20230118-招银国际-China_Auto_Sector__Weak_ending_of_2022_provides_a_glimpse_of_hope_20页_1mb

CMB International Global Markets | Equity Research | Sector Update Summary

Core Content

The document provides an in-depth analysis of the China Auto Sector in 2022 and outlook for 2023, with a particular focus on the New Energy Vehicle (NEV) segment. It highlights the performance of various automakers, the impact of the pandemic, and the role of government policies in shaping the market dynamics. The report also includes forecasts for retail and wholesale sales, market share changes, and the performance of key brands in different segments like BEV and PHEV.

Main Points

2022 Auto Sales Performance

• Passenger Vehicle (PV) Retail Sales: Fell by 3% YoY in 2022, with weaker-than-expected performance in November and December.
• Wholesale Sales: Rose by 10% YoY, driven by exports and inventory restocking.
• Inventory Changes: Automakers cut about 0.49mn units of inventories in December 2022, with NEV makers only cutting 17,000 units, leading to a 66% increase in NEV inventory restocking in 2022.
• 2023 Forecast Adjustment:
  • Revised retail sales forecast for 2023 from 20.16mn units to 20mn units, a 2.4% YoY decline.
  • Maintained wholesale sales forecast at 22.58mn units, a 4.2% YoY decline, due to increased export projections (from 2.7mn to 3.0mn units).

NEV Segment Analysis

• NEV Retail Sales: Rose by 80% YoY to 5.27mn units, with a market share of 25.7%.
• NEV Market Share:
  • Retail: 29% in 4Q22, down from 24% in the first three quarters of 2022.
  • Wholesale: 27.7% in 2022, up from 24.9% in 2021.
• NEV Forecast for 2023:
  • Revised retail sales forecast from 7.5mn units to 7.2mn units.
  • Revised wholesale sales forecast from 8.5mn units to 8.3mn units.
  • NEV market share expected to be 36-37% in 2023 on both retail and wholesale bases.

NEV by City Tier

• Tier-2 cities were the main driver of NEV growth in 2022, contributing 51% of total retail sales.
• Tier-1 cities underperformed, with 17% of NEV retail sales.
• Market Share by Tier:
  • Tier-1: 38.3%
  • Tier-2: 27.1%
  • Tier-3: 22.8%
  • Tier-4 and below: 18.3%
• National Market Share: 25.7% in 2022, up from 24.9% in 2021.

NEV by City Type

• Cities without ICE restrictions contributed 62% of NEV retail sales in 2022.
• Cities with ICE restrictions (e.g., Beijing, Shanghai) contributed 24% of NEV sales.
• Market Share by City Type:
  • Cities without restrictions: 62%
  • Cities with restrictions: 24%
  • Overall: 70% of NEV retail sales in 2022 came from cities without restrictions.

NEV Growth by Model

• BYD was the largest contributor to NEV growth in 2022, with four models in the top five.
• Tesla Model Y was the fourth-largest contributor.
• Model 3 experienced a 30% YoY decline in sales due to competition from other models.

BEV Brands

• BYD regained the BEV sales crown in 2022, with a 19.9% market share.
• Tesla was the second-largest BEV brand, with a 11.1% market share.
• Wuling was the third-largest, with a 10.6% market share.
• Chinese brands gained 87.1% of the PHEV market in 2022, up from 72.5% in 2021.
• Foreign brands (e.g., VW, Mercedes-Benz) still held a presence in the PHEV segment.

PHEV Brands

• BYD dominated the PHEV segment with a 61% market share in 2022.
• Lixiang was the second-largest, with a 10.4% market share.
• Aito (Huawei-backed) rose to 4.9% market share in 2022.
• VW had the lowest market share at 2.8% in 2022.
• Chinese brands gained 87.1% of the PHEV market in 2022, up from 72.5% in 2021.

Leading Indicators

• Number of leads, customer flow, and new orders for major brands declined in December 2022, with NIO and Xpeng experiencing the steepest drops.
• Conversion ratios from leads to store visits and from store visits to orders also declined, indicating weaker consumer engagement.

1Q23 Outlook

• Weak sales in 1Q23 are expected due to declining new orders in November and December 2022.
• Retail sales are projected to fall 44% YoY in January 2023, with wholesale sales declining 49% YoY.
• Potential for recovery is expected from 2Q23 onwards, with the possibility of government stimulus if sales continue to be weak.

Other Industry Indicators

• Chinese-brand market share rose to 44% in 2022, up from 39.7% in 2021.
• Traditional luxury brands underperformed, with a 6.7% YoY decline in total retail sales and a 14.9% market share.
• Pandemic impact was a major uncertainty, with Tier-1 and Tier-2 cities outperforming lower-tier cities.

Key Information

• NEV exports in 2022 more than doubled YoY to 0.56mn units, leading to a revised 2023 export forecast of 0.76mn units.
• Weak sales in late 2022 may create entry opportunities or trigger new stimulus measures in 2023.
• BYD is the dominant player in both BEV and PHEV segments, with a 19.9% market share in BEV and 61% in PHEV.
• Tesla is expected to surpass Audi in 2023 in terms of NEV sales in China.
• PHEV growth is expected to continue in 2023, with BYD likely to maintain its leadership.
• Consumer behavior in lower-tier cities favors mini-BEVs, with Wuling Hongguang Mini leading the segment.

Stocks Covered

Conclusion

The China Auto Sector experienced a weak ending to 2022, with retail sales declining 3% YoY and wholesale sales rising 10% YoY. The NEV segment showed strong growth, with retail sales increasing 80% YoY and wholesale sales rising 97% YoY. Despite the challenges, the sector is expected to recover gradually in 2023, with potential for government intervention if sales remain weak. BYD remains the leader in both BEV and PHEV segments, while Tesla is expected to challenge foreign luxury brands in the NEV space.