Author: Zhu Yulong
Looking at the global sales in April, it is observed that overall car sales have been decreasing, which is worse than LMC Consulting’s predictions in March. After seasonal adjustment, the global annualized sales of passenger cars in March fell to 75 million units/year, a 14% YoY drop in global light vehicle sales. The current situation shows the following:
- The US drops by 18% to 1.256 million units.
- Japan drops by 14.4% to 300,000 units.
- Germany drops by 21.5% to 180,000 units.
- France drops by 22.5% to 108,000 units.
If we estimate China’s situation, according to the China Passenger Car Association’s estimates, April’s zero retail sales target for automakers will significantly decrease YoY, with narrow passenger car retail sales expected to reach 1.1 million units, representing a 31.9% decline. Following this trend, the global passenger car sales in April 2022 dropped to around 24%.
Looking at the entire new energy vehicle market, YoY, in April the sales of Electric Vehicle (EV) were 43,872 units, decreasing by 14%, a decrease of 29% MoM. Meanwhile, in the Plug-in Hybrid Electric Vehicle (PHEV) market, sales increased by 10% YoY, but decreased by 27% MoM, with UK data still pending. New energy vehicles in April were basically in a horizontal trend, and the growth trend was not very good.
Overview of YoY data
Looking at Europe, the main markets, Germany, France, Italy, and Spain, all experienced declines. It is highly likely that car sales in the UK will also decline, as there is a strong correlation between automotive consumption and macroeconomic environment.
Breaking down the total volume into HEVs, PHEVs, and BEVs YoY, the decline in battery electric vehicles (BEV) is not particularly significant, but the decline in PHEVs is quite large due to supply issues.
## Sales Volume Comparison of BEV and PHEV for April 2022
In Germany, there were 22,175 pure electric vehicle (BEV) sales (down -7% YoY and -36% MoM) and 21,697 plug-in hybrid electric vehicle (PHEV) sales (down -20% YoY and -20% MoM), resulting in a total new energy vehicle penetration rate of 24.3%, up 2.2% YoY. This was a month with very few reported sales in Germany.
In France, there were 12,692 BEV sales (up +32% YoY and -36% MoM) and 10,234 PHEV sales (down -9% YoY and -12% MoM), resulting in a new energy vehicle penetration rate of 21.1%, up 6.3% YoY.
In other markets, Sweden, Italy, Norway and Spain are overall experiencing low growth.
In terms of penetration rate, Norway achieved a high penetration rate of 74.1% for BEVs, while major markets are at a 10% penetration rate for pure electric vehicles. In the current economic environment, the prices of battery components continue to rise, making it difficult for these markets to transition to higher penetration rates.
Supply and Demand Issues this Year
Europe is facing a shortage of vehicle supply due to chip and wiring harness supply issues from Ukraine, leading to price increases. In addition, rising inflation rates and soaring gasoline prices, coupled with potential unemployment due to rising operational costs for businesses, are causing the actual income of the people to decrease. Germany, which has the strongest economy, has seen a faster decline in private purchases of vehicles than fleet purchases (down 35.9% vs. down 23.4%, respectively).
In recent news, there has been a cost shift in the automotive industry, with Bosch renegotiating contracts with automakers to charge them more for supplies. This move could lead to even higher window sticker prices for car buyers during this pandemic.
Summary: In my opinion, the most likely scenario is that auto prices will continue to rise for a period of time, and then demand will differentiate based on product strength and actual sales terminals; during this process, the scale effect of the auto industry will weaken, and the profit margins of the industry chain will be compressed for a period of time. It’s a bit like the era of the oil crisis, where we need to find companies that can survive. This period is the stage of market clearance in the elimination phase.
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.