Cui Dongshu: The January car market was slightly weaker than the previous year's hot pace, with retail negative growth as expected.

On February 12th, Cui Dongshu released an analysis of the characteristics of the national passenger car market operation in January 2025. Since the beginning of winter, due to the appearance of "La Nia", the eastern region of China has been significantly affected by the north wind, resulting in less precipitation and higher temperatures, leading to a weaker demand for cars. With the end of the annual national car scrappage and replacement policy in 2024, although related policies continued in January 2025, the transition period in January is the best time to enjoy the car purchase subsidies. However, due to an early Chinese New Year, many consumers completed their replacement car plans before the end of 2024, resulting in slightly weaker car market conditions in January compared to previous years. Additionally, with more than 4 days less effective sales time in January, a negative retail growth was expected. Taking into account factors such as the transportation cycle before the Chinese New Year, the period leading up to the Spring Festival has traditionally been a low production and sales period for manufacturers. This forms a node for strong inventory clearance before the Chinese New Year, as reflected by the rapid drop in inventory. This year, due to the high base number before the Chinese New Year in January last year, in order to ensure stable economic growth, some manufacturers, after meeting their 2024 targets, will consider a certain amount of transfer to ensure a strong start in January 2025. Due to strong exports and a moderate decline in inventory, wholesale sales performance will be strong in January. Characteristics of the passenger car market in January 2025: 1. Wholesale, production, and exports are at historical lows. January retail is only higher than January retail in 2020 and 2023 in the past 10 years, indicating a potentially great starting point for the year. 2. Independent brands accounted for over 68% of wholesale and over 61% of retail in January, marking an increase of 8 and 6 percentage points respectively from last year. Independent brands lead in all aspects, reflecting innovation in product quality and channel management, and continue to receive support and recognition from users. 3. Price wars are stabilizing, with moderate discount promotions in January. 4. Passenger car exports reached 410,000, a 5% year-on-year increase with a noticeable slowdown in growth. 5. Inventory reduction in January is not prominent, with manufacturers adding 10,000 vehicles to their inventory and channel inventory decreasing by 70,000 vehicles. This significant decrease in fuel vehicle inventory highlights the instability of the distribution system. 6. Domestic retail of new energy vehicles reached 740,000, with a growth rate of 11%, maintaining good growth due to high demand around the Chinese New Year. 7. Independent car companies have become the absolute leaders, with BYD, Geely, Chery, and Changan maintaining their leading positions. The sales share of manufacturers has increased from 38% in the previous year to 46% in January 2025, representing the successful transition of traditional independent companies to new energy vehicles. 8. The high-end market for independent passenger cars is increasing noticeably. In January, the share of independent brands priced above 200,000 yuan has risen from 22% in 2022 to 37% in 2025. 9. SUVs continue to show strong growth, accounting for 50% of domestic passenger car sales in January. In recent years, there has been a trend of continuous growth in retail sales, wholesale sales, and production of passenger cars. Retail sales in January 2025 were 1.79 million vehicles, a 12% year-on-year decrease and a 32% decrease from the previous month. Wholesale sales, production, and inventory levels also experienced significant trends. Overall, the passenger car market in China in January 2025 shows signs of decline in sales but stability in other aspects.From July to December in the fourth year, it has been hovering at a recent high level of 22%. National subsidy policies have driven the industry's stable trend.C. Sales Trend of Luxury Cars In January 2025, the promotion of luxury cars gradually reached a high of 26.2%, an increase of 6 percentage points compared to the same period. Although the upgrade in consumption drives strong demand for high-end products, the promotion of luxury cars continued to increase to 25.1% from April to July 2024, reaching a historical high level. With the stabilization of production and prices, the promotion of luxury cars dropped to 24.3% in August. However, with intensified market competition, the promotion rate in January 2025 rebounded to a high of 26.2%, relatively stable. D. Trend of Mainstream Joint Venture Car Promotions In January 2025, the promotion of joint venture fuel cars gradually reached a high of 21.6%, an increase of 2 percentage points compared to the same period. Sales promotions of joint ventures saw significant growth, starting from a low of 13% in 2023 and further increasing to 22.5% from March to June 2024. It surpassed 22.9% in August and then stabilized, reaching 21.6% in January this year. E. Trend of Independent Fuel Car Sales Promotions In January 2025, the promotion of independent fuel cars gradually reached a high of 16.4%, an increase of 2 percentage points compared to the same period. Independent car companies saw a rapid increase in promotions from March to August 2024, followed by overall stability from August to December. Due to the smaller promotion of new energy vehicles by independent companies compared to fuel cars, an increase in export share, the overall promotion remains relatively stable. F. Tracking of Fuel Car Sales Promotions At the beginning of 2025, there was higher promotional pressure on conventional fuel cars and hybrid cars, while promotions for new energy vehicles were relatively moderate, especially plug-in hybrids and extended-range vehicles performing well. 6. Growth Characteristics of Different Levels of Passenger Cars In January 2025, retail sales of passenger cars decreased by 12%, significantly lower than the zero growth in wholesale. Due to the strong demand for fuel cars, the proportion of sedan demand in January remained stable. SUVs remained the main force in the car market, with sedan retail sales lower than SUV retail sales in January. The performance of high-end B-class sedans was good, while sales of A00-class sedans rebounded, but sales of A0-class sedans suffered losses. The SUV market showed strong high-end characteristics, with B-class and C-class SUVs performing strongly compared to the previous year. 7. Growth Characteristics of Passenger Cars by Country In January, domestic brand retail sales reached 1.09 million units, a year-on-year decrease of 3% and a month-on-month decrease of 31%. The domestic brand's domestic retail market share in January was 61%, an increase of 5.9 percentage points year-on-year. In January, the domestic brand's wholesale market share was 69%, an increase of 8 percentage points from the same period last year; the domestic brand obtained significant increments in the new energy market and export market. Head traditional car companies have performed excellently in transformation and upgrading, with significant increases in market share for BYD Company Limited, GEELY AUTO, Chery Automobile, SAIC General Motors WULING MOTORS, and other traditional car brands. In January, mainstream joint venture brand retail sales reached 490,000 units, a year-on-year decrease of 27% and a month-on-month decrease of 30%. In January, the market share of German brands was 18.4%, a decrease of 0.7 percentage points year-on-year. Japanese brand market share was 13.4%, a decrease of 3.3 percentage points year-on-year. The market share of American brands reached 5.3% in January, a decrease of 1.1 percentage points year-on-year. 8. Characteristics of Brand Production and Sales in 2024 Changes in the original brand value system, continuous pressure on the production and sales trends of joint venture car companies, and a severe crisis in the industrial chain of joint venture brands. In January, industry differentiation improved slightly, with a stronger month-on-month performance in the fuel car market, driving improvements in the trends of joint venture and luxury cars. 9. Wholesale Penetration Rate of New Energy Vehicles in January In January, the wholesale penetration rate of new energy vehicle manufacturers was 41%, an increase of 8 percentage points from January 2024. In January, the wholesale penetration rate of new energy vehicle manufacturers was 41.5%, an increase of 9 percentage points from January 2024. In January, the penetration rate of new energy vehicles from domestic brands reached 54%; the penetration rate of new energy vehicles in luxury cars was 34%; while the penetration rate of new energy vehicles from mainstream joint venture brands was only 2%. Compared to the same period last year, wholesale sales of traditional car manufacturers decreased by 13% in January, while retail sales of new energy vehicles increased by 27%, with a difference in growth rate of 40 percentage points, indicating greater pressure on fuel cars. 10. Retail Penetration Rate of New Energy Vehicles in January In January, the domestic retail penetration rate of new energy vehicles was 41%, an increase of 9 percentage points compared to the same period last year. In January, the penetration rate of new energy vehicles in domestic retail was 60.6% for domestic brands; 20% for luxury cars; and only 3% for mainstream joint venture brands. In January, retail sales of traditional cars decreased by 24% year-on-year, while retail sales of new energy vehicles increased by 11%, indicating a 33 percentage point difference and greater pressure on fuel cars.