Increase in estimated sales figures can be observed in comparison to last year's figure of 49.2 billion USD for the… https://t.co/v4JRLJ1oX9
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.
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.
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We estimate China's light vehicle production in June was around 2.4mn units, an increase of approximately 30% YoY.… https://t.co/xGx7fPSI5t