Category: China Auto Market

China NEV retail up 13% MoM to 372,000 in 1st 3 weeks of May, CPCA data show

Retail penetration of NEVs in China was 35.6 percent in the first three weeks of May.

China NEV retail up 13% MoM to 372,000 in 1st 3 weeks of May, CPCA data show-CnEVPost

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In the first three weeks of May -- May 1 to May 21 -- retail sales of new energy passenger vehicles in China were 372,000 units, up 109 percent year-on-year and up 13 percent from the same period last month, according to data released yesterday by the China Passenger Car Association (CPCA).

So far this year, China's retail sales of new energy passenger cars were 2.125 million units, up 44 percent year-on-year.

Wholesale sales of new energy passenger cars in China from May 1 to 21 were 361,000 units, up 81 percent year-on-year and up 10 percent from the same period in April, according to the CPCA.

So far this year, China's wholesale sales of new energy passenger vehicles are 2.469 million units, up 47 percent year-on-year.

In the first three weeks of May, retail sales of all passenger vehicles in China were 1.046 million units, up 41 percent year-on-year and up 10 percent from the same period last month, the CPCA said.

So far this year, cumulative retail sales of passenger cars in China are up 3 percent to 6.941 million units.

This means that in the first three weeks of May, China's penetration of new energy vehicles (NEVs) at retail was 35.6 percent, and the year-to-date penetration of NEVs was 31.9 percent.

In the first week of May, May 1-7, the average daily retail sales of passenger cars in China were 54,000 units, up 67 percent from the same period last May and up 46 percent from the same period in April.

In the second week of May, May 8- 14, the average daily retail sales of passenger cars in China were 48,000 units, up 44 percent over the same period last May and up 6 percent over the same period in April.

In the third week of May, May 15-21, the average daily retail sales of passenger cars in China were 48,000 units, up 17 percent from the same period last May but down 11 percent compared to the same period last month.

As price wars faded, dealers' mindsets stabilized and consumers returned to rational consumption, the CPCA said, adding that this eased wait-and-see sentiment and released pent-up demand.

Data table: China auto sales from May 1-21

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China NEV retail up 101% YoY in May 1-14, CPCA data show

As price wars fade and consumer wait-and-see sentiment eases, pent-up demand has been released, the CPCA said.

China NEV retail up 101% YoY in May 1-14, CPCA data show-CnEVPost

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Sales of new energy vehicles (NEVs) in China doubled in the first two weeks of May compared with the same period last year and also showed significant growth over the same period in April, although the Labor Day holiday at the beginning of the month may have brought some shock.

From May 1 to 14, China's retail sales of new energy passenger vehicles were 217,000 units, up 101 percent year-on-year and up 17 percent from the same period last month, according to data released today by the China Passenger Car Association (CPCA).

So far this year, China's retail sales of new energy passenger cars were 2.06 million units, up 41 percent year-on-year.

From May 1 to 14, wholesale sales of new energy passenger vehicles in China were 193,000 units, up 69 percent year-on-year and up 13 percent from April, according to the CPCA.

So far this year, wholesale sales of new energy passenger vehicles are up 32 percent year-on-year to 2.11 million units.

In the first two weeks of May, retail sales of all passenger vehicles in China were up 55 percent to 706,000 units, up 24 percent from the same period last month, the CPCA said.

So far this year, retail sales of passenger cars in China were up 3 percent to 6.6 million units.

This means that the penetration of NEVs at retail in China was 30.73 percent in the first two weeks of May and 31.20 percent so far this year.

In the first week of May -- May 1-7 -- the average daily retail sales of passenger cars in China were 54,000 units, up 67 percent from the same period last year and up 46 percent from the same period in April.

In the second week of May -- May 8-14 -- average daily retail sales of passenger cars were 47,000 units, up 44 percent year-on-year and up 5 percent from the same period in April.

As price wars faded, dealers' mindsets stabilized and consumers returned to rational spending, the CPCA said, adding that this eased wait-and-see sentiment and released pent-up demand.

During the Labor Day holiday, some local governments and manufacturers provided temporary subsidies, which helped the auto market grow in early May, and new orders from the holiday are expected to be released gradually, the CPCA said. This year, China's Labor Day holiday was from April 29 to May 3.

CPCA weekly data: NEV retail sales for 1st 2 weeks of May at 217,000

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Prominent economist suggests China ban fuel car sales in 5 years

Independent economist Ren Zeping has suggested that China introduce a timetable to ban the sale of fuel cars within five years and have regions south of Hebei actively develop the new energy sector.

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A prominent economist is proposing that China should ban the sale of conventional fuel cars within five years, sparking widespread discussion on social media.

Independent economist Ren Zeping said on Weibo today that he suggested China introduce a timetable for a ban on fuel cars within five years and for the region south of Hebei to actively develop the new energy sector.

He hinted that this is a move China needs to make to reach its carbon peak and carbon-neutral targets, as well as to expand domestic demand.

The words have generated a lot of discussions, with many opposing voices in the Weibo comments section, some of whom say that fuel car production and sales could also expand domestic demand.

Ren used to work for China's national think tank, as chief macro analyst at Guotai Junan and chief economist at Evergrande Group. He is currently an independent economist and has set up his own studio.

China does not currently have a national timetable for banning fuel cars, although the southernmost province of Hainan did so last year.

A carbon peak implementation plan released by the provincial government on August 22, 2022, said that by 2030, the sale of fuel cars will be completely banned across Hainan.

By then, vehicles in Hainan's public services and operations will be fully powered by clean energy, except for special uses, the plan said, adding that 100 percent of new and replacement vehicles in the private sector will be new energy vehicles (NEVs).

The document does not specify, though in China, NEVs generally refer to pure electric vehicles, plug-in hybrids and fuel cell cars.

China previously set a goal of seeing NEVs contribute 25 percent of all new vehicle sales by 2025, but that goal was met ahead of schedule last year.

For the full year 2022, China sold 5.67 million new energy passenger vehicles at retail, contributing 27.6 percent of all passenger vehicle retail sales of 20.54 million units, according to the China Passenger Car Association (CPCA).

In April, China's retail sales of new energy passenger cars were 527,000 units, with a penetration rate of 32.3 percent.

By December 2025, NEVs will account for more than 80 percent of all new vehicle sales in China, Li Xiang, founder, chairman and CEO of (NASDAQ: LI), said on April 24.

Ren has previously posted bullish comments on China's NEV industry, saying on December 31, 2021, that the NEV industry will be the most promising replacement for the real estate, heavy industry and chemical sectors as the most important engine of growth for China's economy.

The NEV industry was growing at a rate of several times, bringing a fast-growing penetration rate, while taking into account the market size of the industries associated with it, a large number of fuel vehicles will be replaced by NEVs in the next decade or longer, he said at the time.

China's Hainan to completely ban sales of ICE vehicles by 2030

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China allows 6-month sales extension for some ICE models based on existing emissions standard

China will implement the China 6b emissions standard on July 1, although some models will be given a six-month sales transition period.

China allows 6-month sales extension for some ICE models based on existing emissions standard-CnEVPost

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Chinese authorities confirmed in an official document that a new emissions standard will go into effect on July 1 as scheduled, but provided an additional six-month sales period for some internal combustion engines (ICE) vehicles based on the existing standard.

In a joint announcement issued today, five ministries, including China's Ministry of Industry and Information Technology and Ministry of Ecology and Environment, said that China will implement the China 6b emissions standard nationwide starting July 1, when the production, import and sales of vehicles that do not meet the standard will be banned.

For some of the models with "monitoring only" results in the Real Driving Emissions (RDE) test report, they will be given a six-month sales transition period until December 31, 2023, according to the announcement.

The move is to implement the requirements of the China 6 emissions standard, as well as China's policy to stabilize and expand vehicle consumption, the announcement said.

China released the final rule for Stage 6 light-duty vehicle emission limits and measurement methods (China 6 standard) in December 2016, a new standard that combines best practices from European and US regulatory requirements.

The standard is being implemented in two phases, with the 6a standard already taking effect on July 1, 2020, and the 6b standard coming into effect on July 1, 2023.

In March, price wars were the most talked about topic in China's auto industry, and the impending entry into force of the 6b standard was seen as an important factor.

On March 23, China's Auto Dealers Chamber of Commerce (CADCC) called on regulators to delay the start of implementation of the China 6b emissions standard.

Since the beginning of the year, the CADCC has received feedback from many auto dealer groups that they are under significant pressure to survive the impending full implementation of the China 6b emissions standard.

A study covering nearly 100 dealership groups showed that nearly 98.89 percent of them strongly recommended that China delay implementation of the China 6b emissions standard until January 1, 2024, the CADCC said at the time.

Notably, following the release of the latest announcement, the China Association of Automobile Manufacturers (CAAM) said in an article on its website that the new policy would help the Chinese auto market recover steadily.

Since the release of the China 6 standard, most car companies have been developing and producing products in accordance with the standard, which amounts to an early implementation of the China 6b standard, the CAAM said, adding that to date, more than 95 percent of light-duty vehicles have met the China 6b standard.

As of the end of January, there were more than 1.89 million vehicles in stock in China that did not meet the RDE requirements, and if purchased parts are included, then there are more than 2 million such vehicles in stock, the CAAM said.

The CAAM submitted a proposal for a six-month sales transition period for light-duty vehicles with "monitoring only" RDE test results to ease the difficulties faced by China's auto industry, according to the article.

"We hope that after the release of the policy, companies will uphold the principle of fair market competition, plan their layout rationally and complete the switchover and sale of their products as soon as possible," the CAAM said.

China's transition to new emission standard: How will this affect auto market?

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Price wars fail to boost China’s auto consumption

With consumers in a wait-and-see mood, orders and transaction rates did not increase significantly, and auto demand recovered less than expected, the CADA said.

Price wars fail to boost China's auto consumption-CnEVPost

Many automakers in China launched rare price wars in March to try to boost sales. But these moves do not seem to have achieved the results they wanted.

In March, following significant promotions by automakers in Hubei province, dozens of provinces and cities, including Beijing, Tianjin, Shanghai and Zhejiang, offered deals that gave dealership store traffic a quick boost, the China Automobile Dealers Association (CADA) said in an April 3 report.

However, orders and transaction rates did not increase significantly as consumers were in a wait-and-see mood, and auto consumer demand did not recover as expected, the CADA said.

The Vehicle Inventory Alert Index for China's auto market was 62.4 percent in March, down 1.2 percentage points from a year ago but up 4.3 percentage points from February, according to the CADA report.

The index's break-even value is 50 percent, and a reading above that benchmark means the auto distribution industry is in contraction territory, according to the report.

China's switch to the 6b emissions standard was not the main reason for the wave of price cuts, the CADA said, adding that most dealers said their inventories of 6a-based vehicles are not high and could be cleared by the end of June.

However, there are still a large number of 6b-based vehicles that do not meet RDE (real-world driving emission) standards, and with lower-than-expected sales in the first quarter, these vehicles face challenges in completing inventory clearance by the end of June, the CADA said.

In March, vehicle prices were volatile and customer wait-and-see sentiment was strong, resulting in lower orders and turnover rates and a decline in dealer profitability, according to the report.

More than 60 percent of dealers said they met less than 80 percent of their sales targets in the first quarter. Of those, 20.5 percent of dealers achieved 70-80 percent of their sales targets and 46.0 percent achieved less than 70 percent, the CADA said.

Separately, the CADA said in another report on April 3 that the March auto consumption index was 72.5, down from 74.6 percent in February.

March auto sales did not meet expectations, and dealers predict that without major policy changes in April, auto sales will be essentially unchanged from March, the CADA said.

In March, the demand sub-index of the auto consumption index was 68.2, down from 73.3 in February, the CADA said, adding that this signals a decline in demand for cars in April.

Price wars fail to boost China's auto consumption-CnEVPost

China's Mar passenger NEV wholesale sales up 20% MoM to 600,000, CPCA estimates show

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China to allow extended sales periods for ICE models based on existing emissions standard, report says

Price war has been the most talked about topic in China's auto industry this month, and the imminent implementation of a new emissions standard is seen as a major factor.

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The imminent implementation of a new emissions standard in three months is seen as a major factor behind the price war launched by internal combustion engine (ICE) automakers this month. Now, these automakers may be able to get some respite.

China's policy on extending the sales period for vehicles built to the 6a emissions standard may be announced soon, National Business Daily reported today, citing Shen Jinjun, president of the China Auto Dealers Association (CADA), as saying at a forum.

A government document on the switch to the China 6b standard and the extension of the sales period for 6a-compliant models will be released soon, Shen said, without revealing any more information.

China released the final rule for stage 6 light vehicle emission limits and measurement methods (China 6 standard) in December 2016, a new standard that combines best practices from European and US regulatory requirements.

The standard is being implemented in two phases, with the 6a standard already taking effect on July 1, 2020, and the 6b standard coming into effect on July 1, 2023.

During this month, price war has been the most talked about topic in the Chinese auto industry, and the upcoming entry into force of the 6b standard is seen as an important factor.

There are still some older models on the market that do not meet China 6b emissions regulations, and the de-stocking of these models could have an impact on production, sales and prices in the auto industry, a team from CITIC Securities said in a March 13 research note.

In early March, authorities in Hubei province joined forces with many local car companies to offer subsidies to consumers for car purchases, with some models being subsidized by as much as 90,000 yuan ($13,060). This was seen as the beginning of the massive outbreak of the price war.

Subsequently, several brands, including Volkswagen and BMW, announced similar large discounts. At the same time, some car companies made it clear that they would not participate in the price war, trying to dispel the wait-and-see sentiment of potential consumers.

The price war has had an unprecedented impact on China's auto industry, and on March 22, the China Association of Automobile Manufacturers (CAAM) called on all parties to return to rationality and bring order to the market.

On March 23, China's Auto Dealers Chamber of Commerce (CADCC) called on regulators to delay the implementation of the China 6b emissions standard.

Since the beginning of the year, the CADCC has received feedback from many auto dealer groups that they are under significant pressure to survive because of the impending full implementation of the China 6b emissions standard.

A study covering nearly 100 auto dealer groups showed that nearly 98.89 percent of them strongly recommended that China delay the implementation of the China 6b emissions standard until January 1, 2024, according to the CADCC.

These dealer groups suggest that regulators allow sufficient switchover time for car companies and dealers to deal with the existing inventory of vehicles that do not meet the China 6b emissions standard.

($1 = RMB 6.8906)

China's transition to new emission standard: How will this affect auto market?

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NIO won’t get involved in price war, exec says

China's auto industry is facing cyclical swings in the transition to electrification that can't be weathered by price wars and require automakers to stick to brand values, an executive said.

NIO US | NIO HK | NIO SG

An NIO (NYSE: NIO) executive said the company won't get involved in a price war, which has come into focus with the recent sharp price cuts by a large number of internal combustion engine (ICE) automakers.

NIO will not engage in a price war and will not respond to the current market volatility with price cuts, said Pu Yang, the company's assistant vice president of sales operations, at a media briefing today.

NIO believes that the current wave of price cuts is a cyclical fluctuation in the transition from ICE vehicles to smart electric vehicles (EVs), with the main players being ICE models from joint venture brands with limited competitiveness, Pu said, according to minutes shared by several automotive bloggers.

The cyclical fluctuations brought about by this technological revolution can't be crossed by price wars and require car companies to stick to their brand values, he said.

NIO will always ensure the user experience and cope with this cycle by efforts including continuous investment in infrastructure, keeping prices and configurations stable, and full-stack in-house research and development, he said.

More and more car companies are joining the price war, leading to an increased wait-and-see sentiment among consumers to avoid seeing price cuts soon after purchasing a car.

NIO's local counterpart, (NASDAQ: LI), has introduced a consumer price-protection benefit that will refund the difference if the price drops within 90 days of their purchase.

Pu said he saw Li Auto's move and that NIO had considered whether to issue a similar policy, but for the company, it had previously made it clear that prices would not go down.

Not only is NIO not dropping prices for 90 days, but prices won't change for a longer period of time, he said.

He believes the current plunge in ICE vehicle prices in China will be a landmark event and potentially a watershed moment for the auto industry as a whole.

Many of the products that have seen significant price cuts are at the end of their life cycle, Pu said, adding that he doesn't think that will be the norm.

He believes that the large number of models that have seen significant price cuts are appearing quickly, and that these moves will disappear quickly, and that this will be some sort of catalyst for the development of the new energy vehicle (NEV) market.

Pu is optimistic about the whole-year performance of the passenger car market in China, and believes that sales will increase compared to last year.

He mentioned that NIO has seen an increase in the number of visitors to its stores and test drives in recent times, and is confident of growth given the new products the company will have available and the upcoming Shanghai auto show.

The NIO brand will not make prices lower by introducing single-motor models or models without LiDARs, Pu said, reiterating remarks made by William Li, the company's founder, chairman and CEO, during an earnings call earlier this month.

Lower configurations and lower prices are not how NIO wins. The company started from the beginning with a desire to give users a highly configurable, high-quality-of-service experience, he said.

Pu said he suggested to the company's management at the time of the ET5's launch that it could lower the barrier to purchase by eliminating the free battery swap benefit, but that was voted by Li.

The ET5 is a good value when compared to competitors in the same price range as it, especially in terms of intelligence and performance, he said.

NIO believes that improving service quality will be an effective means of dealing with the competition, including adding 1,000 new battery swap stations this year, he said.

The penetration rate of NEVs in China will be higher this year, and the total market segment of high-end EVs will be larger, so NIO is expected to achieve better growth, Pu said.

New products will be an important card for NIO this year, as the company will have more core products on the market this year and delivery is expected to be smoother, he said.

As for the lower-priced EV market, NIO will cover it through sub-brands, including one codenamed ALPS, he said.

China auto price war: BMW dealers offer discounts of up to $14,360 for i3

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China’s transition to new emission standard: How will this affect auto market?

Analysts believe the impact of the transition will not last long and will have less of an impact than the last switch in standards in 2019.

China's transition to new emission standard: How will this affect auto market?-CnEVPost

The recent price war in China's auto market has put a new emission standard that will come into effect in a few months' time in the spotlight.

CnEVPost obtained the views of several local analysts, which provide references on what impact that new emission standard will have on the auto industry.

As background, China released its final rule for stage 6 light-duty vehicle emission limits and measurement methods (China 6 standard) in December 2016, a new standard that combines best practices from European and US regulatory requirements.

The standard is being implemented in two phases, with the 6a standard already taking effect on July 1, 2020, and the 6b standard coming into effect on July 1, 2023.

CITIC Securities: Impact will not last long

From July 1, the China 6b standard will be fully implemented, which is more stringent in terms of emission standards and testing criteria compared with China 6a, especially the new RDE test that detects the actual driving emissions of the car, said Yin Xinchi, chief analyst of the auto industry at CITIC Securities, in a research note today.

There are still some old models on the market that do not meet China 6b emission regulations, and the de-stocking of these models may have an impact on the production, sales and prices of the auto industry, according to the note.

However, CITIC Securities also pointed out that the duration of the impact of the transition will not be too long, and the degree of impact will be significantly smaller than the switch of China's auto industry emission standard from China 5 to China 6a in 2019.

China Securities: Essence is the weakening competitiveness of JV brands

China's passenger car market will begin implementing the stricter China 6b emissions standard on July 1, which could exacerbate the pressure to de-stock older models, China Securities automotive industry chief analyst Cheng Siqi's team said in a research report today.

This may intensify the profitability pressure among car companies in the short term, but behind it reflects the further erosion of the competitiveness of second- and third-tier joint venture brands, according to the team.

Against the backdrop of rising market share of local Chinese brands and the ongoing electrification transformation of China's auto market, these joint venture brands have been forced to start cutting prices and de-stocking, the team said.

Huaxi Securities: Several regions have already completed the standard switch

The China 6b emissions standard will go into effect on July 1, and overall, this will have limited material impact on the auto industry, Huaxi Securities analyst Cui Yan's team said in a research note today.

The window for that transition is long, and several regions have already completed the transition ahead of schedule, such as Beijing, Shanghai, Guangzhou and Tianjin, according to the team.

Car companies previously experienced the pain of the transition from China 5 to the China 6a standard and this time are expected to prepare beforehand, the team said.

Inventories in the Chinese auto industry are currently at an above-average level, but the vast majority of inventories have been accrued since April 2022, according to the team.

The team believes the recent wave of price cuts in the Chinese auto industry is largely due to the penetration of new energy vehicles (NEVs) reaching about 30 percent and the willingness and ability of some leading car companies to grab market share.

The China automobile dealers VIA (Vehicle Inventory Alert Index) stood at 58.1 percent in February, up 2.0 percentage points from a year ago but down 3.7 percentage points from January, still sitting above the 50 percent mark, according to China Automobile Dealers Association data released earlier this month The data.

For the VIA, a value below 50 percent is a reasonable range, and a higher reading means lower market demand and greater inventory pressure, according to the index's description.

If you'd like to learn more about the China 6 standard, here's a report from the International Council on Clean Transportation, a nonprofit organization.

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Automakers in central China’s Hubei offer hefty subsidies as sales pressure mounts

Authorities in Hubei province have joined forces with local automakers this month to offer subsidies for car purchases of up to RMB 90,000 yuan ($13,000) for some models.

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