Cui Dongshu: The pressure for collapse of fuel companies is significant. Promoting vehicle sales in rural areas requires more effort rather than suppression.

Secretary-General of the China Association of Automobile Manufacturers, Cui Dongshu, stated in an article that in 2024, the Chinese car market achieved the expected strong start in retail sales. Subsequently, there was a significant differentiation between new energy vehicles and traditional fuel vehicles. From January to August 2024, retail sales of new energy vehicles reached 6.01 million units, showing a strong growth trend with a 35% increase, which was close to the 36% growth rate seen in 2023. With the introduction of national scrappage and renewal policies and a doubling of subsidies in July, new energy vehicles experienced accelerated growth. In August, traditional vehicle retail sales decreased by 28% compared to the previous year, while new energy vehicle retail sales increased by 43%, resulting in a 71-point difference. Heavy taxes on fuel vehicles and incentives for purchasing new energy vehicles have put significant pressure on traditional fuel vehicle companies. Rural residents have a high sensitivity to prices, with a considerable number of people inclined to purchase pure electric vehicles priced below 70,000 yuan. Currently, A00 level vehicles are not exempt from taxes for those with a range of less than 200 kilometers, giving them a disadvantage compared to low-speed electric vehicles. Therefore, policies supporting the economic aspects of electric vehicles are still needed for new energy vehicles to penetrate rural areas. The inadequate construction of charging infrastructure in county and township markets hinders widespread use, making the promotion of photovoltaic energy storage electric vehicles a good way to encourage the penetration of new energy vehicles in rural areas. The sales structure of new energy vehicles in small cities, counties, and towns has changed from being 87% pure electric vehicles in 2021 to 56% in 2024, showing a gradual convergence with the situation in large cities. The promotion of automobiles in rural areas should involve strengthening rather than restricting. The sales structure of pure electric vehicles in small cities, counties, and towns has shown a noticeable decline trend, with A00 level vehicles accounting for 66% in 2020 falling to 35% in 2024. While the scrappage renewal policy has had some impact on A00 level electric vehicles, the support provided is insufficient. To better cater to the practical and relatively lower purchasing power of the elderly in rural areas, it is necessary to ease the vehicle purchase tax exemption for electric cars with a range of under 200 kilometers instead of squeezing them into buying low-speed electric vehicles. 1. Strong Wholesale Performance of New Energy Vehicles in August 2024 In August 2024, wholesale sales of new energy passenger vehicles reached 1.05 million units, surpassing the historic peak level. Due to factors such as the Spring Festival and price cuts, there was a significant drop in February, with the market gradually recovering and showing a huge increase in August compared to the previous month. Since 2023, the prices of raw materials such as lithium and nickel have fallen, leading to a downward trend in the prices of power batteries. The low sales in February were advantageous for companies to reduce production at the beginning of the year, clear historical inventory, and achieve continuous growth in sales of new products. In August, the wholesale of new energy passenger vehicles reached 1.05 million units, with a year-on-year growth rate rising to 32%, a strong performance compared to the 30% growth rate from January to July. The overall growth from January to August was relatively fast. The wholesale growth in August was relatively lower than the retail growth, reflecting the market's driving effect. 2. Wholesale Penetration of Shanxi Guoxin Energy Corporation In August, the wholesale penetration rate of new energy vehicles manufacturers reached 48.9%, an increase of 13.3 percentage points from the 35.6% penetration rate in August 2023. In August, the penetration rate of independent brand new energy vehicles was 63%; the penetration rate of new energy vehicles in luxury cars was 43.2%; while the penetration rate of new energy vehicles in mainstream joint venture brands was only 7.8%. Comparatively, traditional vehicle manufacturers saw a 24% decrease in wholesale sales in August, while new energy vehicle retail sales increased by 32%, highlighting the significant pressure on traditional fuel vehicles. 3. Strong Growth in Retail Sales of New Energy Vehicles in August 2024 In August 2024, the retail sales of new energy vehicles in the market reached 1.03 million vehicles, showing a stronger performance in August than in July, indicating a sustained strengthening trend in retail sales. The effects of increased demand due to the allocation of license plates in Beijing from June to August are evident, and some price-watching groups have started purchasing cars, while the scrappage renewal policy has increased enthusiasm for buying. From 2023, the cumulative retail sales of new energy vehicles reached 7.75 million vehicles, with a 36% year-on-year increase. The strong performance in August, with a 43% growth rate, indicated a relatively strong trend from January to August, with 6.01 million new energy vehicles sold, a 35% increase relative to 2023, which is a commendable achievement. 4. Retail Penetration Rate of Shanxi Guoxin Energy Corporation In August, the domestic retail penetration rate of new energy vehicles reached 54%, an increase of 16.7 percentage points from the 37.3% penetration rate in the same period last year. In August, the penetration rate of new energy vehicles in domestic retail was 75.9% for independent brands; 33.5% for new energy vehicles in luxury cars; and only 8% for new energy vehicles in mainstream joint venture brands. In August, traditional vehicle retail sales decreased by 28% compared to the previous year, while new energy vehicle retail sales increased by 43%, resulting in a significant difference of 71 percentage points, indicating significant pressure on fuel vehicles. The sustained breakthrough of the penetration rate of new energy vehicles in the domestic passenger car market exceeding 50% is due to: 1. The empowering effect of the strong advantages of the industrial chain brought about by China's manufacturing strength, with super advantages in battery, motor, and chip production in the equipment manufacturing and component industries; 2. Under the promotion of new productive forces, Chinese auto companies have vigorously developed new energy vehicles, driving China's automotive industry from large to strong; 3. The guiding ideology of open development in the passenger car industry has promoted the comprehensive entry of internet companies, intelligent consumer manufacturing enterprises, and international new energy car companies, activating industry competitiveness and innovation capabilities; 4. The innovative development of Chinese auto companies in plug-in hybrid technology, achieving breakthroughs in narrow plug-in hybrid and extended-range technologies, enriching the technical routes of global new energy development, and achieving a breakthrough advantage with China's plug-in hybrids accounting for 78% of the global market share; 5. In August, the country further intensified the scrappage renewal policy for passenger cars, with subsidies for pure electric plug-in hybrids and other new energy vehicles exceeding traditional fuel vehicles by 0.5 yuan, further supporting the development of new energy vehicles. These measures have driven the penetration rate of new energy vehicles in the slack season of July and August to exceed 50%, helping to promote the popularization of new energy vehicles to a new level. This phenomenon is worth paying attention to. 5. Analysis of New Energy Vehicle Markets in Urban and Rural Areas The criteria for classifying urban and rural areas (State Letter [2008] No.60) explicitly states that "based on China's administrative division, using the jurisdiction of resident committees and village committees confirmed by the civil affairs department as the basis of classification, based on actual construction, China has been divided into urban and rural areas. Among them, "urban areas include urban and town areas. Urban areas refer to areas within cities."The actual construction of residents' committees and other areas connected to the district and municipal governments in areas with and without districts and cities. Townships refer to the county people's government headquarters and other towns outside the urban area, where the actual construction of residents' committees and other areas connected to the government headquarters; while "rural areas" refer to the areas outside the towns designated in this regulation.Due to the fact that insurance data is national data managed by the China Banking and Insurance Regulatory Commission, its classification is not as detailed as that of the National Bureau of Statistics. Therefore, we cannot see the distribution of urban and rural areas from the insurance data of the China Banking and Insurance Regulatory Commission. We can only base our analysis on the classification of prefecture-level cities and make approximate reference analysis. According to the differences between the China Banking and Insurance Regulatory Commission and the National Bureau of Statistics, insurance data is official data from the China Banking and Insurance Regulatory Commission. From this data, we can only analyze based on the proportions of large cities, medium-sized cities, small cities, and county town markets. Therefore, we collectively refer to county town markets and small city markets as these small county town markets. In the analysis of these small county town markets, the sales of pure electric new energy vehicles are continuously increasing. In 2020, the sales proportion of new energy vehicles in small county town markets was 0.5%, which increased to 5.3% by 2024, showing a trend of continuous growth. The increase in small county town markets mainly relies on the growth of plug-in hybrid electric vehicles and pure electric vehicles. The market in small county town areas has also shown strong growth due to the increased popularity of plug-in and pure electric vehicles as alternatives to fuel-powered cars. In terms of the distribution of new energy vehicle sales in small county town markets, the sales growth of pure electric vehicles in the Northeast, North China, Northwest, and Central regions is relatively fast. Recently, the performance in the Northwest and Northeast regions has been good, the performance in North China is relatively strong, while the overall performance in the eastern regions of Southern and Eastern China is relatively average. In terms of vehicle structure, the sales of A00-class pure electric vehicles in small county town markets in August have increased significantly, with A00-class vehicles in various regions continuing to grow by over 50% compared to July in the Northeast, North China, and Northwest. In the past, micro electric vehicles faced significant pressure due to the cancellation of vehicle purchase tax incentives, leading to increased competition with low-speed electric vehicles. A0-class mid-to-high-priced electric vehicles have also seen some growth in small city markets. Therefore, in the county town market, the demand for A00-class electric vehicles suitable for farmers has not been effectively released, but there was a noticeable growth in August. The difference in vehicle models between large and medium cities and county town markets in China is significant. Tesla Model 3, Model Y, and Xiaomi SU7 perform relatively well in large cities, while Model Y and Model 3 also have strong performance in large cities. In county town markets, vehicles like BYD eSeagull perform relatively well, and there is strong demand for economical electric cars such as Wuling Hongguang Mini, Wuling Hongguang Binguo, Chang'an Lumin, BYD Yuan, Pand...However, there is a good demand in the market for small and medium-sized cities. The demand for personal plug-in hybrid vehicles in the county and rural markets is growing rapidly, and the performance in August was also strong compared to the previous month. The proportion of unit-use and rental plug-in hybrid vehicles continues to shrink. The main demand for plug-in hybrid rental models is in super large cities and large cities, with a significant decline in the rental of plug-in hybrids in super large cities this year.In August, the sales of plug-in hybrids were strong, with medium and large non-restricted cities still being the main market for plug-in hybrids, while the demand share in restricted cities decreased. Plug-in hybrids have formed a good driving force in county and township markets. In recent years, the proportion of plug-in hybrid vehicles in non-restricted cities has gradually increased, with BYD and Geely relatively strong. The Qin and Haibao performed strongly in the county and township markets in August, surpassing some established models. Low-priced plug-in hybrids like the BYD Qin and Song performed well in medium and small cities. 11. Regional Demand for Extended Range Vehicles The main users of extended range vehicles are individuals and organizations, with organizations accounting for a higher proportion than individual users, reflecting that extended range models are more suitable for organizational users. The main market for extended range vehicles is still medium and large cities, but with the growth of boundaries and deep blue areas, small cities and county and township markets are gradually emerging. 12. Regional Penetration Rate of Pure Electric Vehicles - August Currently, the proportion of pure electric vehicles in restricted cities has remained largely stable, increasing from 20% in August 2021 to 37% in 2024. In non-restricted cities, the sales proportion of pure electric vehicles in large, medium, and small cities is basically the same, with the sales proportion in medium cities increasing to 29% in August of this year and the penetration rate in county and township markets increasing to 25%. The penetration rate of plug-in hybrids continues to increase in markets nationwide, especially in mega-cities, where the market share of plug-in hybrids reached 23% in August this year; in medium and small cities, the market share of plug-in hybrids also shows a continuous increase, narrowing the gap in penetration rates among various types of cities. Due to the boost from the plug-in hybrid license policy in Shanghai, plug-in hybrids accounted for 11% in August, up 7%. 13. Strong Enterprise Differentiation in Various Regional Markets The performance of rental markets in different regions varies greatly. Strong performance in the rental markets in Guangdong, Jiangsu, Zhejiang, Sichuan in August this year. The performance of various manufacturers in rental markets in different regions also varies greatly, with some local products in certain areas not necessarily having a high market share. The private market has shown strong performance recently in Zhejiang, Shandong, Jiangsu, Henan. The characteristics of the private pure electric vehicle market are relatively distinct, with a clear trend towards high-end products. BYD performed well, leading in Jiangsu, Guangdong, and other developed regions. Wuling performed well in Shandong, Henan, and Hebei. New forces in the automotive industry, such as NIO and Xiaomi, have performed well, and traditional car manufacturers have also performed well in the private electric vehicle market. In the private plug-in hybrid market, BYD and Ideal Auto showed strong performance, especially BYD leading in major cities, Ideal Auto coming in second overall, and Chongqing Changan Automobile ranking third. Chongqing Sokon Industry Group Stock, Geely, and Great Wall also showed a strong trend. The plug-in hybrid market outside of BYD is mainly extended range vehicles, so the performance of joint venture private plug-in hybrids is relatively weak, making the breakthroughs by Great Wall and Geely in plug-in hybrids significant. 14. Trends in the Beijing Market The new energy vehicle market in Beijing in 2024 has been relatively stable, with sales reaching 30,000 units in August, staying at a high level compared to the same period in previous years, with license plate indicators fully absorbed. Since the relatively tight new energy vehicle indicators in 2018, the trend in the Beijing market has diverged from the national trend in 2022. Currently, the growth rate is low, and some users who bought cars in 2018 should be considering upgrading, but the overall market volume is still not high, with the effect of consumption suppression brought about by the pace of indicator issuance. The sales of new energy vehicles in Beijing were strong in the second half of last year, and considering the lack of indicators and limited supply from Tesla, the performance in August was relatively strong. The overall level of new energy vehicles in Beijing is practical, reflecting the good demand for household use. 15. Trends in the Shanghai New Energy Market The trend of new policies in the Shanghai market is significantly different from that of the Beijing market, with extreme stability from 2019 to 2021. A buying spree at the end of 2022 led to a slump at the beginning of 2023, with a significant decrease in sales in early 2024. In August 2024, the sales of new energy vehicles in Shanghai reached 29,000 units, a 5% decrease from the 31,000 units in August of the previous year. The impact of policy adjustments on Shanghai's new energy vehicles from the previous year is gradually recovering, with the tightening of license plate policies having a significant impact on the new car market in early 2024. 16. Trends in the New Energy Passenger Vehicle Market in Restricted Cities The performance of new energy vehicles in restricted cities is relatively strong, reaching 244,000 units in August 2024, showing a good growth rate of 44% compared to the same period last year. The cumulative sales of new energy vehicles in restricted cities in 2024 reached 1.5 million units, reflecting the continuous growth in demand for new energy vehicles in restricted cities. 17. Trends in the New Energy Passenger Vehicle Market in Non-Restricted and Non-Limited Areas Non-restricted cities refer to areas where traditional fuel vehicles are not restricted or limited. Since traditional vehicles are not restricted or limited, the demand for new energy vehicles in these cities represents genuine market demand. Currently, non-restricted cities are showing strong and rapid growth trends, with sales of new energy vehicles at relatively high levels. In 2022, the cumulative sales of new energy vehicles in non-restricted cities reached 2.73 million units, with a 96% year-on-year growth, showing strong growth characteristics. The performance of new energy vehicles in non-restricted cities in 2023 reached 4.06 million units, with strong growth of 50% in sales from January to August 2024 at 3.44 million units.