Finally, after another year of dramatic involution, the Chinese car market continues to reach new highs in 2024.
According to forecasts by the China Association of Automobile Manufacturers (CAAM), the China Electric Vehicle Association (CEVA), and the Passenger Vehicle Association (PVA), China’s automobile sales in 2024 will be in the range of 31-31.3 million units, with year-on-year growth rate of about 4%.
The low growth rate will continue to be close in 2025, with 3% year-over-year growth expected to 32 million units.
If we look at the number of cars produced in China, there is no doubt that since the 30 million mark was reached in 2023, the number will continue to set new records this year and next.
Yet if you discount the explosive growth in export sales and purely count only domestic auto market sales, it still hasn’t recovered to 2017’s all-time high.
On the one hand, the automobile industry should be proud of the achievements, on the other hand, should also see the domestic automobile consumption has not yet returned to the peak period, still need to focus on the quality of the achievements, the pursuit of long-term development, rather than vicious competition.
1. It’s a new high, but not a new high
Usually the automotive industry publishes sales figures for a period of time about a week after the end of that period by an authoritative organization.
However, with the popularity of weekly and monthly data, it is no longer a challenge to predict in advance what is close to the “nail in the coffin”.
Not long ago, the China Association of Automobile Manufacturers (CAAM) projected that China’s total automobile sales would reach 31 million units in 2024, a 3% year-on-year increase from 30.094 million units in 2023.
Just on December 30, the China Electric Vehicle Association (C EVAA) held a media communication meeting, and Vice Chairman and Secretary General Zhang Yongwei gave a more refined forecast figure: based on the 27.94 million units and 3.7% year-on-year growth from January to November, the total vehicle sales for the whole year of 2024 are expected to be 31.3 million units, a year-on-year growth of 4%.
So will the automotive industry in 2025 have an uncertain future for those in the business due to ongoing inward rolling pressures?
The 2025 auto market forecast given by the Electric Vehicle Committee of 100 is for steady progress overall, with annual sales of around 32 million units, up 3% year-on-year.
From 30.094 million units in 2023, to 31.3 million units in 2024, to 32 million units in 2025, China’s auto market is said to be setting new highs one after another.
But that doesn’t mean it’s all good news.
Usually, the term “China car sales” is strictly equal to “car sales produced in China + car sales exported by Chinese brands”.Compared to the real “China market sales”, this figure adds a part of automobile export sales (including Chinese brand exports, and Tesla and other foreign brands of domestic car exports), and a part of the lesser part, that is, the sales of automobile imports.
The true meaning of “China’s auto market sales” has not yet reached a new high.
The previous peak in domestic auto sales occurred in 2017.
At that time, domestic auto sales (including exports and sales of local auto brands manufactured overseas) were 28,878,900 units, and taking into account exports of 891,000 units and imports of 1,216,000 units, the actual total new car sales in the Chinese market in 2017 (including passenger cars and commercial vehicles) were 29,203,900 units, or 27,987,900 units excluding imports, a record that has not been broken to date..
So what is the level of domestic car sales in 2023-2025?
Breaking away from the declining trend in 2023, the upward momentum actually comes from exports that are starting to take off, while domestic car sales at 25.184 million units are still short of 2017’s 27.8979 million units.
The total sales counting imported cars will be even further off from 2017 as imported car sales continue to slide.
In 2024 and 2025, domestic vehicle sales (excluding imports) are projected to be 25.5 million and 26.0 million units, respectively, representing year-on-year increases of only 1.3% and 3%, respectively, a slow increase from 2023 and still less than the highest level in 2017.
According to the full-year passenger car retail forecast given by the RTA, this year’s growth rate of 6% will be 23 million units, up from 21.7 million in 2013.The difference between this 23 million and the previous 25.5 million units comes mainly from sales of commercial vehicles, among others.
Despite the forecasts given by the Riders’ Association, where the market is moving substantially better than expected at the beginning of the year, it is important to realize that this figure was 23,764,400 units in 2017, and there is still a gap of 760,000 units for this year.
In terms of purely domestic market auto consumption, it’s encouraging to see that it’s recovering, but the happy news isn’t enough to be completely optimistic.
Without taking into account the firmness of car prices and profitability of individual cars, there is a difference of about two million cars from 2017 just in terms of real domestic car sales, and it will still take time to catch up with the gap.
2. New energy + intelligence: the right technology gamble
Cautious optimism is generally the right attitude.
For domestic auto consumption, it is appropriate to keep calm and cautious, while for the transformation of the auto industry – new energy/electrification and intelligence – one should have enough confidence in China’s auto industry and market.
Taking the figures forecasted by CAC, for the whole year of 2024, passenger car sales will be around 26.8 million units, up 3.1% year-on-year; commercial vehicle sales will be 4.2 million units, up 5% year-on-year; and sales of new energy vehicles will reach around 11.5 million units, up 20% year-on-year, with a penetration rate of 37.1% (as a result of a large proportion of exported oil vehicles, which pulls the overall penetration rate down).
And with the Electric Vehicle Committee’s forecast figures, compared with 9.494 million units in 2023, new energy vehicle sales will reach about 13 million units in 2024, with a year-on-year growth rate of up to 37% and a domestic demand penetration rate of 45%.
Optimistic estimates indicate that new energy vehicle sales will reach about 16.5 million units (including exports) in 2025, with a growth rate of nearly 30% and a penetration rate of 50%, of which domestic demand is expected to reach 15 million units, with a penetration rate of over 55%.
In addition to the continued rise in popularity of electrified new energy vehicles, cars are rapidly embracing intelligence.
According to data from the Electric Vehicle Committee, the proportion of cars equipped with smart cockpits will exceed 50 percent in 2021, and will continue to climb thereafter, reaching 71 percent in 2024 and 75 percent in 2025.
Usually, the industry believes that Smart Cabin is more practical than Smart Driver, and is more easily accepted by lower-tier cities and conservative people, so the penetration rate of Smart Cabin is higher than that of Smart Driver.
But on the other hand, SmartDrive is gaining popularity faster than SmartCabin.
In 2020, the penetration of L2 and L2+ Smart Driving in passenger cars only reaches 15.0%, while it more than doubles in 2022. in the first half of 2024, the percentage of this figure is 55.7%, and it is expected to be as high as 65% in 2025.
The Chinese auto industry’s push for electrification and intelligent transformation is actually being recognized globally, which is why China’s auto export sales surpassed Japan’s last year and jumped to the top spot globally for the first time.
China’s auto export sales will increase to around 5.5 million units in 2024, 12% higher than the 4.91 million units in 2023, according to the CCA forecast.
And the passenger association gave export sales of 5.84 million for January-November.
On the basis of that figure, it is estimated that the whole year may reach about 6.4 million vehicles.The reason why the passenger association car export data is significantly higher than the CCA, according to the relevant parties to explain, is due to include a portion of used cars, and similar semi-trailer tractor or chassis exports, which is why the 2023 car export sales figures, the CCA gave 4.91 million units, while the passenger association gave 5.22 million units of the reason.
There is no doubt that for China’s auto industry, 2024 and 2025 will continue to climb to new highs under industry-wide efforts and policy push, but at the same time a portion of the domestic auto consumption figures have yet to return to the highest moments in history.
While cheering with confidence, we also need to be cautious and careful; while worrying about risks, we also need to boost morale.
Only by constantly taking the right position can China’s automobile industry continue to advance on the road of long-termism.
Article source: One Sentence Revie
