In August 2024, China’s automobile market showed a positive month-on-month (MoM) growth trajectory, boosted by policy incentives and market demand. Despite year-on-year (YoY) declines in automobile production and sales due to seasonal factors and economic fluctuations, the market has shown considerable resilience.
Domestic light vehicle (LV) sales, excluding exports, amounted to 1.9 million units, showing a significant YoY decrease of 10.8% but a MoM increase of 7.9%, influenced by the comparative basis higher than the same period last year. In the passenger vehicle (PV) segment, sales volume decreased to 1.8 million units, down 9.6% YoY, but a substantial MoM increase of 8.6%. Light commercial vehicle (LCV) sales also saw a contraction, falling to 163k units, with a significant YoY decrease of 22.5% and a slight MoM increase of 0.7%.
From January to August this year, LV’s sales reached 14.9 million units, experiencing a YoY decrease of 2.3%. PV sales made up the majority of this figure, totaling 13.3 million units with a decrease of 2.0% YoY. Although the LCV market is significant, it also experienced a slight YoY decline of 5.0%, with sales amounting to 1.6 million units.
In China’s domestic market, the August sales rate hit an annualized rate of 27 million units, a slight decrease of 2% from the previous month’s figures. The rate has been hovering around the 27 million units/year mark since June, after enjoying a steady climb from an average of 22.6 million units/year during the first months of the year, from January to May. Despite a nearly 10% YoY decline in August sales and a 2% YTD decline compared to the previous year’s robust figures, there is a silver lining on the horizon. The government’s recent move to double scrappage subsidies is expected to inject a strong dose of vitality into the market for the rest of the year. The sales forecast remains largely positive, with only a small downward modification to the forecast of light commercial vehicles 2024. The market is projected to experience a growth of 3%, reaching an estimated 26 million units in sales by the end of the year, a testimony to the sustainable growth potential of the sector.
Although August’s sales figures looked a bit lackluster, this was mainly due to the faster-than-expected decline in share of the ICE and JV brands in China. However, NEVs, mainly Chinese brands, not only maintained their robust growth, but also captured a significant share of 54% of PV retail sales in August, following the trend of the previous month which also saw 50% + part NEV. The market is on the cusp of a period of strong expansion in the coming months, largely due to the strategic intervention of the government. The National Automobile Trade Platform reported an increase in applications for temporary scrapping subsidies, reaching 800k units at the end of August. This increase was helped by the government’s decision to double the subsidy amounts, with the aim of stimulating the market and promoting the green transition in the car industry.
According to preliminary statistics, almost 3.8 million internal combustion engine vehicles and new energy vehicles meet the criteria for scrappage subsidies, suggesting that the replacement of these vehicles could bring additional growth to the market. To further stimulate the market, the government implemented
additional measures, including reducing minimum payment requirements for car financing loans and planning to gradually ease purchase restrictions on new energy vehicles in various regions. Currently, many major cities have certain restrictions on the purchase of vehicles based on traffic congestion and air pollution levels, however, these strategic measures are expected to be more relaxed in the context of stimulating the domestic consumption. Also, the promotional power of price wars seems to have weakened. Many car companies are tired of dealing with price wars and the damage done to their profitability. Intense price competition has also led consumers to adopt a wait-and-see attitude, preventing them from making timely decisions.
On the manufacturing front, LV production experienced a slight decline to 2.4 million units in August, marking a modest YoY reduction of 3.0%. However, there was a more significant MoM increase of 8.5%. For the first eight months of this year, cumulative production has been robust, reaching an impressive 18.0 million units. This illustrates a commendable YoY growth of 2.9%. In terms of segment performance, PV production was flat in August at 2.2 million units, with a minor decrease of 2.0% YoY. The YTD accumulated volume of PV production reached 16.1 million units, maintaining a growth trajectory with an increase of 3.6% YoY. In contrast, LCV production volumes for August were recorded at 203k units, indicating a modest YoY decrease of 12.2%. When looking at the first eight months of 2024, YTD volume for LCVs is 1.9 million units, reflecting a slight decrease of 2.8%.
In August, LV exports showed a strong performance, hitting 489k units with a significant YoY increase of 29%. The growth trend persists throughout the month, with PV accounting for 439k units of exports, marking an increase of 27% YoY, and LCV reaching 50k units, which shows a substantial 47% YoY Increase. Cumulatively, from January to August 2024, LV exports totaled 3.47 million units, reflecting 24% YoY growth. The primary factors driving this year’s growth include the enhanced competitiveness of Chinese-made products, a modest expansion in the Central and South American markets, and the significant replacement of international brands by Chinese vehicles in the conflict-ridden Russian market. Russia-Ukraine. In addition to the continued increase in NEV exports, the improved competitiveness of traditional ICE vehicle exports also contributed to the overall increase in shipments.
This article was first published on GlobalData’s dedicated research platform, the Automotive Intelligence Center.
“China’s vehicle market underpinned by NEV incentives” was originally created and published by Auto onlya trademark owned by GlobalData.
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