Cui Dongshu: Increase the forecasted retail sales volume of passenger cars in 2025 to 23.43 million units.

On February 24th, Cui Dongshu posted an article stating that based on the better performance of the passenger car industry data released in January 2025, and considering the favorable policy orientation of the national policy promotion fee in 2025 and future environmental change trends, the China Passenger Car Association forecasting team made slight adjustments to the industry's annual forecast for 2025 in mid-February. Passenger car retail forecast for 2025 is 23.43 million units, an increase of 2%, with an additional 70,000 units compared to the January forecast. The export forecast for passenger cars in 2025 is 5.27 million units, an increase of 10%, with a decrease of 30,000 units compared to the January forecast. The wholesale forecast for new energy passenger cars in 2025 is 15.65 million units, an increase of 28%, with a decrease of 30,000 units compared to the January forecast. The national automotive wholesale forecast for 2025 is 32.66 million units, an increase of 4%, with a decrease of 10,000 units compared to the January forecast. 1. The national passenger car market forecast index in February and the January satisfaction index both exceeded 50%. According to the set method and evaluation results of the PMI index, the China Passenger Car Association evaluates the market performance on a monthly basis. Based on forecasts from internal personnel of manufacturers, the internal market forecasting team's optimism towards the December passenger car market forecast was at 95%, with a satisfaction rating of 43% in early January. The China Passenger Car Association's optimism towards the market in January 2025 reached 19%, which is a recent high in market optimism. With manufacturer sales lower than retail sales in January, creating destocking characteristics, with evaluations at 56% being optimistic for January, and a value of 56% for February, compared to 33% in February 2024 and 46% in February 2023. The forecast for February is also relatively optimistic, reflecting a strong promotion of market growth. Considering the current level of inventory at 2.99 million units and the expected market growth in the coming months, there is not significant pressure on industry inventory digestion. Given the current divergence brought about by the price promotion war, car companies need to track policy environment and market changes in a timely manner, cautiously set production and sales pace, cautiously increase inventory based on dealer inventory structure, and promptly clear historical inventory. 2. Overall, the start of 2025 is better than expected The overall economic and policy operation since the start of 2025 is more optimistic. First, China's export performance has been better than expected, with Trump's tariff policies towards China being more gradual. China also has a reasonable and logical response, and currently, the 10% tariff on China only detracts 0.2 percentage points from China's economic growth in 2025. Since 2018, US import prices have risen rapidly, while Chinese import prices have only increased by 0.3%. China still has a competitive advantage due to lower prices and lower tariff rates, with room for maneuver. Secondly, the confidence in the overtaking of the bend in high-tech industries has increased, as the possibility of Deepseek reproducing the most advanced models at low computing costs means that the previous assumption of absolute US leadership in the AI field is now more uncertain. This also means that the US's efforts to constrain China's high-tech industries have not been entirely successful. China can still achieve better development and may become a formidable competitor with the US in high-tech industries, greatly boosting industry confidence and market sentiment. Looking ahead to 2025, if there is a positive "expectation gap" in the US-China trade war, it may continue to drive the high export growth; if the real estate market continues to trend downwards, reducing the consumption impact of bottom-fishing in the real estate market, which is mainly lacking in consumption power, high real estate prices divert wealth from the economy, which is beneficial for consumption recovery. Currently, we have firm, willing, and united macroeconomic strategies. Firstly, our high-quality development strategy corresponds to the trade war, maintaining positive and orderly policy arrangements, unlike recent policy changes that have caused global concerns from the US government. At the same time, there is consensus among us, with a clear understanding of the main contradictions in China's economy. The first State Council executive meeting after the Spring Festival focused on boosting consumption, resolving structural contradictions in key industries, policy measures, and the 2025 plan to stabilize foreign investment, which more effectively ensures China's economic growth in 2025, playing a relatively good stabilizing role in the development of the automotive market. 3. 2025 uncertainties impact forecast adjustments Recently, due to other countries' automotive companies withdrawing from Russia, Chinese companies have quickly assured the supply demand of vehicles in Russia in 2023. Chinese companies are currently safe in Russia, but we still need to observe the changes in the Ukraine crisis carefully. The export of new energy vehicles from China to Russia fluctuated dramatically in 2024, and the import rules of Russia have been continuously adjusted according to supply and demand. After a sharp increase in the export of tractor-trailers and heavy trucks in 2024, the performance of Shaanxi Automobile and Sinotruk Jinan Truck in exporting to Russia declined. Recently, there has been an increase in passenger car exports. If the Ukraine crisis ends quickly, it will have a significant impact on China's automotive exports to Russia. Many international car brands have withdrawn from the Russian market due to Western sanctions, allowing Chinese companies to quickly fill this void and increase sales. If the Ukraine crisis suddenly ends, partial removal of international sanctions may allow Western car brands to re-enter the Russian market, intensifying market competition. Additionally, Russian consumers may prefer to buy familiar Western brands. Moreover, the resumption of production by Western manufacturing companies in Russia would have a huge impact on Chinese automotive exports. Whether the 1.16 million vehicles exported in 2024 will revert to the 910,000 vehicles in 2023 is also a concern, as some Russian opinions have already questioned and amplified some flaws in Chinese cars, and we need to be prepared for more. 4. Maintain stable rolling forecasts for 2025 The China Passenger Car Association forecasting team has been making monthly and annual forecasts since 2009, with relatively good forecasting accuracy. The forecast for 2024 was 22.3 million units, with a 4% increase forecasted for the whole year at the beginning of January, then gradually slowing down due to factors such as price wars.With the country's ultra-long-term government bonds used for the "trade-in old for new" subsidy exceeding expectations, the China Association of Automobile Manufacturers also predicted a significant increase in optimism. The annual forecast increased from 3% in October to 5% in November, and rose to nearly 6% in early December, ultimately achieving a growth rate of 5.5%, which is 2 percentage points better than the initial forecast for the year.In 2025, the forecast for retail sales of passenger cars is 23.43 million units, an increase of 2%, with a total of 7,000 units higher than the forecast in January. The China Association of Automobile Manufacturers (CAAM) forecasted at the end of 2024 that domestic retail sales in 2025 would reach 23.30 million units, an increase of 2%. In early January 2025, the annual forecast for 2025 was 23.36 million units, exceeding the initial forecast by about 60,000 units, with an annual growth rate of 2%. As retail sales in January were 1.79 million units, better than the monthly forecast performance, the mid-February forecast for 2025 annual sales was 23.43 million units, an increase of 2%, with a total of 7,000 units higher than the January forecast, indicating a better overall forecast optimism for 2025. In 2025, the forecast for passenger car exports is 5.27 million units, an increase of 10%, with a total of 3,000 units lower than the January forecast. In February, the forecast for the full year passenger car exports in 2025 is 5.27 million units, slightly down by 3,000 units compared to January. The forecast has not been significantly adjusted, mainly due to the complexity of the Russia-Ukraine situation and the uncertainty of U.S. influence. Further adjustments will be made once the situation becomes clearer. The forecast for wholesale sales of new energy passenger cars in 2025 is 15.65 million units, an increase of 28%, with a total of 3,000 units lower than the January forecast. In 2024, national passenger car manufacturers sold 12.23 million units, significantly better than the CAAM's forecast of 11 million units. This is due to the decrease in prices of new energy vehicles, as well as the higher subsidies for new energy vehicles under the government's scrappage and replacement policy compared to fuel vehicles. The forecast for new energy passenger cars in 2025 remained at 15.63 million units in January, an increase of 28% year-on-year. In February, the forecast was raised to 15.65 million units, an increase of 28%, with a 2,000-unit increase from January. The forecast for new energy passenger cars in February is consistent with the annual forecast of 15.70 million units, driven by anti-overwork efforts and promotion of intelligentization. The forecast for national wholesale automobile sales in 2025 is 32.66 million units, an increase of 4%, with a total of 1,000 units lower than the January forecast. In 2024, national wholesale sales of automobiles reached 31.44 million units, an increase of 5%. At the end of 2024, CAAM forecasted 32.50 million units of automobile sales in 2025, an increase of 4%. In January 2025, CAAM forecasted a total of 32.67 million units of automobile sales in the country, an increase of 4%, mainly due to the transfer of some manufacturer sales from the end of 2024 to January 2025, achieving a strong start to the year. In mid-February 2025, CAAM forecasted 32.66 million units of automobile sales in the country in 2025, an increase of 4%, despite concerns about exports, maintaining an overall optimistic forecast.