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This article is reprinted from One Passenger (WeChat Official Account ID: carcaijing) with authorization, established by the Transportation Industry Group of the Economic Journal, author: Li Yang, editor: Zhao Cheng.
New energy has become the main growth point of China’s automotive market again, and the market penetration rate is expected to exceed 20% ahead of schedule.
The prolonged fermentation of chip shortages and the repeated outbreaks of the pandemic have made the automotive industry in 2021 far from stable. Nevertheless, in 2021, China’s automotive industry still ended with a total sales volume of 26.275 million vehicles, a year-on-year increase of 3.8%, ending the three-year trend of the automotive market’s decline.
On January 12, the China Association of Automobile Manufacturers (CAAM) released the latest production and sales data, showing that in December 2021, China’s automobile production and sales reached 2.907 million and 2.786 million vehicles, respectively, up 12.5% and 10.5% from November on a month-on-month basis; on a year-on-year basis for December 2020, production increased by 2.4%, while sales decreased by 1.6%. For the whole year, China’s automobile production and sales were 26.082 million and 26.275 million vehicles, respectively, up 3.4% and 3.8% year-on-year.
The rise of the new energy vehicle market is the main reason for China’s automotive industry to end its three-year downward trend. CAAM data shows that in 2021, China’s new energy vehicle sales totaled 3.521 million vehicles, an increase of 160% year-on-year, ranking first in the world for seven consecutive years. Among them, the sales of new energy passenger cars reached 3.334 million units, a year-on-year increase of 167.5%.
“China’s total automobile production and sales volume has been the world’s number one for 13 consecutive years, and has made great progress in ‘electrification, networking, and intelligentization.’ China’s position as an automotive power has been further consolidated, and we are moving towards becoming a strong automotive country,” said Fu Bingfeng, Executive Vice Chairman and Secretary General of CAAM.
As issues such as chip shortages and the high price of raw materials on the supply side gradually improve in the new year, CAAM expects that the automotive market will continue to show a stable and positive development trend in 2022, with overall production and sales performance outperforming that of 2021.
Chinese brand passenger car market share reaches 44.4%
In 2021, the production and sales of passenger cars in China reached 21.408 million and 21.482 million vehicles, respectively, an increase of 7.1% and 6.5% year-on-year, both outpacing the industry’s growth by 3.7 and 2.7 percentage points. Driven by China’s strong consumer market, China’s passenger vehicle market has exceeded 20 million units for seven consecutive years.From the perspective of the change in annual passenger car sales volume, due to the low base in the beginning of the year, the passenger car market showed a significant growth trend. However, as the issue of chip shortage gradually emerged and combined with the rapid increase in the same period of the base, the passenger car market began to decline, and the decline has widened. In the fourth quarter, with the gradual easing of the chip issue, the passenger car market runs steadily, and the decline gradually narrows.
It is worth mentioning that the competitiveness of domestic passenger cars has become prominent. In December 2021, Chinese brand passenger cars sold a total of 1.137 million units, a month-on-month increase of 11.2%, a year-on-year increase of 10%, accounting for 46.9% of the total sales of passenger cars, an increase of 0.3 percentage points from the previous month and an increase of 3.4 percentage points from the same period last year.
Looking at the whole year, in 2021, Chinese brand passenger cars sold a total of 9.543 million vehicles, a year-on-year increase of 23.1%, accounting for 44.4% of the total sales of passenger cars, and an increase of 6.0 percentage points compared with the same period last year. It has approached the historical peak.
Among the major foreign brands, compared with the previous year, the French passenger car sales growth rate was the most significant, and the American passenger car sales increased rapidly in double digits. The German, Japanese, and Korean passenger cars all declined, with the Korean passenger car decline ranking first. The German and Japanese passenger cars were mainly affected by the chip shortage, leading to supply shortages.
In terms of self-owned brands, new car manufacturers such as XPeng, Ideal, and NIO have shown significant growth, but their sales ratios are still not high. In traditional car companies, BYD has the fastest growth rate, reaching 75%, and FAW and Chery maintained growth rates of more than 30%. Among the top ten self-owned car brands in terms of sales, only Jiangling Motors market has declined.
In terms of vehicle types, the competitiveness of Chinese brands has mainly improved in the fields of sedans and SUVs. In 2021, Chinese brand sedans, SUVs, and MPVs had market shares of 31.7%, 52.3%, and 68.3%, respectively. Compared with the previous year, the market share of Chinese brand sedans and SUVs has increased, while the market share of Chinese brand MPVs, despite occupying 70% of the market, has declined compared with last year.
In the sedan market, the top ten sedan production companies sold a total of 6.355 million units, accounting for 64.0% of total sedan sales. Domestic brands BYD and SAIC-GM-Wuling have achieved rapid growth, driving the increase in the market share of Chinese self-owned sedans; In the SUV market, the top ten SUV production companies sold a total of 5.934 million units, accounting for 58.7% of the total SUV sales, of which Chery Automobile, Changan Automobile, and Great Wall Automobile achieved fast growth in sales.From the perspective of consumer level, the trend towards high-end has become obvious. With the gradual increase of the residents’ income level, China’s automotive market has shown a clear trend of consumption upgrading. In 2021, sales of luxury brand passenger cars reached 3.472 million units, a year-on-year increase of 20.7%, which is 14.2 percentage points higher than the growth rate of passenger cars, accounting for 16.2% of the total passenger car sales, 1.9 percentage points higher than last year.
New Energy Market Growth Reaches 5-Year High
In 2021, new energy vehicles became the biggest highlight of China’s automotive market, and their market development has shifted from policy-driven to market-driven development stage, presenting a good development situation of both market size and development quality.
In 2021, new energy vehicle production and sales reached 3.545 million and 3.521 million units respectively, a year-on-year increase of 1.6 times, with a market share of 13.4%, which is 8 percentage points higher than last year. The growth rate of new energy vehicles in the Chinese market in 2021 reached a new high since 2016.
“From the trend perspective, the new energy vehicle market maintained a strong development trend in production and sales throughout the entire year of 2021,” said Fu Bingfeng. The rapid growth of new energy vehicle sales has effectively supported the demand of the automotive market. It is worth noting that the export performance of new energy vehicles is outstanding, with 310,000 units exported in 2021.
At the same time, the gradual improvement of China’s new energy supporting facilities has laid a foundation for the rapid development of the industry. As of the end of 2021, China has built 75,000 charging stations, 2.617 million chargers, and 1,298 battery swap stations.
From the trend of new energy vehicles, production and sales maintained a strong development trend throughout the year, with monthly sales exceeding 200,000 units since March, exceeding 300,000 units in August, exceeding 400,000 units in November, and reaching 530,000 units in December, showing a sustained growth momentum.
The “New Energy Vehicle Industry Development Plan (2021-2035)” issued by the State Council earlier pointed out in the development vision that by 2025, China’s new energy vehicle market competitiveness will be significantly enhanced, and the sales volume of new energy vehicles will reach about 20% of the total sales volume of automobiles.
In 2021, China’s new energy vehicle market share has reached 13.4%, and in terms of sales, the December sales volume reached 530,000 units, with a market share of 19.2%, which is close to 20%. The market share of new energy passenger cars in December was 20.6%, reaching the market share of 20% in advance. The China Association of Automobile Manufacturers believes that China’s new energy vehicle market share is expected to exceed 20% ahead of schedule.In the main categories of new energy vehicles, pure electric and plug-in hybrid vehicles have shown a high-speed growth trend compared to the same period last year. In addition, new energy vehicles are being accepted and recognized by more and more consumers, accelerating their entry into the private consumer market and further promoting the growth of production and sales.
In 2022, with the launch of a competitive lineup of electric and hybrid new cars, it is widely expected within the industry that sales and penetration rates of new energy vehicles will continue to rise. Five million units is a common expectation among many institutions for 2022. CICC judges that global automotive electrification has exceeded the threshold and entered a steep growth phase. By 2022, the penetration rate of new energy vehicles in China will reach 20%, corresponding to sales of five million units. The global total sales volume will aim at tens of millions of units, with a year-on-year growth rate of 70%.
“In the future, under the promotion of “electrification, networking, and intelligence”, the automotive industry will continue to actively embrace a new round of technological revolution, adhere to innovation-driven development, accelerate integration into the new development pattern, become the leader in promoting the transformation and upgrading of the global automotive industry, and make due contributions to achieving the second centenary goal,” said Fu Bingfeng.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.