November 27, 2022

Motowndesserts

Automotive to Us

Greater China Sales & Production Commentary- July 2022

Greater China sales
June 2022: +29.7%; 2.37 million units vs. 1.83 million
units

YTD 2022: -4.8%; 11.2 million units vs. 11.8 million
units

  • In June 2022, 2.37 million light vehicles were sold in Greater
    China, a 29.7% increase compared with the same month of 2021.
    Specifically, light vehicle sales in mainland China increased
    29.7%, from 1.8 million units in June 2021 to 2.33 million units.
    Passenger vehicles recorded sales of 2.06 million units, a 37.9%
    increase year on year (y/y), while light commercial vehicle (LCV)
    sales contracted 11.2% y/y, to 0.27 million units. The rapid growth
    of passenger vehicle sales in June was helped by newly introduced
    purchases tax incentives and eased pandemic-related restrictions in
    Shanghai and Jilin provinces.
  • On a year-to-date (YTD) basis, light vehicle sales in mainland
    China decreased 4.7%, from 11.55 million units to 11.01 million
    units. Precisely, passenger vehicle sales decreased 0.4% y/y, to
    9.57 million units, while LCV sales decreased 26% y/y, to 1.43
    million units. Segment-wise, YTD sedan sales increased 2% y/y, from
    4.72 million units to 4.81 million units, and the sport utility
    vehicle (SUV) segment decreased 2.3% y/y, from 4.54 million units
    to 4.44 million units. YTD sales of multipurpose vehicles (MPVs)
    decreased 10.8% y/y, to 0.33 million units.
  • In the first half of 2022, passenger vehicle sales of domestic
    OEMs increased 14.7% y/y, to 4.02 million units. The YTD market
    share went up from 36.4% to 42%. The growth was driven by robust
    new-energy vehicle (NEV) sales, led by BYD and startups from
    mainland China, such as Xpeng and Neta.
  • In response to the COVID-19 outbreak’s impact on the economy,
    the mainland Chinese government ramped up stimulus in late May. On
    20 May, the mainland Chinese central bank cut the five-year loan
    prime rate (LPR) that benchmarks the mainland Chinese mortgage
    interest rates by 15 basis points, the second cut in five months.
    On 24 May, the central government unveiled a 33-point stimulus
    package, including a CNY60-billion cut on passenger vehicle
    purchase taxes and a relief of CNY90 billion for extended
    repayments of commercial vehicle loans. Meanwhile, business
    activity rebounded in both manufacturing and services in June, as
    COVID-19 containment measures were partially relaxed. While
    manufacturers reported steeper rates of expansion, enjoying the
    second-largest increase in production since the start of 2011,
    service providers also reported a marked improvement, with output
    growing at the strongest rate since July 2021.
  • In the latest update, the light vehicle sales forecast for
    mainland China was revised up to reflect the fast recovery helped
    by stimulus policies. Light vehicle sales in 2022 are expected to
    increase 3.8% y/y to 24.8 million units, of which passenger
    vehicles are estimated to increase 5.5% y/y to 21.32 million units,
    while LCVs are forecast to decline 5.4% to 3.49 million units.

Greater China production
June 2022: +29.9%; 2.37 million units vs. 1.82 million
units

YTD 2022: +0.6%; 11.71 million units vs. 11.65 million
units

  • Greater China’s light vehicle production in June recorded 2.37
    million units, with a 29.9% increase year on year (y/y). In
    mainland China, light vehicle production increased 30.3% y/y, to
    2.35 million units, which ended three consecutive months of
    decline. Light vehicle production in mainland China has shown a
    significant rebound after the massive lockdown measures were lifted
    in Shanghai and Jilin provinces. Meanwhile, in order to stimulate
    latent demand, the central government has rolled out a new round of
    tax incentive, which could be another positive factor for
    carmakers. Some carmakers—especially state-owned manufacturers,
    such as SAIC and FAW Group—might also need to offset the losses
    in April and May as soon as possible to support the local
    governments to fulfill the half-year economy target.
  • The light vehicle production forecast for Greater China for
    full-year 2022 whole year is set at 24.92 million units, with a
    0.3% y/y increase. In mainland China, light vehicle production will
    likely be 24.68 million units, marking a 0.4% increase y/y. The
    increase mainly comes from the tax incentives and the increase in
    production of pure electric vehicles, while the chip shortage
    crisis could be the persistent challenge that carmakers need to
    face in 2022. In comparison with the June forecast, an additional
    400,000 units have been added to the forecast.
  • The latest vehicle inventory alert (VIA) index, issued by China
    Automobile Dealers Association (CADA), stood at 49.5%—a
    decrease of 7.3% month on month (m/m) and 6.6% lower than in the
    same period of 2021—first time below the threshold. Meanwhile,
    the dealership inventory index fell to 1.36, which indicated an
    average supply of 41 available sales days. It was four days lower
    than the safe level. The main reason was the strict containment
    measure that has disrupted logistics and production.
  • In June, production of passenger vehicles in Greater China
    sharply rose 39.8% y/y, to 2.13 million units. Market segment-wise,
    car production stood at 1.05 million units, with a 41.4% y/y
    increase. Production of multipurpose vehicles (MPVs) rose 10.3%
    y/y, to 59,855 units. Production of sport utility vehicles (SUVs)
    increased 40.7% y/y, to 1.02 million units. Each sector strongly
    rebounded. The pace of production at large state-owned enterprises,
    which was affected by the pandemic, quickly recovered in June. For
    example, Shanghai-based SAIC Group achieved a 63% increase y/y in
    June, largely benefitting by the recovery of its joint venture (JV)
    partner SVW, which almost doubled to 1.3 million units y/y. FAW
    group, which is located at Changchun, outperformed others with a
    52% increase y/y, mainly contributed by two major JVs—FAW-VW
    (77% y/y) and FAW-Toyota (63% y/y)—both of which were out of
    operation during the outbreak from March to May. The other driver
    was the growing NEV market that achieved an increase of 141% y/y,
    with 571,000 units in June, according to China Passenger Car
    Association (CPCA). Despite the April-May lockdown in Shanghai,
    Tesla still built nearly 70,000 units with a 123% increase y/y in
    June. BYD, the biggest local carmaker from mainland China, recorded
    a 176% increase y/y, with 140,000 units, and remained second place
    below FAW-VW in June.
  • In June, light commercial vehicle (LCV) production in Greater
    China posted 0.24 million units, a decrease of 20.7% y/y. Market
    segment-wise, production of chassis-cabs stood at 0.13 million
    units, marking a decrease of 23.0% y/y. Production of vans stood at
    67,504 units, with a 23.4% decrease y/y. Pickups fell 5.3% y/y, to
    38,861 units. Influenced by macroeconomic downward pressure and the
    effect of policy-driven pre-purchases in the past two years,
    commercial vehicles are expected to experience a slowdown
    throughout 2022.




Posted 28 July 2022 by Gao Tao, Manager, Great China Light Vehicle Production Forecasting, S&P Global Mobility

and



Lin Huaibin, Manager, China Light Vehicle Sales Forecast, Automotive, S&P Global Mobility


This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.