China Passenger Car Association: Regional market analysis of new energy passenger vehicles in May 2022

China Passenger Car Association: Regional market analysis of new energy passenger vehicles in May 2022

According to the new energy vehicle retail data of the China Passenger Car Association, the overall market trend continued to remain strong in May . China's traditional fuel vehicle market was sluggish in 2022 , but the epidemic and the shortage and price increase of raw materials did not affect the strong trend of new energy. The price of battery materials for new energy vehicles fell significantly from April to May , which also has a stabilizing significance for new energy vehicles. The Shanghai auto market was sluggish under the impact of the epidemic. This year, the private demand for new energy in non-restricted areas has gradually strengthened, and the new energy vehicles of traditional automakers and passenger car companies have grown strongly, especially the A00 and A0 private car markets have performed relatively strongly, and rental demand has improved.

New forces of independent brands are making full efforts to become stronger, and the demand structure is becoming more balanced. The performance of joint venture brands of new energy vehicles needs to be improved, and BYD's plug-in hybrid has an increasingly obvious competitive advantage over joint venture car companies, forming a new situation in which independent brands are ahead of joint ventures in all aspects.

1. The wholesale environment of new energy vehicles was relatively good in May

In May, the wholesale sales of new energy passenger vehicles reached 421,000 units, a year-on-year increase of 111.5% and a month-on-month increase of 49.8%. The development of new energy has also been impacted by the current epidemic, but the month-on-month improvement exceeded expectations. From January to May, the wholesale sales of new energy passenger vehicles reached 1.892 million units, a year-on-year increase of 117.4%.

From January to May , the wholesale volume of new energy passenger vehicles reached 1.89 million, a year-on-year increase of 117% . Only by further boosting the market after the supply improves in the future can the sales losses be recovered.

Since the beginning of this year, the price of power batteries has increased much faster than the industry expected due to the rising prices of raw materials such as lithium and nickel. Therefore, car companies are under great pressure after the price increase of power batteries and can only ease the cost pressure by raising prices.

The impact of the current two-wheel new energy vehicle price increase is not obvious for the time being. First of all, the sales model of new energy vehicles is order sales. At present, various car companies have a large number of orders before the price increase, resulting in the digestion of previous orders from March to May , so the sales volume is not greatly affected.

Secondly, the new energy plug-in hybrid has diverted the fuel vehicle market, and high oil prices have increased the advantages of new energy. Under the current high oil prices, the cost performance of new energy vehicles has been significantly improved, but the traditional vehicle market has become more difficult.

The third reason is that consumers have strong rigid demand for new energy vehicles and relatively low price sensitivity, so small price changes will not significantly affect consumer demand for new energy vehicles.

The fourth reason is that the order price of new energy vehicles was locked before the price increase, resulting in a locked-in price for early orders, which led to a new situation in which more consumers were rational or followed suit to rush to order. Car companies have also taken measures to regulate the order of suspected scalpers.

2. New energy vehicle retail sales grew strongly in May

In May, the retail sales of new energy passenger vehicles reached 360,000 units, a year-on-year increase of 91.2% and a month-on-month increase of 26.9%, forming a "W-shaped" trend from January to May.

According to the retail data of the China Passenger Car Association, the domestic sales of new energy passenger vehicles from January to May reached 1.712 million, a year-on-year increase of 119.5% , but the annual cumulative growth rate has not fallen rapidly from its high level. This year is a subsidy adjustment, so there is no obvious change in demand for new energy vehicles after the adjustment.

3. Usage characteristics of new energy passenger vehicles

The proportion of new energy passenger car rental and leasing gradually increased from 2017 to 2019 , and then the proportion of pure electric rental and leasing continued to decline from 2020, falling to 10% in 2022. Due to insufficient supply in the private market, the proportion of pure electric rental and leasing in May 2022 was 12 % , a slight recovery.

Recently, the private market share of plug-in hybrids has continued to increase, while the demand for plug-in hybrids for rental has continued to decline. Pure electric vehicles are still the best choice for rental.

Most of the pure electric passenger cars of a corporate nature are used for rental purposes. There is not much market for new energy passenger cars for other purposes, or the market is gradually shrinking. This is also the trend of new energy passenger cars turning to private demand due to the reduction of subsidies.

In the non-operating market, the individual market accounted for 78% in 2021 , which was a strong performance, and the individual market accounted for 81% in 2022 , further forming a high growth in the private market. Unit use continued to decline to 10% .

The recent market for new energy passenger vehicles is a market with huge fluctuations. At the beginning of 2020 , the rental electric vehicle market continued to be sluggish due to the impact of the epidemic. Among them, the rental market affected by the epidemic was hit hard and is still poor recently. The proportion of rental electric passenger vehicles in May rebounded to 12% , which is an abnormal structural change.

4. Regional market performance is gradually improving

In the past few years , the demand for new energy passenger vehicles was strong mainly in megacities with purchase restrictions, but has continued to decline recently. From January to May 2022 , new energy passenger vehicles accounted for 19% of total sales in megacities , down 10 percentage points from 2021. Shanghai suffered a large loss, which also shows that the sales of new energy vehicles in cities with purchase restrictions have gradually stabilized, and purchase restrictions have constrained demand. The recent new energy market in counties and towns has gradually started.

The recent growth of new energy vehicles in the mid-to-large vehicle market reflects the good market expansion of mid-to-high-end new energy vehicles, while new energy vehicles in the county and township markets are also gradually expanding. The sales trend of new energy vehicles in large cities without purchase restrictions is not strong.

5. The performance of the new energy urban market is gradually improving

The main growth of new energy vehicles in May was in large cities without purchase restrictions, such as Chengdu, Chongqing, and Foshan. The restricted cities, such as Shenzhen, Guangzhou, and Hangzhou, still performed well. However, sales in Shanghai declined, resulting in huge losses. The current market growth is in large cities such as Chengdu and Chongqing. The performance of restricted cities is differentiated, and the current decline in special regional promotion areas such as Shanghai is relatively large.

From January to May 2022, there was a significant increase across the board compared to the same period in 2021. The growth in Chengdu, Foshan, Chongqing and other cities was relatively rapid, especially Chengdu, where the increase reached 36,000 units, forming the core driving force for the increase.

The Chengdu market is also a unique environment for new energy vehicles to show high growth. Products with high appearance and low use costs have great potential in the southwest region. Hangzhou, Shenzhen, Guangzhou and other cities with purchase restrictions have relatively strong performance, which is also the incremental contribution of high-end models.

The pure electric share of new energy vehicles has declined slightly recently, falling to 75% of the total in May 2022. Due to weak demand in Shanghai, pure electric vehicles performed well in the super-large market, accounting for 15% of pure electric vehicles. However, the overall performance of plug-in hybrid vehicles in small cities and county and township markets is relatively low.

6. Regional differences in demand for pure electric vehicles

The gradual start of the private household market has promoted the development of the industry. Although the demand in large cities with purchase restrictions is very strong this year, its share has gradually decreased, the market share of large cities with traffic restrictions has continued to rise, and the private consumption market in small and medium-sized cities has gradually recovered.

The rental market for pure electric vehicles is currently gradually recovering. In 2019, the proportion of rental and leasing in pure electric vehicle sales reached its peak. Then, in 2020, the proportion of rental and leasing gradually declined, and in 2022 it dropped to around 13%.

The proportion of rental cars in megacities has declined, while the private market is still recovering rapidly. The rental market in cities with purchase restrictions is still the core force this year.

From the performance of the main models, it also reflects the improvement of the performance of the main models in large and medium-sized cities. In particular, the incremental growth represented by Wuling Hongguang MINI in May compared with the same period increased by 3 percentage points in large cities and medium-sized markets. From the perspective of Tesla Maodou 3, the decline in share in May was mainly due to the large cities, that is, the contribution of Shanghai in the early stage, while the market in other places was relatively good.

7. Regional demand for plug-in hybrid passenger vehicles

The rental share of plug-in hybrid vehicles continues to shrink, and in 2022 the share dropped sharply to around 1%.

The main demand for rental models is in megacities and large cities. This year, the number of plug-in hybrid rentals in megacities has shrunk significantly. The private consumption market for plug-in hybrid models has great potential for growth, and there is good demand in both small and medium-sized cities.

In recent years, the proportion of plug-in hybrid vehicles in cities without purchase restrictions has gradually increased, and BYD and Ideal are relatively strong. Wenjie M5 performed very well in May, surpassing some old star models.

Plug-in hybrids strengthened in May, and large and medium-sized cities with or without purchase restrictions are still the main force of plug-in hybrids. The demand in cities with purchase restrictions has been greatly affected by the epidemic, and plug-in hybrids in county and township markets have not yet been fully and effectively promoted.

BYD Han and other models have a high degree of dependence in cities with purchase restrictions. Low-priced plug-in hybrids such as Qin and Song perform well in small and medium-sized cities.

8. Regional penetration of electric passenger vehicles – May

At present, the proportion of pure electric vehicles in cities with purchase restrictions has increased significantly, from 14% in 2019 to 27% in 2022. The sales proportion of pure electric vehicles in large cities, medium-sized cities and small cities without purchase restrictions is basically the same, which was at a relatively low level in 2019 and 2020. In May this year, the proportion of pure electric vehicles in medium-sized cities rose to 19%, and the penetration performance in county and township markets was also strong.

In 2022, the national plug-in hybrid market also reached a recent high of 6%. The penetration rate of plug-in hybrids in various parts of the country has continued to grow, especially in megacities, where the plug-in hybrid market accounted for 12% in May this year. Among them, the proportion of the plug-in hybrid market in small cities has also shown a continuous increase, and the gap in plug-in hybrid penetration rates between various cities has narrowed relatively.

9. In May, the companies in each regional market were highly differentiated

The performance of the rental markets in various regions varies greatly. In May this year, the rental markets with strong performance were Chengdu, Shenzhen, Beijing, Guangzhou, Hangzhou, Chongqing, etc. The performance of various manufacturers in the rental markets in various regions also varies greatly. In some regions, the market share of local products in the local rental market is not necessarily very high. For example, in the Shenzhen market and Chongqing market, foreign brands performed relatively well this year.

The private pure electric vehicle market has relatively distinct characteristics, and the trend towards high-end is extremely obvious. BYD performed well, ranking first in almost all regions except Guangzhou. Leapmotor and other companies are relatively strong in Tianjin, while SAIC-GM-Wuling in Zhengzhou and other regions are mostly high-end.

New car manufacturers NIO and Xpeng Motors have performed very well. At the same time, NIO has become the second in the high-end market of pure electric vehicles, and Xpeng Motors has also performed well, while traditional car manufacturers have not performed well in the private market.

BYD and Li Auto performed well in the private plug-in hybrid market. In particular, BYD's main cities are almost leading. Li Auto performed well in Beijing, Zhengzhou, Chongqing, etc. SAIC Passenger Cars also performed well. The plug-in hybrid performance of joint venture automakers was relatively weak, and BMW and Volkswagen South and North performed generally.

10. Beijing market trends

The trend of the new energy vehicle market in Beijing in 2022 was relatively stable, with sales reaching 8,000 units in May 2022, slightly higher than the same period last year. However, Beijing's sales in January 2022 were much lower than last year, and the cumulative sales from January to May increased by 23% year-on-year, which was average.

Since the new energy vehicle quotas became relatively tight in 2018, the Beijing new energy vehicle market in 2022 has been in contrast to the national trend. This is the effect of suppressed consumption caused by the rhythm of quota issuance.

The sales volume of new energy vehicles in Beijing in May was good. Considering the lack of indicators, the performance in May was also stable. The overall level of new energy vehicles in Beijing is pragmatic, which is also a reflection of the good demand for home use.

11. Trends in Shanghai’s new energy market

The new policy trend in the Shanghai market is in sharp contrast to that in the Beijing market, which has been extremely stable since 2019. Starting from May 2020, Shanghai's new energy vehicles have shown a small explosive growth feature.

In May 2022, the sales volume of new energy vehicles in Shanghai reached less than 2 units, a huge drop from 14,000 in May last year. The losses suffered by new energy vehicles in Shanghai due to the epidemic in June should be able to recover significantly.

12. Market trends of new energy passenger vehicles in restricted cities

New energy vehicles performed relatively strongly in restricted cities. In January 2022, the sales of passenger cars in restricted cities reached 77,000 new energy vehicles, and in May it reached 84,000 units, with a year-on-year growth rate of 1 times.

Moreover, the cumulative sales of new energy vehicles from January to May reached 420,000, a year-on-year increase of 156%, which is much higher than the overall growth of our auto market and higher than the average growth rate of our overall new energy vehicles. This reflects the relatively high enthusiasm of restricted cities to purchase new energy vehicles during the epidemic.

13. Market trends of new energy passenger vehicles in areas with no purchase or driving restrictions

Non-double-restricted cities are areas where there are no restrictions on the purchase and use of fuel vehicles. Since there are no restrictions on the purchase and use of traditional vehicles, the demand for new energy vehicles in these cities is real market demand. At present, non-double-restricted cities are also growing extremely rapidly. Such cities are relatively widespread in the country, and the sales of new energy vehicles are also at a relatively high level.

In 2022, new energy vehicles performed extremely well in cities without dual restrictions, with sales of 170,000 units in January, a strong growth rate of 183% in March, and 188,000 units in May, a growth rate of 130%, which was higher than the growth rate in April. Overall, the cumulative sales from January to May reached 870,000 units, a year-on-year increase of 150%, showing strong growth characteristics.

Cities without purchase and driving restrictions, which were not affected by the policy in the early stage, have become the main force of sales and growth. All regions in the country have the characteristics of strong demand growth for new energy vehicles. Combined with the demand of cities with driving restrictions, regional market demand in 2022 will maintain strong growth.

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