits.

Whether it is the new generation of new car buyers, or the replacement and additional users who have their own cars but need to upgrade their consumption, they have gradually completed the transition from curiosity to acceptance, and even have become accustomed to new energy vehicles.

Mr. Lu, the owner of the NIO, told the horse-drawn carriage market that he was originally a customer of oil trucks, but since he bought the NIO and drove it for more than three years, he has only maintained it once in total with a cumulative mileage of more than 50,000 kilometers, costing only 270 yuan. In addition, the daily cost of trams is low, so they have long been accustomed to new energy vehicles, and it is difficult to change back to trams. Even if it has a need to increase its purchase, the new purchase is still an AVATR, and it doesn't think about oil cars at all.

The loss of a large number of new and replacement users is the biggest problem encountered by joint venture brands that rely on oil vehicles to survive, which also causes their market share to decrease year by year to a certain extent.

The "price war" has been fought for more than a year

The joint ventures that were forced to enter the war were not only knocked out of the price of the product

If it is said that due to the epidemic for three years, the domestic auto market has seen a trend of independent upward and joint venture downward share, then the continuation of last year in 2023 is somewhat related to one thing, that is, the auto market price war that began in March last year and has continued to this day.

According to the long-term on-site visit and observation of the horse-drawn carriage market on the front line of the terminal of the car market, it is found that the price war in the car market, which has lasted for more than a year, has not only affected the joint venture brands that passively participated in the war at the beginning.

At the same time, there may be brand premium, production capacity and channel advantages that have been the core competitiveness of the joint venture brand for a long time.

Let's take a look at each of them. According to the observation of the horse-drawn carriage market, the current domestic car consumers, especially the younger new generation of car buyers, have undergone earth-shaking changes in their cognition and views on joint venture brands and independent brands. They are no longer so entangled in the original possible brand premium "baggage", but pay more attention to the value of the product itself when choosing a car.

As the price war continues, consumers find that even joint venture brand models that have been knocked out of some product prices not only have less obvious competitive advantages when compared with independent models at the same price, but even have a visible comparative disadvantage.

In the face of the practical pressure brought about by the decline in the cost of new energy and the "same price of oil and electricity", the joint venture brands are still the protagonists of fuel vehicles, and it is difficult to impress more consumers by forcing them to participate in the price war only because of the relatively slow upgrading of their products and the low degree of product intelligence. At the same time, the brand influence and the original brand premium ability are also being reduced step by step.

The decline in sales volume and share has also brought a simultaneous blow to the capacity utilization rate of the joint venture brand and the original channel advantage. If sales cannot go up, the factory's production capacity will inevitably be forced to decrease. If the share is estimated according to 2020 and the current one, the joint venture brand will be forced to reduce its production capacity by nearly 5 million units per year in the past three years. Based on this, there are also continuous news of joint venture brand factories laying off employees and reducing costs, and even joint ventures selling factories to new forces.

Not only was the capacity utilization rate forced to decline, but the original channel advantage of the joint venture brand was also further reduced. Taking Chengdu, where the horse-drawn carriage city is located, as an example, in our long-term market visits, we found that there are constantly dealers of joint venture brands who have closed their doors and resolutely withdrawn from the network.

Many of the original 4S stores of joint venture brands have been renovated for a period of time, and most of them have been opened as stores of independent brands or new power brands. Sales have never gone up, and you can even lose a lot of money selling a car, so it's hard to expect dealers to be able to "generate electricity for love" in the long run.

Compared with independent brands, joint venture brands may hope that the "price war" can end as soon as possible, and they may attract more consumers with certain preferential promotions.

Ma said:

The market share is declining, and the independent brand is aimed at the remaining three-quarters of the remaining share in the hands; while the penetration rate of new energy continues to rise, it has to face the reality that it still has to rely on oil vehicles to hit the market; coupled with the impact of the price war in the car market, the joint venture has also been knocked out, including product prices, brand premiums, production capacity and channel advantages, it can be said that the current joint venture brand is facing a huge pressure on the development bottleneck and dilemma.

If the joint venture brands do not face up to this problem and do not fundamentally find a solution to the problem, then there is really not much time left for them. As for the time node of the great change in the share of 3-5 years mentioned by Wang Chuanfu, it may even be advanced.