Negative Growth for the First Time in 27 Months: The Automotive Market Hits Black April

At 2pm on May 10th, the National Passenger Car Market Information Association (hereinafter referred to as “Chair”) released domestic auto market data for April - April, generalized passenger cars (including cars, MPVs, SUVs, and microbuses) Sales volume totaled 10,77921 units, an increase of only 1.3% year-on-year, and a 13% drop from the previous quarter, of which micro-customers declined significantly. April sales fell 11.5% year-on-year.

One hour later, the China Association of Automobile Manufacturers (hereinafter referred to as "China Automobile Association") also released data on the auto market in April. In April, the country's vehicle sales fell by 0.25% year-on-year to only 1.55 million vehicles. The sales growth of Chinese automobiles in the first four months was YOY. Less than 6%, only 6.53 million units.

“This year, the situation of China’s autos is quite serious, and it is very likely that it will not be able to achieve the 10%-15% growth predicted in the industry previously.” Dong Yang, Vice Chairman of China Automobile Association, said at the scene that the growth of Chinese cars may be lower than the growth of GDP this year. This means that the Chinese auto industry will not be able to achieve the purpose of stimulating GDP growth and expanding domestic demand.

“The profit growth of the auto industry in April was significantly lower than the increase in sales. This shows that the efficiency of the auto industry is declining. This obviously fails to meet the government’s purpose of accelerating the transformation of economic growth methods.” Dong Yang said.

Sales decreased 0.25% year-on-year

Passenger car sales were 1,143,300 units, an increase of only 2.79% year-on-year. Commercial vehicle sales were 409,700 units, a year-on-year decrease of 7.84%.

The figures of the China Automobile Association show further that in April, the total production and sales of autos were 1.5353 million units and 1.552 million units, which was a year-on-year decrease of 1.85% and 0.25%, of which the sales volume of passenger cars was 1,143,300 units, a year-on-year increase of only 2.79%. Commercial vehicle sales were 409,700 units, a year-on-year decrease of 7.84%.

It is worth noting that the significant decline in the sales volume of crossover passenger vehicles (ie, minicars) is an important reason for the significant slowdown in the overall growth of the passenger vehicle market, with the exception of a 10% drop in the sales volume of mini vehicles, including cars, The growth rate of other passenger vehicles, including MPV and SUV, also slowed down further to 4%, 3.9% and 19% respectively.

The shrinkage of the mini-vehicle market directly led to a significant decline in the share of self-owned brands in the passenger vehicle market. In April, Changan Group's passenger car rankings had slipped to eighth place.

In January-April, a total of 2,284,400 self-owned brands were sold, which accounted for 45.82% of the total sales of passenger cars, and the market share decreased by 2.47 percentage points year-on-year, while the Japanese, German, U.S., Korean, and French cars had their respective share. To 18.19%, 15%, 10.82%, 7.51% and 2.67%, it is worth noting that the sales of Japanese cars have been affected by the earthquake and the year-on-year decline has been the fastest.

With the turning of the entire auto market, sales of some multinational car companies in China also fell in April. Toyota and GM bear the brunt of this. General Motors sold a total of 203,400 vehicles in the Chinese market, a decrease of 4.6% year-on-year, the first decline in the year.

Toyota was hit by the earthquake. In April, sales in China fell drastically by 23% to just 48,700 vehicles. Not only that, Toyota China said that before June 3, Toyota's operating rate of all vehicle factories in China will be reduced to 50% of the usual, and in extreme cases is more likely to be reduced to 30%.

In addition to the declining sales volume of the overall market and some multinational car manufacturers, the April turning point also showed a significant decline in the number of licences in Beijing and Shanghai's first-tier cities.

“In our opinion, the turning point in the automotive industry has long since arrived. This time the turning point is the same as in 2004. It is even more violent.”

On May 9th, a high-level domestic self-owned brand told reporters on the phone that the car industry had pessimistic forecasts before the financial crisis, but it was still a result of spurious advancement, and thus habitually believed that the inflection point would not come so quickly.

"The passenger car market closely related to personal consumption has dropped so sharply that the turning point of the auto market has arrived." The above-mentioned sources said, "We have just opened the director's meeting and the off-season comes. The pressing task is to push new products and promote terminals. These six words are easy to say and actually contain rich content."

From the breakdown of passenger cars, the entire industry is suffering from injustice. The sedan has dropped from 27% in the previous year to 9% in the first quarter of this year, and it has dropped to 7.7% by the end of March. The SUV has fallen from 101% last year to 46% in the first quarter of this year, and the growth rate at the end of March has dropped to 35%. .

The most obvious decline came from the mini-vehicle that was once benefited from the “going to the countryside” policy. This segment of the market grew from 28% last year to a negative growth of 5.6% in the first quarter of this year. By the end of March, the negative growth has reached 10%. %.

In addition to different market segments, uneventness is also manifested among different auto companies. Contrary to the slowdown in China’s auto growth, the expansion of North and South China’s masses is very rapid. "A lot of Audi Q5 and Volkswagen's hot models still have good sources of supply. The phenomenon of increasing the sales price of cars is common," said a FAW-Volkswagen dealer in Beijing.

The industry believes that China's autos will present the survival of the fittest, the elimination of the other, the increasingly fierce competition in the industry, the differentiation will come quickly, and independent brands will face severe challenges.

Luo Lei, deputy secretary-general of the China Automobile Dealers Association, believes that the Chinese auto market is only recovering from its previous rapid growth to its current rational growth. “This year’s economic situation is worse than in 2004. International inflationary pressures, monetary policy, and the status quo of the real estate industry, coupled with restrictions on policies, are not conducive to the consumption of the auto market.” Luo Lei told reporters that if before 2009, The major purchasers of cars are middle- and high-income people. After 2009, the main consumer groups are ordinary people. The increase in the use of cars has a great impact on them.

Luo Lei stressed that restoring to rational growth is both a bad and a good thing for the Chinese auto market. "What I have learned is that dealers are also responding rationally, especially as Beijing dealers are focusing on extending their businesses, such as used car replacement, car rental, financial leasing, retrofitting, etc."

In the face of this year's unfavorable situation, the CLUCC appealed that the investment plans of major manufacturers should be shrunk to prevent a serious excess of production capacity. According to the domestic manufacturers' 12th Five-Year Plan, China will have an annual production capacity of more than 40 million units in 2015. If the annual growth rate is 10%, the scale of the automobile market in 2015 will be 2,908 units. It is only 73%, and it is still unknown whether it can maintain a 10% growth rate. When the capacity utilization rate is lower than 75%, it is a serious surplus. If the investment is not reduced, the production capacity will inevitably be seriously excessive.

“Over-investment and overcapacity are two concepts. China’s autos are still undercapacity. An effective way to curb the surplus is to change the taxation mechanism. Instead of changing taxes from the end of production to taxation from the consumer end, local governments can concentrate on In order to attract investment to transform the market and promote consumption, the problem of overheated investment can be curbed.” Dong Yang finally stressed.