Not long ago, the Beijing International Auto Show was very popular, and new energy vehicles were favored. Many executives of multinational car companies also felt the audience's enthusiasm for new energy vehicles at the scene, and said that they would "accelerate the launch of electrified products" to keep up with "China's speed".
The bottleneck period of the auto market is coming
According to the International Energy Agency, the global demand for new energy vehicles will reach 45 million in 2030, more than three times that of 2023. This means that the global demand for new energy vehicles will continue to grow strongly in the next 10 years. New energy vehicles have become the mainstream of the market. The cumulative effect of trends will open up more market space for the development of new energy vehicles in the future over time.
At present, China's automobile market has crossed the dividing line of "oil to electricity", and from the perspective of industrial development trend and potential, China's new energy vehicle industry is also worth looking forward to. However, the continuous price wars have indeed put the entire automotive industry into a bottleneck.
According to data from the All-China Passenger Car Association, the retail sales of passenger cars in the national passenger car market in April were 1.532 million units, down 5.7% year-on-year and 9.4% month-on-month. Since the beginning of this year, the cumulative retail sales have reached 6.364 million units, a year-on-year increase of 8.0%. Among them, only the new energy vehicle market grew strongly, and the domestic retail penetration rate of new energy vehicles in April was 43.7%, an increase of 11.7 percentage points from the penetration rate of 32% in the same period last year.
BYD sat on dividends, and Dongfeng's profits plummeted
It is also worth noting that due to factors such as price wars and the continuous expansion of the scale of new energy, the net profit of car companies has changed greatly compared with the previous year. In a blink of an eye, it has been mid-May, and the financial reports of most car companies in 2023 have basically been released, and on the whole, BYD's dominant pattern has begun to appear, not only the transformation of "oil to electricity" has become the most successful representative of car companies, but also the most profitable existence of domestic passenger car companies. Looking at Dongfeng Group, which is also a traditional enterprise, it has suffered its first loss in ten years.
Looking back at 2022, the net profits of BYD and SAIC are still around 16 billion yuan. By 2023, BYD's sales will reach 3 million units, ranking first among traditional car companies, with a year-on-year increase of 61.9%, and a net profit of more than 30 billion yuan, an increase of 80.72% year-on-year. At the same time, BYD has also become the only Chinese brand with new energy sales exceeding 3 million units and a profit of more than 30 billion yuan.
Even though the annual sales volume in 2023 will exceed 5 million units, ranking among the top domestic car companies, SAIC's net profit will only be 14.1 billion yuan, less than half of BYD's, down 12.5% from the same period last year.
As the first brother of domestic car companies in the era of internal combustion engines, SAIC is facing the pain of transforming from a traditional fuel vehicle manufacturer to new energy, as well as from a joint venture brand to a "joint venture + independent" two-wheel drive. Fortunately, SAIC's independent business and export business performed well, which slowed down the group's overall profitability.
Dongfeng Group, another car company in the reform period, has an unexpected market performance, with about 347,400 independent passenger car sales last year, a year-on-year decrease of 30.2%. Under the dual impact of the decline in passenger car sales and the price war, the net profit ushered in the first loss in ten years, at -3.996 billion yuan, a year-on-year plunge of 138.9%.
In addition, most traditional car companies such as Geely and Great Wall generally have the problem of increasing revenue but not increasing profits. The basic reason is to increase the investment in research and development in the field of new energy intelligence, or brand and channel construction.
It is not difficult to see that with the intensification of competition in the new energy market, not only joint venture brands are facing great pressure, but also Chinese brands are extremely anxious. Returning to the beginning, the sales of passenger cars are declining, and the recession is still spreading.
There is not much time left for the joint venture
In recent days, many car companies have announced their results for the first quarter of 2024, including SAIC, BYD, Great Wall Motor, Changan Automobile, Guangzhou Automobile Group, etc. From a number of quarterly financial reports, we can somewhat understand how effective each car company is to resist risks after the first round of price wars.
BYD still maintained profit growth against the backdrop of sharp price cuts for its main models this year. According to the financial report data, in the first quarter of 2024, BYD's revenue increased by about 4% year-on-year to 124.94 billion yuan, and the net profit attributable to shareholders of listed companies was 4.57 billion yuan, a year-on-year increase of 11%; The net profit attributable to shareholders of listed companies was 3.75 billion yuan, a year-on-year increase of 5.24%.
BYD has proved with its strength that the vertical integration of its supply chain has a huge cost advantage in the fierce price war. In the short term, even if the price war continues for a period of time, BYD is still profitable, but compared with the revenue scale of about 180 billion yuan and the net profit of about 8.67 billion yuan in the fourth quarter of last year, BYD's growth rate has also slowed down.
It is worth noting that in the first quarter of 2024, Great Wall Motor achieved revenue of 42.86 billion yuan, a year-on-year increase of 47.6%; The net profit was 3.228 billion yuan, a year-on-year increase of 1752.55%, creating the best financial performance in the same period in history. At the same time, Great Wall Motor's export volume also far exceeds the overall level of the industry. In the first quarter of 2024, Great Wall Motor's overseas sales increased by 78.51% year-on-year to 92,800 units, accounting for 33.7% of its total sales in the first quarter.
Although SAIC maintains a leading position in terms of revenue, its earning power is not as good as in the past. In the first quarter of 2024, SAIC's operating income was 138.984 billion yuan, down 1.19%; net profit attributable to shareholders of listed companies was 2.714 billion yuan, down 2.48%. In the first quarter of 2024, GAC Group achieved revenue of 21.566 billion yuan, a year-on-year decrease of 18.79%; net profit attributable to shareholders of listed companies was 1.22 billion yuan, down 20.65% year-on-year.
The decline in both revenue and profit was mainly dragged down by the performance of joint ventures, which were previously extremely dependent on joint venture brands, and SAIC's joint ventures accounted for nearly 70% of the group's total sales. In April, the retail sales of domestic mainstream joint venture brands were 450,000 units, down 26% year-on-year and 9% month-on-month.
Nowadays, independent brands are taking advantage of the strong rise of new energy vehicles, and joint venture vehicles are stalling in the transformation of new energy vehicles. The slow progress of intelligence and electrification, and the lack of product competitiveness are considered to be important reasons for the gradual lag of joint venture car companies in the current round of vehicle market reform, and it has become a consensus in the industry that there is not much time left for joint venture vehicles, and if tangible changes cannot be realized, it is only a matter of time before new things replace old things.