Writing by: Wu Jingtao
Ten consecutive championships or one championship in ten years?
In the early hours of Monday, the 2022 World Cup officially kicked off, and all the powerhouses competed on the world football stage representing the pinnacle of the football world. Discussions about football games are everywhere on social media and in offices every day, after all, this is a football event that only happens once every four years.
Apart from the intense competition on the green field, there is also a suspenseful competition going on in the domestic automobile market, which is the battle for the annual passenger car sales championship this year, between traditional powerhouse FAW-Volkswagen and new rising star BYD.
As of October, FAW-Volkswagen is still leading the way, but BYD’s momentum is strong in the second half, and it is completely possible to reverse the game and win the annual sales championship trophy.
The regular playing time of a football game is 90 minutes, while this 2022 annual passenger car sales championship is still ongoing and there are 35 days left until the final whistle.
Special Significance
Why is the competition for the annual sales championship particularly noteworthy this year, even though there is a new champion every year? That’s because no matter who wins the annual sales championship, a new record will be born.
Since 2013, SAIC Volkswagen (Shanghai Volkswagen) has won the annual sales championship over SAIC-GM, and the throne of the domestic passenger car sales championship has been held by Volkswagen for a full 9 years, from 2013 until 2021.
Among them, SAIC Volkswagen won the championship 5 times, in 2013, 2015, 2016, 2017, and 2018.
FAW-Volkswagen won the championship 4 times in 2014, 2019, 2020, and 2021.
If FAW-Volkswagen wins the annual passenger car sales championship again this year, “North-South Volkswagen” will create a record of ten consecutive championships. FAW-Volkswagen and SAIC Volkswagen will then equally have won the championship 5 times, achieving a true “share the glory” outcome.If BYD (Build Your Dreams) can reverse FAW-Volkswagen’s dominance in the last two months and take the crown for annual passenger car sales in 2022, it will mark the first time in 10 years that a domestic automaker has taken the title since SGMW (SAIC-GM-Wuling) achieved annual passenger car sales champion in 2011.
At the same time, BYD’s sales ranking will jump drastically from 15th place last year to first place for annual sales, which has never been seen before.
Therefore, the battle for the annual passenger car sales championship in 2022 has attracted much attention not only for the achievement itself, but also for the significance behind it.
Intense Competition
According to the previous two years’ wholesale total sales in 2020 and 2021, FAW-Volkswagen, ranked first, won the annual sales championship hands down with a huge advantage of 565,000 and 469,000 units respectively over the second-ranked automaker.
With such a huge lead, after the sales in October were announced this year, the winner of the annual sales championship seems a foregone conclusion.
But this year, the situation is quite different. According to China Passenger Car Association’s (CPCA) announcement of sales in October 2022, FAW-Volkswagen ranked first in cumulative wholesale sales, with 1,523,213 units, leading BYD, the second-ranked automaker, by only 125,150 units.
Not only has the cumulative sales advantage decreased significantly compared to previous years, but in monthly sales in October, FAW-Volkswagen sold 71,386 fewer units than BYD.
If BYD can maintain this monthly sales advantage for the remaining two months of this year, it will be possible to complete a comeback in December, snatch the annual sales crown from FAW-Volkswagen, and make history.
Although the difficulty of overtaking is not small, it is not impossible to achieve, making the competition for this year’s sales champion full of suspense.
BYD’s sales have shown significant growth since the second half of last year, and the momentum of sales growth has become even stronger in 2022. From the first time sales exceeded 100,000 units per month in March of this year to the sales exceeded 200,000 units per month in September, it only took half a year.
By July, BYD’s cumulative sales had exceeded last year’s annual sales by 70,000 units. In October, BYD has exceeded the sales of 200,000 units per month for two consecutive months and launched the 3 millionth new energy vehicle in November. The strong momentum of BYD’s sales growth this year is evident.
In contrast, FAW-Volkswagen, currently in the top spot, has been in a fluctuating state in sales since entering 2022, affected by factors such as the pandemic.
The sales fluctuation in the first half of the year was the largest, starting from the single-month sales of 190,000 units in January and falling all the way down to 57,000 units in April, then bottoming out and bouncing back to 213,000 units in June.
The fluctuation in the second half of the year was relatively small, with monthly sales fluctuating between 140,000 and 180,000 units. The sales in October were the lowest in the second half of the year, at only 146,000 units.
Therefore, the sales performance in November has a decisive significance for the competition for the annual sales crown. If BYD further narrows the gap by achieving a new high in November, the probability of FAW-Volkswagen reversing the situation to win the annual sales crown will greatly increase.
On the other hand, if FAW-Volkswagen strongly “counterattacks” to maintain its advantage in November, it will be highly likely for Volkswagen to achieve the feat of “winning the annual sales crown of domestic passenger cars continuously for 10 years”.# BYD’s Advantages
After reading the “Battlefield Dispatch” above, I believe everyone has a preliminary understanding of the fierce competition between the two car companies.
Following the usual process, it’s time to predict the game results. Who will win the annual sales championship?
My prediction is – none! After all, in this world cup, there were so many upsets in the 90-minute games. Not to mention that there are still 35 days left for the “Peak Duel” between two car companies with strong strength.
But if we had to say which one currently looks more like a championship contender, I would hold a cautious and optimistic attitude towards BYD, mainly for two reasons.
Firstly, the heat and customer flow at the store. There is no doubt that BYD is the brand with the greatest progress in the domestic auto market this year, whether discussing heat or sales performance; BYD’s performance this year is top-notch.
Generally speaking, there are many ways for car companies to improve their sales data. In terms of wholesale sales, there is not much difficulty in performing “micro-manipulations” to make their wholesale sales data better in the short term. For example, delaying the delivery of vehicles to dealerships, selling vehicles to shared platforms, etc.
Therefore, customer flow at the store has become a high-precision wind vane for predicting “real sales volume”. After all, buying a car is not like buying vegetables (even if buying vegetables, you still have to go to the market), and if you want to buy a car, you must go to the store and try it out. Therefore, customer flow at the store can directly reflect a brand’s sales situation.
According to the data released by Weibo car blogger @Sun Shaojun 09, the normal daily customer flow at BYD E-Net (Ocean) suburban stores is 20 batches, and the number of customers over the weekend is 70 batches. This level has surpassed the customer flow of Volkswagen’s downtown flagship stores during the peak period from 2010 to 2015.
And E-Net is a relatively poor selling BYD dual-network platform, only having three major models, including Song PLUS, Dolphin, and Dolphin II, while other popular models such as Qin, Han, Tang, and Yuan are on the other side of Wangchao Network.
According to the blogger, the customer traffic in suburban stores is generally only half of that in city stores, and even lower.
Let’s rearrange the relationship, the relatively poor-selling E-Net of BYD and the suburban shops with relatively fewer traffic, when combined, still have higher traffic than peak period flagship stores of Volkswagen. Therefore, we can imagine how high the traffic of BYD Wangchao Network, which sells better, can be.
So, from the perspective of customer traffic, BYD’s sales growth is quite solid.
Secondly, let’s talk about policies. If you have plans to buy new energy vehicles recently, you must be familiar with the word “policy.” Because whether it is from news reports or sales language, you must have heard about the adjustment of subsidies for new energy vehicle models.
Interesting fact review: BYD is the first traditional car company in the world to stop producing pure fuel vehicles comprehensively, and now only sells new energy vehicle models.
According to the existing national policy, the new energy vehicle purchase subsidy policy will end on December 31, 2022, and after that date, the state will no longer provide subsidies for newly registered cars (existing subsidy quotas: plug-in hybrid vehicles CNY 4,800/unit, electric vehicles CNY 12,600/unit).
Currently, the main price range of BYD models is about CNY 150,000-250,000, and the cancellation of subsidies will still have a significant impact on cash-saving consumers. This will stimulate the sales of BYD to some extent before the subsidy is cancelled, which is at the end of this year.
On November 23, BYD officially released news that it would raise the guidance prices of Wangchao, Ocean, and DENZA related models from January 1, 2023, with an increase ranging from CNY 2,000 to CNY 6,000.
According to BYD’s official statement, one of the reasons for the price increase is the cancellation of the “national subsidy” for new energy vehicle models. The specific adjustment range for each model will be notified separately, and customers who pay a deposit and sign a contract before January 1 next year will not be affected by this price adjustment.
BYD’s price increase across its full range of models is equivalent to adding “fuel” to the final stage of this year’s sales boom stimulated by policy incentives.
Combining the current customer flow of BYD’s dealerships with factors such as subsidy policies, it is likely that BYD’s sales data in the last two months of this year will reach a new high. As a result, pressure naturally falls on the “reigning champion” FAW-Volkswagen.
New energy is the key
Whether BYD successfully counters and helps domestic brands to regain the annual passenger vehicle sales champion title after 10 years or Volkswagen achieves the impressive feat of winning the crown for 10 consecutive years in China, the automotive market in these 10 years has undergone significant changes, one of which is the rise of the new energy market.
As of October, the highest monthly retail penetration rate of new energy vehicle models in 2022 has exceeded 30%, reaching 31.8%. According to recent predictions by the China Passenger Car Association, the retail penetration rate of new energy vehicles nationwide in November will reach a new high of 32.3%.
It can be seen that the importance of new energy vehicle models is no longer “the direction of the future”, but has become a key factor in the present. The two participants in this competition have also demonstrated this.
It goes without saying that BYD, as a car manufacturer that only sells new energy vehicle models, has become a powerful contender for the sales crown this year, jumping from 15th place on last year’s sales rankings. There are too many interpretations of this achievement that we can make based on the rapid development and growth of the new energy market.
On the other hand, as the “South-North Automakers” who are challenging for the tenth consecutive sales crown, they are obviously more active in the field of new energy, especially in the direction of electrification, than many traditional joint venture brands.
Perhaps currently, models like the ID series cannot yet carry the banner of sales, but the active exploration in the field of new energy will definitely bring more choices and possibilities for the sustainable development of subsequent brands.
Who do you think will have the last laugh in this year’s annual sales crown battle? Welcome to give your answer and leave your comments in the comment section. When the results are announced in January next year, we will see whose predictions and analysis are the most accurate.
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.