The production and sales of passenger cars in April keep increasing and prefer to doing business in overseas

The production and sales of passenger cars in April increased according to the data from CAAM. In April, passenger car production and sales reached 2.048 million and 2.001 million units respectively, with a month-on-month decrease of 9% and 10.5%, as well as a year-on-year increase of 15.2% and 10.5%. In the first four months of this year, passenger car production volume was 7.658 million units, indicating an increase of 8.6% compared to the same period last year; while sales volume was 7.689 million units, showing a year-on-year increase of 10.6%. 

The export of automobiles reached 504,000 units, showing a YoY increase of 34%, and is expected to reach the target of 5 million units this year. Chinese brand passenger car sales volume was 4.664 million units, indicating a YoY increase of 26.7% with a market share of 60.7%, up by 7.7 percentage points.

Production and sales increase but growth rate slow down

According to the April data, automobile production reached 2.406 million vehicles, while sales amounted to 2.359 million vehicles. Despite a month-on-month decrease of 10.5% and 12.5%, respectively, indicating short-term market fluctuations and slight adjustments in consumer purchasing intentions, the year-on-year growth remained strong at 12.8% and 9.3%. 

The decrease in April is due to the intensified price war in February and March, which had a noticeable stimulating effect. Sales peaked in March, and the slight decline observed in April falls within the normal range. Compared to the same period last year, sales volumes have increased significantly across all dimensions.

Further observation of the cumulative data from January to April shows that, despite some fluctuations in car production and sales in April, the overall trend remains positive. The automotive market fundamentals remain strong; however, it also faces challenges. New energy vehicles continue to replace traditional fuel-powered models. In April, new energy vehicle production and sales reached 870,000 units and 850,000 units respectively, with year-on-year growth rates of 35.9% and 33.5%. The market share has reached 36%, continuing its rapid expansion.

From January to April, the production and sales of new energy vehicles reached 2.985 million and 2.94 million respectively, representing a YoY increase of 30.3% and 32.3%. The market share has reached 32.4%. It can be observed from recent new model releases by car companies that the market share of new energy vehicles continues to steadily rise after surpassing the "threshold" of a 25% market share. Traditional fuel-powered vehicles are becoming increasingly rare as electric, plug-in hybrid, and extended-range powertrain models gain popularity, especially among domestic brands that have taken dominant positions.

Both domestic and global market keep increasing

In April, automobile exports reached 504,000 units, up 0.4% from the previous month and up 34% compared to the same period last year. From January to April this year, automobile exports totaled 1.827 million units, with a growth rate of 33.4%. Regarding new energy vehicles, April's export volume was 115,000 units, showing a YoY increase of 26.8%, but a MoM decrease of 4.1%. The export volume of new energy vehicles from January to April reached 421,000 units with a YoY growth rate of 20.8%. 

According to statistics from Car Insight, new energy vehicles accounted for 27.1% of total exports in April, a decrease of 2.9 percentage points compared to the same period. In response, Cui Dongshu, Secretary-General of the Joint Conference on Passenger Vehicle Market Information, stated that despite recent disturbances from Europe, the long-term outlook for new energy vehicle exports remains positive and promising. 

It is worth noting that China's automobile sales in April reached 2.359 million units, a year-on-year increase of 9.3%. However, domestic sales decreased by 15.4% to reach 1.855 million units in the same month. This rise and fall can explain the following: while overall domestic sales are slowing down, exports are significantly increasing. 

Since 2018, the automotive industry has realized a fundamental change in its development environment due to the continuous three-year adjustment cycle. While new energy vehicles have provided some companies with new growth opportunities, they are expected to replace traditional fuel vehicles rather than simply adding to the overall domestic automotive market. 

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In these circumstances, exports have become crucial for automobile companies. Particularly in 2022, Chinese automotive enterprises exported 3.111 million vehicles, marking a significant YoY growth of 54.4% and positioning China as the world's second-largest auto exporter after Japan. This upward trend continued into 2023 when exports surpassed Japan to make China the leading exporting nation with shipments of over one million vehicles in Q1.

Automobile exports have become an increasingly important “second growth point” for companies, especially as Great Wall, Chery, Geely, and Changan have expanded their overseas business. The significance of global expansion for Chinese car manufacturers is also being emphasized. 

The China Association of Automobile Manufacturers (CAAM) has stated that the export growth rate of China's automobile market surpasses domestic sales overall, emphasizing the urgent need for further stimulation in the domestic market. In line with recent policies such as "trade-in rules" issued by seven departments including the Ministry of Commerce and the Ministry of Finance, as well as the joint issuance of "financing rules" by the People's Bank of China and the China Banking and Insurance Regulatory Commission, implementing detailed measures to replace old cars with new ones are expected to alleviate consumer hesitation when purchasing vehicles and significantly boost their willingness to buy. The demand trend in China's automobile market this year is anticipated to follow a similar pattern as last year, gradually strengthening from Q2 onwards. 

Translator：Wei Xiong                                          

Reviser：Yan Luo