China's car market shows clear signs of recovery.

Data disclosed by the China Association of Automobile Manufacturers (hereinafter referred to as "CAAM") shows that in September 2024, China's passenger car production and sales were completed at 2.502 million and 2.525 million units, respectively, with a monthly increase of 12.6% and 15.8%, and a year-on-year increase of 0.2% and 1.5%, respectively. From January to September 2024, the cumulative production and sales of passenger cars were 18.643 million and 18.679 million units, with a year-on-year increase of 2.6% and 3%, respectively.

"In the third quarter, with the national level of car scrapping and renewal subsidy efforts strengthened, local replacement and renewal policies took effect successively, coupled with car companies launching new products in the fall, the passenger car market gradually recovered, especially the terminal retail market continued to strengthen, the 'Golden September' effect continued to show; the commercial vehicle market performance was relatively weak; new energy vehicles and car exports continued to maintain a good momentum and made significant contributions."

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On October 12, CAAM held a communication meeting, and CAAM Deputy Secretary-General Chen Shihua made the above statement. Chen Shihua said that since the implementation of the car renewal policy has been intensified, the effect has been obvious, the application volume of car scrapping and renewal subsidies has accelerated, effectively driving the increase in car sales.

Policy dividends are emerging

According to the data disclosed by CAAM, in September 2024, China's car production and sales were completed at 2.796 million and 2.809 million units, respectively, with a monthly increase of 12.2% and 14.5%, and a year-on-year decrease of 1.9% and 1.7%, respectively. From January to September 2024, China's car production and sales were completed at 21.47 million and 21.571 million units, with a year-on-year increase of 1.9% and 2.4%, respectively, and the production and sales growth rate narrowed by 0.6 and 0.7 percentage points compared to January-August 2024.

"From September to December 2023, the base of China's car production and sales was relatively large, so this year's September production and sales showed a slight decrease compared to last year, which is normal. Car companies have been digesting terminal inventory from the end of June to now. From the perspective of research on key enterprises, terminal inventory has shown a significant decline. Therefore, the current terminal sales are increasing, wholesale sales have slightly decreased, and the data CAAM statistics are wholesale sales." Chen Shihua interpreted the situation of a slight year-on-year decrease in car production and sales in September.

The recovery of the car market in September is inseparable from policy promotion.

"Especially at the end of July, the national car renewal policy was intensified, and policies in various places were introduced successively, until September some provinces and cities were still introducing corresponding policies. With the support of policies, the current policy environment for car industry consumption is very good, so the car market has shown a very obvious improvement." Chen Shihua said.

At the end of April this year, the Ministry of Commerce, the Ministry of Finance, and other 7 departments issued the "Implementation Rules for Car Renewal Subsidies," providing subsidies directly to consumers for car scrapping and renewal.In July, the National Development and Reform Commission and the Ministry of Finance jointly issued the "Several Measures on Strengthening Support for Large-scale Equipment Updates and Consumer Goods Exchange for Old for New," proposing to increase the subsidy standards for vehicle scrapping and renewal. For scrapping old vehicles that meet the standards and purchasing new energy passenger cars, the subsidy has been raised from the original 10,000 yuan to 20,000 yuan. For fuel-powered passenger cars that meet the standards, the subsidy has been increased to 15,000 yuan.

Recently, Geng Hongzhou, a first-level inspector of the Consumer Promotion Department of the Ministry of Commerce, stated at a special press conference held by the National Development and Reform Commission that as of midnight on September 25th, the national vehicle exchange for old information platform has received more than 1.13 million applications for vehicle scrapping and renewal subsidies, with the number of registered users on the platform exceeding 1.68 million. The volume of subsidy applications continues to grow rapidly.

The reporter noticed that in addition to the national "real money" subsidies, governments across the country have introduced policies for exchanging old for new to stimulate car consumption. In the latest research report released by Cinda Securities, it pointed out that since the details of the second round of vehicle exchange for old policies were officially introduced in August, the policies on vehicle replacement and renewal subsidies in various provinces and municipalities have gradually been implemented. As of September 29th, 31 regions have introduced specific policies.

Cui Dongshu, the secretary-general of the Passenger Car Association, believes that this year's "Golden September" effect is already very prominent, and the "Silver October" sales are even more worth looking forward to. As the weather cools and the autumn harvest is completed, the enthusiasm for car purchases in rural areas will gradually be released, and the markets for new energy vehicles and mid-to-low-end fuel vehicles will also gradually heat up.

"Under the 'combination punch' of national policies, car companies are confident in the fourth quarter, and consumer confidence is also gradually recovering," Chen Shihua called for the continuation of related policies next year, considering the positive role of the old-for-new policy in promoting car consumption, to ensure the stability, continuity, and predictability of the policy, and to fully play the role of policy promotion. It is suggested to release the relevant implementation details as soon as possible to stabilize market expectations.

The sales of new energy vehicles in 2024 are expected to reach 12 million units, thanks to the rapid electrification transformation of independent brands, and the market share of independent brands continues to increase.

According to the statistical data of the China Association of Automobile Manufacturers, in September 2024, the sales volume of Chinese brand passenger cars was 1.709 million units, a year-on-year increase of 21.9%; the sales market share was 67.7%, an increase of 11.3 percentage points compared to the same period last year. From January to September 2024, the sales volume of Chinese brand passenger cars was 11.919 million units, a year-on-year increase of 20.5%; the sales market share was 63.8%, an increase of 9.2 percentage points compared to the same period last year.

However, the reporter noticed that the traditional fuel passenger car market still faces pressure. In September 2024, the domestic sales volume of traditional fuel passenger cars was 940,000 units, a decrease of 402,000 units compared to the same period last year, a month-on-month increase of 18.3%, and a year-on-year decrease of 30%.

Looking at the data from January to September 2024, the sales volume of traditional fuel passenger cars has decreased to varying degrees in all market segments. The current sales volume of traditional fuel passenger cars is still mainly concentrated in the A-class car market, with a cumulative sales volume of 5.937 million units, a year-on-year decrease of 13.8%.Chen Shihua believes that much of the growth in the automotive market still comes from joint ventures. Although the pace of transformation in joint ventures is accelerating, it has not yet kept up with the overall rhythm. As a result, car companies mainly focused on traditional fuel vehicles have not performed particularly well this year. Currently, joint ventures are deepening their ties with Chinese partners, and it is believed that joint ventures will quickly catch up with the rhythm in the next few years, which is a major trend.

The new energy vehicle market remains quite interesting, with monthly production and sales reaching historical highs.

According to statistics from the China Association of Automobile Manufacturers, in September 2024, China's new energy vehicle production and sales were completed at 1.307 million and 1.287 million units, respectively, with year-on-year growth of 48.8% and 42.3%, respectively. The sales volume of new energy vehicles accounted for 45.8% of the total sales volume of new cars. From January to September 2024, the production and sales of new energy vehicles were completed at 8.316 million and 8.32 million units, respectively, with year-on-year growth of 31.7% and 32.5%, respectively. The sales volume of new energy vehicles accounted for 38.6% of the total sales volume of new cars.

Plug-in hybrid vehicles are the main force in the growth of the new energy vehicle market. From January to September 2024, the sales volume of pure electric vehicles was 4.988 million units, with a year-on-year increase of 11.6%; the sales volume of plug-in hybrid vehicles was 3.328 million units, with a year-on-year increase of 84.2%.

Chen Shihua estimates that China's new energy vehicle production and sales volume in October will exceed 10 million units, and the annual sales volume of new energy vehicles is expected to reach 12 million units, higher than the expected target of 11.5 million units at the beginning of the year. "The growth of new energy vehicles is partly due to the support of national policies. On the other hand, companies have also developed many new energy vehicle products, and there were quite a few new car launches in September, which played a very important role in car sales."

Although the external environment is full of challenges, China's car exports still perform well. In September 2024, China exported a total of 539,000 cars, with a month-on-month increase of 5.4% and a year-on-year increase of 21.4%. From January to September 2024, China exported 4.312 million cars, with a year-on-year increase of 27.3%.

In terms of new energy vehicle exports, in September 2024, the export volume of pure electric vehicles was 89,000 units, with a month-on-month increase of 1.1% and a year-on-year decrease of 3.6%; the export volume of plug-in hybrid vehicles was 22,000 units, with a month-on-month decrease of 0.1% and a year-on-year increase of 4.9 times. From January to September 2024, the export volume of pure electric vehicles was 731,000 units, with a year-on-year decrease of 3.8%; the export volume of plug-in hybrid vehicles was 198,000 units, with a year-on-year increase of 2 times.

"With the emergence of China's new energy vehicle scale advantages and market expansion needs, more and more new energy brand products made in China are going global, and their recognition overseas continues to increase. Although they have been disturbed by some countries in the short term, the export of independent plug-in hybrid vehicles to developing countries is growing rapidly, and the prospects are bright." Cui Dongshu said.