Chinese Car Market 

An overview of the global car market

The total number of cars sold in China and US takes account for approximately 55% of the global market. Figure 1 displays the market share of the top 5 countries and the rest.

Figure 1 Cars sold by country 2021

Chinese car market

According to China Association of Automobile Manufactures, 21.5 million and 20.2 million passenger cars were sold in 2021 and 2020 respectively. Figure 1 presents the sales of the top 15 car manufactures in 2021 as well as their sales figures from the previous year. They take around 70% of Chinese car market.

Table 1  The top 15 car manufacturers in China -2021

The colon -new energy cars sold refers to the percentage of sold new energy cars of the total sales for each manufacturer.  Except for BYD and SAIC-GM-Wuling, the traditional cars still account for the most sales for these firms. 

You may notice there are some brands which you are kind of familiar with. To better explain the ‘reformed’ name of manufacturers, I have to mention the famous China Automotive Group Four, state-owned automobile manufacturer: 

Ø  First Automobile Works (FAW Group)

Ø  Shanghai Automotive Industry Corporation (SAIC Motor Corp)

Ø  Dongfeng Automobile

Ø  Changan Auto

Before Tesla came to China, foreign auto firms were restricted to a maximum of 50% ownership of joint ventures with local companies. SAIC-GM refers to the joint venture between SAIC and General Motor. After many years simulative/beneficial policies for the ESG sector, it did not show much progress. I think for the first time, China bent for Tesla with a cancellation of the 50% limit. There is still a dispute because in the same year (2018), China cancelled the ownership limit for foreign firms within new energy car sector.

The introduction of Tesla into China motivates the local manufacturers and drives the local Chinese industry growth. Tesla Giga Shanghai has a 95% localized supply chain. Tesla started to roar when it came to Chinese market. It is really a win-win strategy. From 2022, the ownership limit is also removed for the whole passenger car sector.  In the past decades, China tried to strengthen its automobile industry. It ended with little success when the foreign auto manufacturers were established hundreds of years ahead of us. With the opening of the new industry – new energy cars, China has finally turned its situation around. Now it has turned to be the leading country in the new energy car sector. Recently, China believes the local auto manufacturers are competitive enough on their own and hence withdrew the protections.  The door is now widely open to the whole world. The competition will become fierce. In the end, it will benefit consumers like you and me.

New Energy Car Market

China has defined pure EVs and HPEVs as new energy vehicles.

Table 2 The number of passenger cars sold in 2021 and 2020

Source: China Association of Automobile Manufactures

Table 2 shows the sales of new energy passenger cars takes for 6% and 15.5% in 2020 and 2021 respectively. Among the sold new energy passenger cars, Pure EVs make up above 80% of the new energy cars. There is still a huge potential in the new energy car market.

Table 3 The top 15 new energy car manufacturers

The sales of the top 15 new energy car manufacturers accounts for more than 70% of the total new energy car sales in 2021. Wuling Hongguang Mini EV from SAIC-GM-Wuling ranked as the most popular new energy car. More than 400t Wuling were sold in 2021. It is a microEV with a price range RMB 30,000 – 60,000.

Risk

Chinese government’s beneficial policies for purchase of new energy cars have supported the sales. According to the new policy, the subsidies for new energy cars are reduced by 30% in 2022 which refers to an amount of several thousand RMB reduction in subsidies. From 2023, the subsidies will be totally cancelled.

Many car manufacturers have already raised the prices of cars by RMB 10,000 -30,0000 this year partly due to the reduction of subsidies and partly due to the abrupt increase in the price of raw materials, especially batteries.

Many car dealers are still positive towards the new energy cars. They think reduction/cancellation of the subsidies will not have a big impact on the sales. Consumers purchase the new energy cars mainly because of their smart outlook and intelligent system.  

The shortage of semiconductors is expected to be mitigated by many car manufacturers this year.