20220215-招银国际-China_Auto_Sector_January_auto_sales_on_track,_NEV_beat_13页_996kb

China Auto Sector Summary

Core Content

In January 2022, the Chinese auto sector showed mixed performance across different segments and regions, with notable trends in the New Energy Vehicle (NEV) market and Chinese brands gaining significant market share. The report also highlights the impact of the chip shortage, the Chinese New Year effect, and the influence of the pandemic on sales in various cities.

Main Points

Auto Sales Overview

• Passenger Vehicle (PV) Sales:
  • Wholesale Volume: Rose by about 7% YoY and fell by 9% MoM, in line with prior forecasts.
  • Retail Sales Volume: Fell by 4% YoY and was flat MoM, slightly higher than the prior projection.
  • Inventory: Industrywide inventories were reduced by about 150,000 units in January, the lowest since 2019, due to the chip shortage and larger-than-usual order backlog.

NEV Segment

• NEV Wholesale Volume:
  • Surpassed expectations, falling 20% MoM to about 407,000 units.
  • Exports: Accounted for about 13% of total NEV wholesale volume, mainly from Tesla.
• NEV Retail Sales Volume:
  • Fell 35% MoM to about 316,000 units, slightly higher than expected.
• Inventory Growth:
  • NEV inventories increased by about 154,000 units in 2021 and another 41,000 units in January 2022.
• Market Share:
  • NEVs in tier 3 and tier 4 cities reached 12.3% and 9.5% trailing 12-month market share, respectively, compared to 4.8% and 3.4% a year ago.
  • Cities without Restrictions: Accounted for 78% of the BEV retail sales YoY growth in January 2021, with Tesla and mini-BEV models as key contributors.

Luxury Brands

• Luxury Retail Sales:
  • Fell 2.6% YoY but rose 15.9% MoM, outperforming the overall industry for two consecutive months.
  • Market Share: Retained at 17.0% trailing 12-month basis.
• Key Performers:
  • BMW extended its momentum, leading luxury sales with a 14.4% YoY increase.
  • Tesla took the fourth position in luxury sales due to export focus, while Cadillac outperformed others in the luxury segment.
  • Porsche experienced the second worst MoM decline (38%) among top 10 luxury brands.
• Supply Constraints:
  • Some luxury brands, such as BMW and Lexus, reduced supply to dealers in February 2022 due to ongoing chip shortages.

Chinese Brands

• Market Share Growth:
  • Chinese brands gained market share for 19 consecutive months, with trailing 12-month market share reaching 40.3% as of January 2022.
  • BYD and Geely led the NEV segment, with BYD surpassing Tesla in BEV retail sales.
  • Geely showed strong retail sales growth (2% YoY, 6% MoM), with BEV sales outperforming the overall BEV segment.

Industry Indicators

• City Tier Performance:
  • Lower-tier cities outperformed tier 1 and 2 cities in terms of retail sales YoY growth in January.
  • Tier 1 Cities: NEV retail sales accounted for 14.0% of total PV sales, with NEV and luxury combined at 52.4%.
• PHEV Segment:
  • PHEVs accounted for 24% of total NEV retail sales in January, up from 18% in 2021.
  • BYD led the PHEV segment with 49.1% market share, followed by Lixiang.

Key Insights

• NEV Growth: NEVs continue to drive growth in the Chinese auto market, with increasing adoption in smaller cities.
• Inventory Management: The industry is managing inventory levels carefully, with some brands increasing inventories while others are reducing them.
• Chinese Brand Momentum: Chinese brands are gaining market share rapidly, especially in the NEV segment, driven by consumer demand and strong product performance.
• Luxury Market Trends: Luxury brands showed resilience in January, with BMW leading and Tesla potentially challenging Audi for third place.
• Supply Chain Challenges: Chip shortages and pandemic-related disruptions continue to affect production and sales, with some brands reducing supply to dealers in February.

Outlook

• February 2022:
  • Wholesale Volume: Expected to rise significantly YoY due to milder Chinese New Year effect.
  • Retail Sales: Projected to show smaller YoY growth compared to wholesale, with potential for outperformance as supply constraints ease.
  • Uncertainties: Impact of the pandemic and the Winter Olympic Games may affect sales and supply chain operations.
• Long-Term Trends:
  • NEV sales are shifting from policy-driven to market-driven.
  • Chinese brands are on track to continue gaining market share, potentially outpacing the projected growth.

Company Highlights

Great Wall Motor

• Wholesale Volume: Fell 20% YoY to 112,000 units, below expectations.
• Retail Sales: Declined 9% YoY, leading to a 28,000 unit inventory cut.
• Inventory Level: Estimated at 1.1 months.
• Tank Model: Showed strong performance with over 13,000 units sold in February.
• Haval Shenshou: Reached 10,000 units in the second month of its launch, indicating production ramp-up.

Geely

• Wholesale Volume: Fell 6% YoY, with Lynk & Co contributing to the decline.
• BEV Sales: Rose 15% MoM, outperforming the overall BEV segment.
• Inventory: Reduced to 1.2 months.
• Discounts: Stabilized, with a slight increase in gross margin due to reduced incentive costs.

BYD

• NEV Sales: Wholesales flat MoM, retail sales fell 19% MoM but outperformed the overall NEV segment.
• Inventory: Increased by more than 15,000 units in January, contributing to 38% of the total NEV inventory addition.
• Market Share: Dominated the BEV segment with 16.5% market share.

GAC

• Wholesale Volume: Rose 9% YoY, driven by GAC Motor (including Aion).
• Aion Inventory: Increased by about 5,000 units, reaching one month of inventory.
• Trumpchi: Showed growth in both wholesale and retail volumes, with the new-generation GS8 expected to drive sales in the coming months.

Conclusion

The Chinese auto sector in January 2022 displayed resilience and growth in the NEV segment, with Chinese brands gaining market share and luxury brands showing improved performance. The industry continues to navigate supply chain constraints and the impact of the pandemic, with the outlook for February suggesting potential for a significant YoY increase in wholesale sales and continued NEV growth.