China Economic Operation of Automobile Industry in August 2021

According to the statistical analysis of the China Association of Automobile Manufacturers (CAAM), in August 2021, the overall production and sales of automobiles continued the downward momentum and the year-on-year rate of decline expanded compared with the previous month. On the one hand, the intensification of the epidemic in Malaysia led to the tight supply of production of automotive-grade chips and cause the shortage of enterprise chips further intensified; while the impact of a higher base for the same period, the year-on-year decline in passenger car production and sales than last month has expanded; on the other hand, the short-term market fluctuations caused by the switch of the national six emission regulations continue to affect the demand for trucks, commercial vehicle production and sales thus continued the rapid decline in trend. Specific analysis is as follows.

1. Overview of overall operation

Since late July, industrial enterprises continue to face the challenge of stable recovery, including the emergence of the epidemic in some parts of the country superimposed on the impact of overseas epidemics, the production and supply of some enterprises are hampered; commodity prices are generally running high, the pressure of rising costs of enterprises gradually emerge, especially in the middle and lower reaches of small and micro enterprises are constantly squeezed profit space. In this context, the automotive industry operating pressure has increased.

From the market situation, automotive production and sales continued to decline year-on-year this month, with a further expansion of the decline, the specific impact factors include: the impact of the domestic and the Malaysian epidemic, the supply chain risk elevated leading to further pressure to reduce production, in addition to the fluctuations in production and sales are also related to the higher base of the same period last year. It should be noted that although the shortage of chips significantly affected the production plans of enterprises, the cumulative production and sales of automobiles still showed a slight increase compared with the data of the same period in 2019, which is now mainly due to the lack of supply of automotive products, and the end market demand remained stable. Commercial vehicles are subject to this July 1 heavy-duty diesel vehicles national six emissions regulations switch caused by commercial vehicle market fluctuations, however, light buses continue to maintain rapid growth, pulling the bus continues to grow; this month, new energy vehicles continue to be the highlight of the month, production and sales continue to set new records, and for the first time more than 300,000 units, January-August penetration rate also continued to improve to nearly 11% of the level. In addition, this month, auto exports also continue to maintain high growth, a single month export volume to a new high.

Looking ahead to the fourth quarter, China's national economic operation remains stable in general, thus supporting the automotive consumer demand to remain stable; but the supply side of a large fluctuation, the complex and volatile situation at home and abroad brings many uncertainties, the shortage of chip supply due to overseas epidemics still exists, superimposed on the increase in market demand in the fourth quarter will also exacerbate the problem of supply tension; at the same time, the fluctuation of the commercial vehicle market demand and raw material, the fluctuation of commercial vehicle market demand and raw material prices continue to be at a high level will further increase the cost pressure on enterprises and affect the operation of the industry. Comprehensive factors, we need to be cautiously optimistic about the development of the industry, the preliminary prediction of the annual market may be weaker than expected.

2. Operation of automobile industry in August 2021:

1) Automobile production and sales continued to decline year-on-year

In August, automobile production and sales were completed 1.725 million and 1.799 million units, down 7.4% and 3.5% year-on-year, respectively, down 18.7% and 17.8% year-on-year, respectively, the decline was 3.2 and 5.9 percentage points larger than in July. Compared with the same period in 2019, production and sales fell by 13.4% and 8.2% year-on-year, and the growth rate of production and sales both turned from positive to negative, and the rate of decline was larger. From 2019 and 2020 sales in each month, the sales level in September-December is significantly higher than the previous months, indicating that market demand will increase in the ring, overlaid with the problem of tight chip supply, enterprise production is still under pressure in the future.

From January to August, automobile production and sales completed 16.166 million and 16.556 million units respectively, an increase of 11.9% and 13.7% year-on-year, an increase of 5.3 and 5.6 percentage points compared to January-July continued to fall. Compared with the same period in 2019, production and sales increased by 1.3% and 2.7% year-on-year, and the increase in production and sales fell by 2.1 and 1.5 percentage points respectively compared with January-July..

2)  Passenger car production and sales in a single month year-on-year decline in expansion

In August, passenger car production and sales were 1.497 million units and 1.552 million units respectively, with output down 3.3% and sales up 0.04%, and down 11.9% and 11.7% year-on-year, with a decrease of 1.2 percentage points and 4.7 percentage points respectively compared to July. By model: only crossover passenger car production and sales in four categories showed growth, the other three categories of production and sales are showing a decline. Compared with 2019, the production and sales of passenger cars decreased by 11.7% and 6.2% year-on-year. Currently, passenger cars show a mismatch between supply and demand, in which the market demand is relatively stable, but the supply side has reduced a certain amount of production due to the chip shortage problem.

From January to August, passenger car production and sales completed 12.891 million units and 13.112 million units respectively, an increase of 15.2% and 16.0% year-on-year, an increase of 4.9 and 5.2 percentage points from January to July continued to fall. Compared with the same period in 2019, production and sales fell by 2.5% and 1.7% year-on-year, the rate of decline was 1.3 and 0.7 percentage points wider than in January-July.

In August, domestically produced luxury cars were also affected by the shortage of chips, with sales completing 245,000 units, down 13.9 percent year-on-year. from January to August, sales of domestically produced luxury cars completed 2.236 million units, up 29.2 percent year-on-year, higher than the cumulative growth rate of passenger cars by 13.2 percentage points.

3) Commercial vehicle production and sales fell sharply year-on-year

In August, commercial vehicle production and sales were completed 229,000 units and 247,000 units, down 27.5% and 20.9% respectively; down 46.2% and 42.8%, respectively, compared with July, the decline continued to expand significantly by 13 percentage points and 12.6 percentage points. The situation viewed by model, truck production and sales fell sharply year-on-year and bus production and sales continued to grow year-on-year. Compared with the same period in 2019, commercial vehicle production and sales fell 23.1% and 19% year-on-year, the growth rate than in July has turned from positive to negative. As heavy-duty diesel vehicles national six emissions regulations switched on 1^st, July this year, the market demand has seen a large fluctuation, which in turn showed an obvious high before and low after the trend.

　　From January to August, commercial vehicle production and sales were completed 3.275 million units and 3.444 million units, an increase of 0.6% and 5.5%, an increase of 7 and 7.4 percentage points from January to July continued to fall. The situation by model, the growth rate of cumulative production of trucks has turned from positive to negative, other models still show growth in production and sales. Compared with the same period in 2019, commercial vehicle production and sales increased by 20% and 23.8% year-on-year, an increase of 5.2 percentage points lower than the January-July both.

From the situation of passenger and cargo subdivision models, trucks, four types of models are showing a decline, including the largest drop in heavy trucks: buses, large and medium-sized buses show a decline in light buses to maintain rapid growth.

4) New energy vehicle production and sales continue to set new records

In August, the production and sales of new energy vehicles completed 309,000 and 321,000 respectively, an increase of 1.8 times year-on-year. Among them, the production and sales of pure electric vehicles were completed 252,000 and 265,000, an increase of 1.9 times; the production and sales of plug-in hybrid vehicles were completed 56,000, an increase of 1.4 times and 1.7 times; the production and sales of fuel cell vehicles were completed 40 and 38, a decrease of 58.8% and 68.6% respectively. New energy production and sales continued to set new records this month. In August, the penetration rate of new energy vehicles has increased to 17.8%, and the penetration rate of new energy passenger cars is close to 20%. According to this trend, China is expected to achieve the medium and long-term planning goal of 20% market share of new energy vehicles in 2025 ahead of schedule.

From January to August, the production and sales of new energy vehicles completed 1.813 million units and 1.799 million units respectively, an increase of 1.9 times year-on-year, with a cumulative sales penetration rate of nearly 11%. Among them, the production and sales of pure electric vehicles completed 1,512,000 and 1,492,000 units, up 2.2 times and 2.1 times respectively; the production and sales of plug-in hybrid vehicles completed 300,000 and 306,000 units, up 1.1 times and 1.4 times respectively; the production and sales of fuel cell vehicles completed 724 and 733 units, up 27.7% and 26.8% respectively.

5) Chinese brand passenger car market share rose sharply

In August, China-branded passenger cars sold 704,000 units, up 6.8% year-on-year, with a market share of 45.3%, up 7.8 percentage points over the same period.

From January to August, Chinese brand passenger cars sold 5.612 million units, up 36.7% year-on-year, with a market share of 42.8%, up 6.5 percentage points over the same period.

6) The key enterprise group market concentration is lower than the same period

From January to August, the top ten enterprise groups in terms of auto sales totaled 14.267 million units, up 11.1% year-on-year, accounting for 86.2% of total auto sales, 2 percentage points lower than the same period last year..

7) Car exports to a new high

In August, automotive companies exported 187,000 units, up 7.5% sequentially and 1.6 times year-on-year. By model, passenger cars exported 154,000 units this month, up 10.3% YoY and up 1.9 times YoY; commercial vehicles exported 33,000 units, down 4.0% YoY and up 85.7% YoY. This month, the contribution of new energy vehicle export growth was 35.2%.

From January to August, automotive enterprises exported 1.189 million units, up 1.3 times year-on-year. By model, passenger car exports 924,000 units, up 1.4 times year-on-year; commercial vehicle exports 265,000 units, up 99.4% year-on-year.

Source: China Automobile Industry Association