Cui Dongshu: The demand for passenger car purchases in December 2024 is released strongly, and all indicators throughout the year hit record highs.

Secretary-General of the China Association of Automobile Manufacturers Cui Dongshu stated in a document that the automotive market showed strong performance at the beginning of December 2024. As the year-end approached, various companies made efforts to achieve their annual targets, leading to a continuous warming of the automobile market. The subsidy deadline for the "two news" (trade-in and scrappage) at the end of December provided a strong boost to the market affected by the policy expiration. Since the Chinese New Year in 2025 falls at the end of January, some car purchase demands before the Chinese New Year will also be released in December 2024. However, in some regions, the trade-in subsidies have been exhausted, leading to a temporary slowdown in retail sales in the second half of the month. With these factors combined, the demand for car purchases in December this year showed strong growth. Looking at the whole year, the Chinese passenger car market in 2024 showed the following characteristics: first, wholesale, production, and exports all reached a record high for the year. The annual retail sales are still nearly a million vehicles lower compared to the peak in 2017, indicating significant consumption potential for 2025. Second, the market share of domestic brands in wholesale broke through 65%, and in retail broke through 60%, showing a growth of 9 percentage points compared to last year. The overall leadership of domestic brands reflects the innovation in product strength and channel management in 2024, continuing to gain support and recognition from consumers. Third, price wars stabilized, with fewer price promotions from August to December compared to the frequency in April to June, maintaining a stable level of promotions in the fourth quarter. Fourth, passenger car exports reached 4.8 million, a 25% increase compared to the previous year, but the export growth rate in the fourth quarter was only 8%, showing a noticeable slowdown. Fifth, there was a significant destocking feature in 2024, with manufacturers reducing inventory by 340,000 vehicles and distribution channels reducing inventory by 490,000 vehicles, thanks to a substantial reduction in inventory due to instability in the distribution system of gasoline-fueled vehicles. In terms of sales of new energy vehicles, domestic retail sales reached 10.899 million units, with an incremental increase of 3.154 million units, a growth rate of 41%, which is 5 percentage points higher than in 2023, breaking the previous trend of declining growth rate. The annual penetration rate of new energy vehicles in retail reached 47.6%, an increase of 12 percentage points, with the penetration rate exceeding 50% for five consecutive months in the second half of the year. Wholesale of new energy vehicles reached 12.230 million units, with a net increase of 3.356 million units, a growth rate of 38%, which is 2 percentage points higher than in 2023. The wholesale penetration rate of new energy vehicles for the year reached 45%, an increase of 10 percentage points, with an export penetration rate of 27%, indicating significant potential for international development of new energy vehicles. In terms of market share, domestic independent car manufacturers have quickly become the absolute leaders, with companies like BYD Company Limited, Geely Auto, Chery Automobile, and Chongqing Changan Automobile continuing to dominate. Manufacturer sales share increased from 32% in the previous year to 39% in 2024, reflecting the successful transformation of traditional independent car companies towards new energy vehicles. The high-endification of domestic passenger cars is evident, with the share of domestic cars priced above 200,000 RMB increasing from 27% in 2022 to 41% in 2024. The share of new energy vehicles priced above 200,000 RMB increased from 67.4% in 2022 to 74.4% in 2024. SUVs continued to show strong growth, with SUVs accounting for 51.1% of domestic passenger car retail in December and 49.4% for the whole year. In December, the share of SUVs in domestic retail sales of new energy vehicles was 50.5%, and for exports, it was 69%. 1. Retail Trends of Narrow Passenger Cars in Recent Years Domestic retail of passenger cars showed a continuous upward trend from April to December 2024, with a strong performance in July. In December, national retail of narrow passenger cars reached 2.64 million units, with a year-on-year increase of 12% and a month-on-month increase of 8.7%, showing significant growth compared to previous years. 2. Wholesale Trends of Narrow Passenger Cars in Recent Years In December, national wholesale of narrow passenger cars reached 3.08 million units, a strong year-on-year increase of 12%, reaching a new high for December. The U-shaped growth in sales in 2024 was unique, with a significant difference from the trend in 2023. December saw sales surpassing 3 million units for the first time, showing a strong performance. 3. Production Trends of Narrow Passenger Cars in Recent Years In December, the production of narrow passenger cars reached 2.941 million units, a year-on-year increase of 9.7% but a month-on-month decrease of 2.7%. The production in December exceeded the previous high point in 2023 by 270,000 units. From January to December, the production of narrow passenger cars reached 26.85 million units, showing a 5% increase compared to the previous year. Currently, the production capacity of narrow passenger cars is strong, with some restraint in production from June to September. Some key manufacturers increased their production capacity in October and November, reaching a new high in production capacity. In December, some major manufacturers reduced production. 4. Monthly Changes in Production, Sales, and Inventory Due to the significant production cutbacks in December, wholesale remained strong. The production was 130,000 units lower than wholesale in December, while monthly domestic wholesale exceeded retail by 40,000 units. This trend towards achieving production and sales targets at the end of the year indicates a stable growth trend for wholesale and retail in early 2025. However, overall, there is still a strong destocking trend, with a reduction of 340,000 units in manufacturer inventory and 490,000 units in distribution channel inventory from January to December.In comparison with the previous year, the total number of passenger cars in domestic channels decreased by 490,000 (an increase of 10,000 from the previous year), resulting in 22.4 million cars being wholesaled domestically, which is 2.1 percentage points lower than domestic retail sales.5. Analysis of Car Price Reduction in 2024 The scale of new car price reductions this year continues to increase. Currently, the main price competition is the direct breaking of the lower limit of the original price when new cars are launched, rather than the mode of adding equipment without reducing prices. Up to December in 2024, there were a large number of models that had reduced prices, mainly new energy vehicles, concentrated in April, July-September, and some in December. The reduction of prices for conventional fuel vehicles was more frequent in March-April, July, September, and December, but still considered normal. In 2024, from January to December, there were 227 models that had reduced prices, exceeding the scale of 148 models for the entire year of 2023 and significantly surpassing the total scale of 95 models for price reductions in 2022. Of these, 88 conventional fuel vehicles reduced prices, 17 hybrid models reduced prices, 34 plug-in hybrid models reduced prices, 14 extended-range models reduced prices, and 82 pure electric vehicle models reduced prices. The main factors affecting price reductions are pure electric vehicles and plug-in hybrids, and the number of price reductions for conventional fuel vehicles is also gradually increasing. 6. Trends in Promotion of Compact Passenger Cars A. Significant increase in promotions for new energy vehicles In December 2024, promotions for new energy vehicles gradually reached a high point of 8.9%, an increase of 0.3 percentage points compared to the same period. Promotions for new energy vehicles have been stable in recent months, with a significant decrease in intensity after April due to price reductions. With new cars in place after the spring price reductions, promotions are expected to decrease, and they have currently maintained a normal level of promotions since December 2023. B. Trends in promotions for fuel vehicles In December 2024, promotions for traditional fuel vehicles gradually reached a high of 21.8%, an increase of 3 percentage points compared to the same period. Promotions for traditional fuel vehicles began to rise significantly in August 2023, and in February 2024, they relatively decreased to 18.1%. The promotions increased sharply to 22% in March-August, and currently hover around a high level of 22% from September to December. C. Trends in promotions for luxury cars In December 2024, promotions for luxury cars gradually reached a high of 25.8%, an increase of 5.4 percentage points compared to the same period. Despite the strong demand for high-end vehicles driven by consumption upgrades, due to the diversion of new energy vehicles, promotional efforts for luxury cars increased to 25.1% in July, reaching a historical high level. With production cuts stabilizing prices, promotions for luxury cars decreased to 24.3% in August, but with increased market competition, promotions spiked to 25.8% in December. D. Trends in promotions for mainstream joint venture cars In December 2024, promotions for joint venture fuel vehicles gradually reached a high of 21.6%, an increase of 1.1 percentage points compared to the same period. Promotions for joint ventures increased dramatically, from a low of 13% in 2023, further increasing to 22.5% in March-June this year, breaking through 22.9% in August, and stabilizing from September to December, with promotions at 21.6% in December. E. Trends in promotions for independent fuel vehicles In December 2024, promotions for independent fuel vehicles gradually reached a high of 16.4%, an increase of 2.7 percentage points compared to the same period. Promotions for independent car companies rose rapidly from March to August, and remained stable overall from August to December. Due to the lower promotions for new energy vehicles by independent brands and an increase in export volume, overall promotions remained relatively stable. F. Tracking the intensity of promotions for fuel vehicles This year, there is greater pressure on promotions for conventional fuel vehicles and hybrid vehicles, while promotions for new energy vehicles are relatively moderate, especially for plug-in hybrids and extended-range vehicles. The trend of promotions varies among different car series of joint venture companies, with European and Korean brands showing weaker market trends and higher promotional efforts, while Japanese brands showed smaller increases earlier this year but a significant increase more recently. Recent significant growth in promotions by joint venture companies has led to further price reductions for previously resilient brands such as German and Japanese brands compared to December last year. After a year of changes, these brands have gradually caught up with the promotional efforts of Korean and American brands, resulting in a comprehensive increase in promotions for joint venture brands. This reflects the increasing competition from second-tier brands to first-tier brands, leading to significant challenges and pressures for joint venture brands. 7. Growth Characteristics of Different Levels of Compact Passenger Cars In December 2024, the retail growth rate of passenger cars remained equal to wholesale. The weaker performance of fuel vehicles led to a decrease in the proportion of sedan demand in December. Retail sales of sedans were lower than SUVs in December, with good performance in the high-end B-segment sedans, a recovery in sales of A00-sedans, but significant losses in sales of A0-sedans. There is a strong trend towards higher-end SUVs, with B-segment and C-segment SUVs performing well compared to last year. 8. Growth Characteristics by Country of Compact Passenger Cars In December, mainstream joint venture brands sold 710,000 vehicles, a year-on-year decrease of 11% but an increase of 17% compared to the previous month. In December, German brands accounted for 16.2% of the market, a decrease of 4.4 percentage points year-on-year; Japanese brands accounted for 13.4%, a decrease of 3.6 percentage points year-on-year; and American brands reached a market share of 6.7%, a decrease of 0.1 percentage point year-on-year. Independent brands have seen significant increases in the new energy and export markets. Leading traditional car companies have shown excellent performance in transformation and upgrading, with brands such as BYD, GEELY AUTO, Chery, and SAIC-GM Wuling experiencing significant increases in market share. 9. Characteristics of Brand Production and Sales in 2024 The original brand value system has changed, and there continues to be significant pressure on the production and sales trends of joint venture car companies, with the industry chain of joint venture brands facing a severe crisis. In December, there was a slight improvement in industry differentiation, with a stronger month-on-month trend in the fuel vehicle market, driving improvements in the trends of joint ventures and luxury cars. 10. Penetration Rate of Shanxi Guoxin Energy Corporation - Wholesale In December, the wholesale penetration rate of new energy vehicles manufacturers was 49.2%, an increase of 8.5 percentage points compared to December 2023. In December, the penetration rate of self-owned brand new energy vehicles was 67%; the penetration rate of new energy vehicles in luxury cars was 36%; whereas the penetration rate of new energy vehicles in mainstream joint venture brands was only 4.3%. In December, traditional car manufacturers saw a 4% year-on-year decrease in wholesale, while retail sales of new energy vehicles increased by 36% year-on-year, resulting in a 40 percentage point difference in growth rates, with greater pressure on fuel vehicles. 11. Characteristics of Brand Production and Sales in 2024 The production and sales trends of joint venture car companies remain under significant pressure, leading to a crisis in the industry chain of joint venture brands. In December, there was a slight improvement in industry differentiation, with a stronger month-on-month trend in the fuel vehicle market, driving improvements in the trends of joint venture and luxury cars.Energy Corporation - Permeability - RetailIn December, the domestic retail penetration rate of new energy vehicles was 49.4%, an increase of 9.1 percentage points compared to the same period last year. In December, the penetration rate of new energy vehicles in independent brands in the domestic retail market was 71.3%; in luxury cars, the penetration rate was 33.9%; while in mainstream joint venture brands, the penetration rate of new energy vehicles was only 4.8%. In December, traditional car retail sales decreased by 5% year-on-year, while new energy vehicle retail sales increased by 37%, a difference of 42 percentage points. The heavy tax burden on fuel vehicles puts significant pressure on them.