In July 2024, the Chinese automotive industry’s economic operations remained fundamentally stable, with just a minor dip in monthly production and sales. Domestic light vehicle (LV) sales, excluding exports, totalled 1.8 million units, reflecting a significant year-on-year (YoY) decrease of 10.4% and a month-on-month (MoM) decline of 12.5%, influenced by the high comparative base of the same month last year.
Specifically, the passenger vehicle (PV) segment saw a total volume reduction to 1.6 million units, with a 9.8% YoY decline and a substantial MoM decrease of 10.9%. Light commercial vehicle (LCV) sales also contracted to 162k units, recording a significant YoY decline of 15.6% and a 25.8% MoM decrease. From January to July of this year, LV sales reached 13.0 million units, experiencing a slight YoY decrease of 0.9%. Within this, PV sales accounted for a total volume of 11.5 million units, with a 0.7% YoY decrease. LCV sales, despite being a significant market segment, experienced a slight YoY downturn of 2.5%, at 1.4 million units.
China’s domestic market sustained a steady tempo in July, with the selling rate for the month reaching 27.4 million units per year, a slight uptick from the robust June figures. However, the year-to-date (YTD) selling rate averaged only 23.9 million units per year, weighed down by sluggish sales in earlier months. In terms of YoY performance, July sales (domestic wholesale volumes) fell by 10%, partly due to the unusually high levels a year ago and were effectively flat (-0.9%) for the YTD period. A notable milestone was achieved in July, as the share of new energy vehicles (NEVs) among PV sales surpassed 50% for the first time.
In July 2024, the automotive market in China transitioned into its customary off-season, with several manufacturers halting production due to the intense summer heat. As a result, production and sales declined, leading to a generally stable market with both monthly and annual declines. Nonetheless, a positive development occurred on 26 July, when the government declared an enhancement to the old-for-new vehicle subsidy policy. With subsidies potentially reaching CNY20k, the market is anticipated to experience a revival as this financial incentive stimulates consumer demand and invigorates sales.
In July 2024, LV production slightly dipped to 2.2 million units, indicating a modest YoY reduction of 4.1% and a more pronounced MoM decline of 7.8%. Despite these decreases, the cumulative output for the year remains strong at an impressive 15.6 million units, illustrating a commendable YoY growth of 3.9%. Within this overall performance, PV production held steady in July at 2.0 million units, with a minor YoY decrease of 3.1%. The accumulated volume of PV production YTD has reached 12.9 million units, maintaining its growth trajectory with a 4.6% YoY increase.
On the other hand, LCV production volumes for July were recorded at 202,000 units, showing a modest YoY decrease of 12.9%. Looking at the first seven months of 2024, the YTD volume for LCVs stands at 1.7 million units, reflecting a slight decrease of 1.6%.
In the month under review, automotive exports continued to diverge from domestic production and sales trends, playing a pivotal role in bolstering overall output. The export volume of PVs for the month stood at 407k units, nearly matching the previous month’s total and marking a significant YoY increase of 30.7%. Cumulatively, from January to July of this year, the total PV export volume reached 2.8 million units, reflecting a robust increase of 33.6% compared to last year. Chinese Original Equipment Manufacturers (OEMs) have sustained their leading position in export volumes, with Chery, SAIC, and Geely leading the pack. These three manufacturers alone account for 48% of the total export volume, underscoring their dominance and the significant contribution of Chinese OEMs to the global automotive market.
In the New Energy Vehicle (NEV) sector, China has experienced remarkable growth, with July’s production soaring to 958k units. This marks a significant YoY increase of 23% and a slight MoM gain of 0.1%. The 2024 YTD figure stands at 5.6 million units, reflecting robust YoY growth of 29.0%. However, the market penetration rate for NEVs has dipped to 42.9%. In July, the upward trajectory of NEVs continued, with PHEVs and EREVs being the primary drivers. The production of BEVs saw a modest increase of 1.5% compared to the previous month. Considering consumer concerns about price and range anxiety, EREVs and PHEVs currently offer more appealing solutions. The declining prices of key battery materials including lithium carbonate are contributing to the overall cost reduction of NEVs, which, in turn, will expedite the decline of ICE vehicles. The government’s scrappage policy is also contributing to market growth. Our forecast for overall volume remains largely unchanged, we see a notable shift in the market share dynamics, with EREVs and PHEVs gaining a more significant foothold in the NEV landscape.
Given the Chinese government’s doubling of trade-in subsidies and expansion of their scope, we predict a significant increase in the forecast for the rest of 2024, especially in Q4, with a revised forecast adding 470k units to sales, raising the YoY growth from 2% to nearly 4%. In 2025, although the extension of the subsidy into next year is uncertain, we anticipate a continued policy based on the automotive industry’s economic significance, projecting an additional 56k units, keeping a positive YoY growth rate of 0.6% in 2025.
This article was first published on GlobalData’s dedicated research platform, the Automotive Intelligence Center.
“China vehicle market trend flat – GlobalData” was originally created and published by Just Auto, a GlobalData owned brand.
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