In August 2024, China’s auto market showed a positive month-on-month growth trajectory, driven by policy incentives and market demand. Despite year-on-year declines in vehicle production and sales due to seasonal factors and economic fluctuations, the market showed significant resilience.
Domestic sales of light vehicles (LV), excluding exports, amounted to 1.9 million units, showing a significant year-on-year decline of 10.8% but a month-on-month increase of 7.9%, driven by high basis for comparison of the same period last year. In the passenger car (PV) segment, sales volume shrank to 1.8 million units, down 9.6% year-on-year, but a substantial month-on-month increase of 8.6%. Sales of light commercial vehicles (LCVs) also contracted, falling to 163,000 units, with a significant year-on-year decline of 22.5% and a slight month-on-month increase of 0.7%.
From January to August this year, LV sales reached 14.9 million units, a year-over-year decline of 2.3%. PV sales made up the bulk of this figure, totaling 13.3 million units, down 2.0% year-on-year. While the LCV market is significant, it also saw a slight year-on-year decline of 5.0%, with sales of 1.6 million units.
In the Chinese domestic market, annualized sales for August reached 27 million units, down slightly by 2% from the previous month’s figures. The figure has been hovering around 27 million units/year since June, after seeing a steady increase from an average of 22.6 million units/year during the first months of the year, from January to May. Despite a nearly 10% year-over-year decline in August sales and a 2% YTD decline compared to the previous year’s robust numbers, there is a bright spot on the horizon. The government’s recent move to double demolition subsidies is expected to inject a strong dose of vitality into the market for the rest of the year. The sales forecast remains largely positive, with only a small downward adjustment to the 2024 light commercial vehicle forecast. The market is expected to experience a 3% increase and reach estimated sales of 26 million units by the end of the year , a testament to the sector’s continued growth potential.
Although August sales figures appeared somewhat poor, this was mainly due to the faster-than-expected decline in the share of ICE and JV brands in China. However, NEVs, mainly Chinese brands, not only continued their robust growth, but also captured a significant 54% share of the PV retail market in August, following the trend of the previous month, which also saw a NEV share of more than 50% was achieved. The market is on the verge of a period of strong expansion in the coming months, largely as a result of the government’s strategic intervention. The National Automobile Trade-in Platform has reported a rise in applications for temporary scrapping subsidies, which reached 800,000 units by the end of August. This increase was partly made possible by the government’s decision to double the subsidy amounts, with the aim of stimulating the market and promoting the green transition in the automotive industry.
According to preliminary statistics, almost 3.8 million internal combustion engine vehicles and new energy vehicles meet the criteria for scrappage subsidies, indicating that the replacement of these vehicles could drive additional growth in the market. The government has introduced this to further stimulate the market
additional measures, including lowering minimum down payment requirements for auto financing loans and plans to gradually relax purchasing restrictions on new energy vehicles in several regions. Currently, many major cities have certain restrictions on vehicle purchases based on traffic congestion and air pollution levels. However, these strategic measures are expected to be further relaxed in the context of boosting domestic consumption. Moreover, the promotional power of the price wars appears to have weakened. Many car companies are exhausted by the price war and the damage to their profitability. Intense price competition has also led to consumers adopting a wait-and-see attitude, preventing them from making timely decisions.
On the manufacturing front, LV production fell slightly to 2.4 million units in August, representing a modest year-over-year decline of 3.0%. However, there was a more significant MoM increase of 8.5%. Through the first eight months of this year, cumulative production has remained robust, reaching an impressive 18.0 million units. This illustrates commendable year-on-year growth of 2.9%. In terms of segment performance, PV production remained stable at 2.2 million units in August, with a small year-on-year decline of 2.0%. The total volume of PV production since the beginning of the year has reached 16.1 million units, maintaining a growth trajectory with an increase of 3.6% year-on-year. Conversely, light commercial vehicle production volumes for August were recorded at 203,000 units, indicating a modest year-on-year decline of 12.2%. Looking at the first eight months of 2024, YTD LCV volume stands at 1.9 million units, reflecting a slight decline of 2.8%.
In August, LV exports showed a strong performance at 489,000 units, with a significant year-on-year increase of 29%. The growth trend continued throughout the month, with PV accounting for 439,000 export units, marking an increase of 27% year-on-year, and LCV reaching 50,000 units, showing a significant increase of 47% year-on-year. Cumulatively, LV exports from January to August 2024 totaled 3.47 million units, reflecting 24% year-on-year growth. Key factors driving growth this year include increased competitiveness of Chinese-made products, modest expansion in Central and South American markets, and significant replacement of international brands with Chinese vehicles in the Russian market amid of the conflict between Russia and Ukraine. In addition to the continued increase in NEV exports, the improved competitiveness of traditional ICE vehicle exports has also contributed to the overall increase in shipments.
This article was first published on GlobalData’s dedicated research platform, the Auto intelligence center.
“China Vehicle Market Supported by NEV Incentives” was originally created and published by Just Cara brand owned by GlobalData.
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