The pattern of the car market changed in January.
Ideal Automobile, which had previously been far ahead in the New Power camp, was overtaken in January this year, giving up its position as the top monthly delivery volume for New Power car companies. In January, BYD's sales unexpectedly declined and were overtaken by Geely Automobile.
Looking at the entire industry, since January this year, the sales heat of domestic new energy vehicles has declined. From the delivery volume disclosed on February 1st, it can be seen that under the further amplification of price promotions, new energy vehicle companies such as Ideal, NIO, and Xiaopeng have all experienced a significant month on month decline in their monthly delivery volume, and many car companies have seen their sales halve in January.
Cui Dongshu, Secretary General of the China Association of Automobile Manufacturers, believes that due to the saturation of the automotive market, the purchasing behavior of first-time buyers will be scattered throughout various months of the year when purchasing power is low; Looking at different levels of the market, the purchasing behavior of consumers in first tier cities is mainly to increase or exchange purchases, and this type of consumer group currently lacks the motivation to purchase cars.
"The pressure on the market will only be greater this year, and some new energy vehicle companies that have been unable to break through in sales may be eliminated. In the next 2-3 years, we need to be prepared to keep rolling," said Cui Ye, a management member of the planning department of a new energy vehicle company, to a reporter from First Financial.
Cold January
This year's Spring Festival is in early February. As usual, there will be a wave of first-time purchases and homecoming car purchases before the Spring Festival. Industry insiders had high expectations for a successful start to January this year. Surprisingly, the market's terminal market in January this year was far more desolate than before.
"The market is too cold and quiet. In January, the number of customers entering the store decreased by 90%, and the transaction volume was similar. I have been working at this store for more than two years, and this month was the worst. Even with the unfavorable factors of the Spring Festival holiday in January 2023, the number of customers entering the store and sales were not as bad." In mid to late January, a sales consultant for a new energy vehicle store in Shanghai told a reporter from First Financial News.
In the face of market terminal cooling, the price war in the domestic new energy vehicle market in January further intensified. On January 12th, Tesla fired the first shot in the 2024 price war, with the starting price of the updated Model 3 dropping to 245900 yuan, a price reduction of 15500 yuan compared to the previous current price of 261400 yuan; The starting price of Model Y has decreased to 258900 yuan, with a price reduction of 7500 yuan.
In January 2023, Tesla was also the first initiator of the price war that year, with models such as the Model 3 experiencing a decrease of 36000 to 48000 yuan. Tesla's price offensive this year has not had a significant effect as it did last year. On the basis of the official downgrade on January 12th, Tesla will provide an additional cash discount of 8000 yuan for the Model Y equipped with HW3.0 chips, and offer a 10000 yuan discount on the price of optional car paint for all models of Model 3 and Model Y. The reporter learned from some Tesla stores in Shanghai that customer attention has increased significantly after the price reduction, but there has not been a significant improvement in new orders.
After Tesla, car companies such as Ideal, Xiaopeng, and NIO have successively expanded their product discounts. On January 17th, NIO launched a New Year discount, with discounts ranging from 24000 to 32000 yuan for some exhibited and existing cars, and discounts exceeding 60000 yuan for inventory cars with a long inventory age.
Despite continuing to engage in a fierce price war, leading new car manufacturers are still experiencing a month on month decline of over 30%. Ideal Automobile delivered 31200 new cars in January, a decrease of 38% compared to the previous month; Zero Run Motors delivered approximately 12300 new cars in January, a decrease of 34% compared to the previous month; NIO delivered approximately 10000 new cars in January, a decrease of 44% compared to the previous month; Xiaopeng delivered 8250 new cars in January, a decrease of over 60% compared to the previous month.
In contrast, Huawei Wenjie has emerged as an independent market. In January 2024, Wenjie delivered 32973 new cars across the entire lineup, a month on month increase of 34.76% and a year-on-year increase of over 636.82%, becoming the monthly sales champion of new force brands in the Chinese market for the first time. From the perspective of vehicle models, the monthly delivery volume of the Wenjie M7 reached 31253 units, becoming the main sales force of the Wenjie brand.
The forecast data released by the China Association of Automobile Manufacturers shows that wholesale sales of domestic new energy vehicle manufacturers in January were 700000 units, a decrease of 37% compared to the previous month; From January 1st to 28th, the wholesale sales of domestic passenger cars reached 1.577 million units, a 28% decrease compared to the previous period.
It is worth noting that Wenjie, Ideal Automobile, and Zero Run Automobile, which have won the top three new power car companies, have all adopted a range extender technology route (or range extender, pure electric dual power form), while NIO and Xiaopeng, whose sales have declined more severely, have always adhered to the pure electric technology route. Cui Ye believes that starting from 2024, enterprises that still adhere to the pure electric single technology route will face significant growth pressure; More new energy vehicle companies will adopt a dual power layout of pure electric and hybrid.
In addition, traditional car companies that still dominate sales with gasoline vehicles showed stronger resilience in January. Data shows that Geely's total sales in January this year were 213400 vehicles, a year-on-year increase of 110.5%, leading BYD with an advantage of over 10000 vehicles. In terms of brands, Geely's brand increased by 98% year-on-year to 172800 vehicles, Geely's brand increased by 302% year-on-year to 12500 vehicles, and Lynk&Co's brand increased by 155% year-on-year to 28200 vehicles.
"The overall market was not very good in January, and the common feature among companies with outstanding sales performance in January is that they launched new models last year with a considerable amount of new orders," a marketing manager of a car company told reporters.
Hybrid breaking the game and getting caught up?
Compared with pure electric vehicles, plug-in hybrid and extended range hybrid models have lower costs, and their fuel and electric characteristics can also alleviate users' anxiety about range.
At present, all products in the series are ideal extended range hybrid cars, making it the only Chinese new power car company to achieve continuous quarterly profits. Its gross profit performance in recent quarters has been even better than Tesla's. In addition, since the launch of hybrid products last year, the financial performance of Zero Run Motors has rapidly improved, and it has achieved a positive gross profit margin ahead of schedule. In the third quarter, its gross profit margin was better than that of Xiaopeng Motors, which achieved an IPO earlier.
From the perspective of the entire new energy market, starting from 2023, hybrid vehicles have shown a stronger growth potential than pure electric vehicles. Many industry insiders believe that in the coming years, hybrid vehicles will maintain a relatively fast growth rate, with market penetration exceeding that of pure electric vehicles.
"I believe that the growth of pure electric vehicles will significantly slow down, or even not increase, because pure electric vehicles did not grow from January to June last year, but gradually pulled up after June. The hybrid market has exceeded 100% growth for three consecutive years, and this year's market penetration rate will exceed 20%." In a recent interview with First Financial reporters, Li Xueyong, Deputy General Manager of Chery Automobile Co., Ltd., said that in the next 2-3 years, the Chinese market will form a 4:3:3 proportion, with 40% of hybrid vehicles, 30% of pure electric vehicles, and 30% of fuel.
The "Global New Energy Vehicle Category Trends Research Report" released by Reese Consulting believes that in the long run, plug-in hybrid vehicles will be challenged by pure electric vehicles in terms of their significance and role in overturning gasoline vehicles, forming a competitive situation of "dynamic coexistence" with pure electric vehicles. However, even so, it will still take a long time for pure electric vehicles to fully achieve the same price for oil and electricity and the anxiety of no supplementary energy. Therefore, plug-in hybrid vehicles still have a development window of at least 10 years.
Under this expectation, several companies claiming to be "ALL in" pure electric vehicles have transformed into hybrid vehicles. Volkswagen has authorized Chinese joint ventures to independently develop hybrid products; General Motors, which has high hopes for the Ultrapower pure electric platform, has also begun to launch products equipped with new hybrid technology in China; In December 2022, both Nissan and Mitsubishi announced that they would become customers of Horse, a joint venture between Renault and Geely for internal combustion engines; Mercedes Benz also collaborates with Geely in the field of efficient hybrid systems.
"The founder of the company has previously publicly stated that our company will only focus on pure electricity. However, the market landscape has changed too much in the past two years, and the founder has decided to 'show his face'. In the second half of this year, our new product will adopt a dual power form, with both pure electric and hybrid powertrain. From a timeline perspective, hybrid will be launched faster than pure electricity, and we do not want to miss the market trend." Cui Ye told reporters, but whether it is hybrid or pure electricity, price wars and brutal elimination matches are inevitable. Adopting hybrid technology is a means for enterprises to enhance competitiveness and avoid being eliminated.
Zhang Yongwei, Secretary General of the China Electric Vehicle Hundred People Association, believes that 2024 will be a critical period for the industry to accelerate its reshuffle. This is an opportunity for many companies to grow, but for many companies, life will be even more difficult.
Cui Ye stated that although the company's sales have continued to increase in recent months, since December last year, the company has frozen the Headcount (expected number of employees to be recruited) and carried out some personnel optimization. Some candidates have already completed the interview process for professional department heads, HRBP, etc., but their salaries were ultimately stuck by the finance department.
"Hybrid cars not only have better sales performance, but also higher financial returns. Companies that adhere to pure electric vehicles, like layoffs, cost reductions, strategic contractions, etc., aim to accumulate resources, cultivate internal skills, and strive to survive." Cui Ye said.
For the subsequent development of the car market, Li Xueyong believes that 2024 will be even more bloody than 2023. "I am not very optimistic about the Chinese car market in 2024, and perhaps the competition will be even more bloody and intense than in 2023." Li Xueyong said, "The final of China's automotive industry competition will be in the next two years, and this year we can see the initial form of the final outcome.".