Chinese Car Market 2024 – Part 1
According to the China
Association of Automobile Manufacturers, 26 million passenger cars manufactured
in China were sold in 2023, with approximately 4 million of these being
exported.
Overview
Figure 1 Passenger cars sales by China incl. exports 2006 -2023
Source: China Association of Automobile Manufactures
The sales volume of commercial vehicles has not experienced as strong growth as passenger cars (Figure 2). My focus will continue to be on passenger cars; therefore, there will not be further discussion on commercial vehicles.
Figure 2 China’s commercial vehicles sales incl. exports 2006 -2023
Source: China Association of Automobile Manufactures
Top 10
Car Manufacturers
Table 1 displays the sales of the top 10 car manufacturers in 2023, which collectively account for approximately 60% of the Chinese car market. BYD and FAW-Volkswagen remain the first and second-ranked car manufacturers in China, respectively. However, the gap between them has widened compared to last year. In 2022, BYD's sales exceeded those of FAW-Volkswagen by only 25,547 units. By 2023, this margin had increased significantly to 859,458 units.
Table 1 The top 10 car manufacturers in China, 2023
Source: https://chejiahao.autohome.com.cn/info/14386186
In 2023, the sales volumes of China's domestic brands showed
significant improvement.
The notation 'NEV (%)' represents the percentage of new
energy vehicles sold relative to total sales for each manufacturer. Except for
BYD, traditional cars continue to constitute the majority of sales for these
firms.
You may recognize some brands that
seem familiar. To better explain the 'reformed' names of these manufacturers,
it's important to mention the renowned 'China Automotive Group Four,' a
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's entry into China, foreign automotive
companies were limited to a maximum 50% ownership in joint ventures with local
firms. For example, SAIC-GM represents the joint venture between SAIC and
General Motors. Despite many years of stimulating and beneficial policies for
the ESG sector, significant progress was not evident. In a notable shift, China
relaxed these restrictions for Tesla by eliminating the 50% ownership cap. This
change coincided with the removal of the ownership limit for foreign companies
within the new energy vehicle sector in 2018, a move that remains a topic of
dispute.
The introduction of Tesla into the Chinese market has
significantly motivated local manufacturers and spurred growth in the local
automotive industry. Tesla's Giga Shanghai boasts a 95% localized supply chain
and has made a resounding impact since entering the Chinese market, embodying a
truly win-win strategy. From 2022, China also removed the ownership limits for
the entire passenger car sector. For decades, China's efforts to strengthen its
automobile industry faced challenges, as foreign manufacturers had centuries of
a head start. However, with the advent of the new energy vehicle sector, China
has managed to reverse its fortunes and now leads globally in this arena. In
2022, confident in the competitiveness of its local manufacturers, China
removed protective measures, opening the doors to global competition. This will
inevitably intensify competition but ultimately benefit consumers like us.
New
Energy Car Market in China
China classifies battery electric vehicles
(BEVs), plug-in hybrid electric vehicles (PHEVs) and fuel cell electric
vehicles (FCEVs) as new energy vehicles (NEVs). Among these, FCEVs maintain a
very small market share.
Figure 3 New Energy Vehicles Sales (in units)
2019-2023
Source: China Association of Automobile Manufactures
Figure
3
illustrates the sales of new energy vehicles (NEVs) in China from 2019 to 2023,
encompassing both passenger and commercial vehicles. Commercial vehicles
represent a small fraction of the total NEVs, accounting for approximately 5%
in 2022 and 2023. It is important to note that the category of NEVs includes
Battery Electric Vehicles (BEVs), Fuel Cell Vehicles (FCVs), and Plug-in Hybrid
Electric Vehicles (PHEVs). It excludes other types of hybrids that do not
fulfill the battery range requirements established by the Chinese government.
Figure 4 The top 10 new energy vehicle
manufacturers in 2023 with sales in 2020-2023
Source: https://chejiahao.m.autohome.com.cn/info/14410901
https://auto.sina.cn/zz/hy/2023-01-12/detail-imxzvqmf9049024.d.html?vt=4&pos=25
Figure
4
presents the top 10 sales figures for new energy vehicle manufacturers in 2023,
alongside their sales from previous years. BYD has demonstrated significant
growth over the past three years, capturing nearly 35% of China's NEV market
share in 2023. In comparison to the 2022 list, Chery Auto and Nezha Auto have
dropped out of the top 10, while NIO and Leapmotor have ascended into the top
ranks. Additionally, the positions of the remaining manufacturers have shifted,
with the exception of the first and second spots, held by BYD and Tesla,
respectively.
Sales of
New Energy Vehicles in China by Geographic Region
Mainland China is composed of 22 provinces, 5 autonomous
regions and 4 municipalities directly administered by the Central Government. The
cities belonging within provinces, regions, municipalities are categorized to “5+1”
tiers, primarily based on the local economies. There are 4 first-tier cities:
Beijing, Shanghai, Guangdong and Shenzhen. Additionally, 15 cities have been elevated
to the status of ‘new first-tier cities’.
presents
data on the population and the number of cars sold, categorized by city types across
China. First-tier cities exhibit a substantially higher percentage of new
energy vehicle (NEV) sales compared to other cities. This is primarily due to
the availability of convenient charging facilities and expedited license plate
processing for NEVs in these cities. Overall, there is a pronounced upward
trend in NEV sales throughout China.
Table 2 presents data on the population and
the number of cars sold, categorized by city types across China. First-tier
cities exhibit a substantially higher percentage of new energy vehicle (NEV)
sales compared to other cities. This is primarily due to the availability of
convenient charging facilities and expedited license plate processing for NEVs
in these cities. Overall, there is a pronounced upward trend in NEV sales
throughout China.
Table 2 The population and the
number of cars sold in China by city categories
Source: https://www.dongchedi.com/article/7055449690648658462
https://mp.weixin.qq.com/s/D6m_ZNbD0P0XpMpOiLIV0Q
https://mp.weixin.qq.com/s/kRoZWIDn7RgfRnmGw4pA-w
Note: Data for only the top 200 cities are available for
2023. Sales figures for other cities are assumed to be the same as those from
2022.
The demand for passenger
cars in China has not been as strong as it was 10 years ago, suggesting that the growth in total car sales may be limited to 2% over an extended period. While it is certain
that the penetration of new energy vehicle (NEVs) will continue to increase,
the extent of this increase remains uncertain. To address this, I have developed
two scenarios with NEV penetration targets of 40% and 60%, respectively.
Domestic
sales vs. Exports of NEVs
The export volume of NEVs (incl. commercial vehicles) has increased rapidly for recent years. In 2023, exports accounted for 17% of total NEV sales, up from 6% in 2020. Notably, 1.2 million NEVs were exported in 2023.
Figure 5 New energy vehicles sales by domestic vs. export 2020-2023
Exports
Prior to
2021, automobile exports from China consistently remained at or below 1 million
units annually (in Figure
5). However, since 2021, there has been
a rapid increase in export volumes. In 2023, a total of 4.9 million vehicles
were exported, comprising 84% passenger cars and 16% commercial vehicles
respectively.
Figure
6 The evolution of China’s
automobiles exports 2008 - 2023
Figure
5 also displays the growth in the
proportion of exports relative to total auto sales. Over the past three years,
this percentage has increased from under 5% to more than 15%.
Top 10
countries to which China exports automobiles
Figure 6 depicts the distribution of NEVs and
Non-NEVs for the top 10 countries to which China exported vehicles from January
to November 2022. The top 10 countries accounted for nearly 50% of the total
exports. The penetration of NEVs is 28% while NEV penetration of the total
exports is only 22%.
Figure
7 Top 10 countries to which
China exported automobiles in 2022 Jan-Nov
Note: Spain and Thailand were not among the top 10 importers in 2022. The export figures for these countries are therefore not displayed in this Figure.
Source: China Association of Automobile Manufactures
In 2023, Russia emerged as the largest auto importer of Chinese automobiles as shown in Figure 7. However, NEVs constituted only about 1.5% of exports to Russia. Meanwhile, the growth in exports to the other countries on the list has significantly improved with exception of Saudi Arabia. Notably, the proportion of NEVs in the total imports for Belgium and Thailand exceeded 90%.
Figure
8 Top 10 countries to which
China exported automobiles in 2023 Jan-Nov
Note: Malaysia and Chile were not among the top 10 importers in 2023. The export figures for these countries are therefore not displayed in this Figure
Source: China Association of Automobile Manufactures
Overview
of the Structure of Chinese Automobile Exports
Table 4
presents the market share of NEVs of the total auto exports, showing an upward
trending. In recent years, passenger cars have accounted for over 80% of total
exports.
Table 4 The structure of Chinese auto exports
Government
Policies on New Energy Vehicles
In 2012, the State Council issued the ‘Energy Efficiency
and New Energy Vehicles Industry Development Plan (2012-2020)’ which set
production targets for new energy vehicles at 500,000 units by 2015 and 2
million units by 2020. However, due to the COVID-19 pandemic, only 1.4 million
new energy vehicles were sold in 2020, falling significantly short of the
target. Sales rebounded in 2021, reaching 3.5 million units. By 2023, sales of passenger
car has surged to 7.3 million units.
In October 2020, the State Council issued ‘the new plan
for new energy vehicle (2021-2035)’. Under this plan, sales of new energy vehicles
are expected to constitute 20% of total automobile sales by 2025. In 2023, the
market penetration of new energy vehicles (NEVs) for passenger cars exceeded
33%.
In October 2021, the State Council issued a notice regarding
action plans for carbon peak by 2030. Specially for transportation sector, new
energy vehicles are projected to constitute 40% of total vehicle sales by 2030.
There are two primary incentives for purchasing NEVs:
purchase subsidies and tax relief. In 2022, the subsidies for new energy cars were reduced by 30%, equating to a
reduction of several thousand RMB. Staring in 2023, these subsidies have
been discontinued. Despite this, NEV manufacturers have
reduced prices several times, partly due to decreased production cost and
partly because of intense price competition. The sales data for NEVs in China
suggests that the withdrawal of subsidies has not adversely affected sales.
The exemption from purchase tax for NEVs, currently capped
at 30,000 RMB, will continue until December 31, 2025. After this date, the
exemption will be reduced to 50%, with a cap of 15,000 RMB for 2026 and 2027.
Subsequently, NEVs will be taxed as normal vehicles at a rate of 10%.
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