2023 marks a major milestone for China's automotive industry. According to statistics, in 2023, China's automobile production and sales will both exceed the 30 million mark, completing 3016 respectively10,000 and 300940,000 units, up 11. y/y6% and 12%. This achievement marks the fastest growth rate since 2016. At the same time, with the increase in production and sales, the economic benefits of the entire automotive industry have also improved.
According to official statistics, in the first 11 months of 2023, the operating income of the automotive industry reached 90,663500 million yuan, a year-on-year increase of 112%, with a total profit of 4489800 million yuan, a year-on-year increase of 29%。However,Competition throughout the year had an impact on profit margins.
Among them, the production and sales of new energy vehicles reached 958 respectively70,000 and 94950,000 units, a year-on-year increase of 358% and 379%, and the market share increased to 316%, an increase of 5 percent from last year9 percentage points.
However,This is just the beginning of the development of new energy vehicles. At present, the penetration rate of new energy vehicles in the passenger car market has not yet reached 40%, and if the survival of existing vehicles is taken into account, the gap between new energy vehicles and fuel vehicles will be more significant. Therefore, new energy vehicle manufacturers still need to continue to make efforts.
In terms of exports, 2023 is a significant bright spot for China's automotive industry. The annual vehicle export volume reached 52210,000 units, exports of 101.6 billion US dollars, both of which ranked first in the world, and the average selling price of a single vehicle further increased to 1$950,000.
Looking ahead to 2024, how will the automotive industry evolve? Here are the top 10**.
Will the battle be more tragic?
While the pressures and costs of fierce competition among automakers may increase, large-scale competition is likely to decrease. Some brands may accept their shrinking market share and seek new market positioning.
Competition in 2023 is likely to continue throughout the year, but consumers may have become accustomed to it, and ordinary discounts may not inspire them to buy. As a result of the long competition, most automakers, with the exception of a few leading companies, may have exhausted their financial resources.
As consumer expectations for discount margins increase, and more and more companies are unable to offer significant discounts, competition is likely to shift from a chaotic state involving the entire automotive industry in the first half of 2023 to a confrontation between a few leading brands.
From the perspective of industrial development, Dr. Luo Rentong, a senior researcher at the Guangdong Provincial Innovation Strategy Research Association, said that it may not be accurate to simply call the price reduction within the automotive industry a "first-class war". With the gradual phase-out of gasoline vehicles, it is normal for traditional automakers to have to clear their inventories by lowering their **.
The development momentum of new energy vehicles is good, although the initial scale is small, the technology is immature, the cost is high, and the pricing is relatively high. However, with the growth of sales, the rapid improvement of the first chain and the arrival of the return period of technology research and development, the cost is rapidly decreasing, and the retail sales are also declining, which is the general trend of the development of the industry.
Fuel vehicles may not be able to achieve a "counterattack", price reduction to survive will become the norm, and many well-known classic fuel vehicle systems may also collapse. The prospects of new energy vehicles are promising, the cost will be further reduced, and many models will provide more reasonable ** when they are listed.
In this period of industry change, automobiles will undoubtedly be affected to a certain extent.
Will China's auto market be harder?
According to statistics, more than 20 automakers have competed for market share by cutting prices** or disguised price cuts. In the midst of this fierce competition, even wealthy automakers are starting to feel the pressure.
In 2023, seven of the 20 passenger car manufacturers on the A** market will see their net profits fall, including Dongfeng Motor, GAC Group, Great Wall Motor and SAIC Motor.
Under this pressure,The goal of profitability for emerging automakers seems increasingly out of reach. In this environment, automakers and component companies are starting to adjust. Dozens of traditional automakers and emerging automakers, such as Guangqi Honda, Jaguar Land Rover, Volkswagen, Gaohe Automobile, Volvo, NIO, General Motors, Ford, Kia, VOY, etc., have reported layoffs.
In 2023, GAC Mitsubishi, Pangda Group, and WM Motor have all encountered difficulties; In 2024, Gaohe Auto has a bad start, and Daniel Zhang, CEO of Nezha Auto, acknowledged the problem and said that comprehensive reforms will be carried out. However, the mindset of consumers is changing, and they are starting to tend to buy *** cars rather than *** cars.
In addition,New models of China's own brands are also constantly lowering the threshold for various market segments, the ** of the B-class medium-sized sedan has dropped to below 100,000 yuan, almost overlapping with the A-class compact model, and the ** threshold of the C-class medium and large car has also been reduced to 150,000 yuan.
Consumers are increasingly holding on to the fence and are reluctant to see a significant price drop in the first month of a new car, or a cheaper, better new car. In this context, the market prospect of new energy vehicles is better than that of fuel vehicles, because new energy vehicles can attract consumers through technological upgrades, increased configurations, and lower emissions, while fuel vehicles can only rely on competition.
Data on new cars launched in 2023 shows that the pace of renewal of gasoline vehicles is slowing down. Lack of new products to stimulate the market, even if it is further reduced, it is difficult to seize market share under the comprehensive competition of new energy vehicle technology, configuration and leadership.
Therefore,Sales of gasoline-powered vehicles are expected to continue to decline in 2024, and the contraction is likely to accelerate further due to the lack of new models and the negative impact of the collapse. The high-frequency listing of new energy vehicles is improving consumer taste, and the number of fuel vehicles** continues to decline, so the outlook for whether the overall growth of the auto market in 2024 can meet expectations is not optimistic.
How will Chinese cars perform overseas?
For the first time in 2023, China topped the global auto export list with an export volume of 5.26 million units. It is expected that by 2024, Chinese automakers will accelerate the pace of globalization, and compared with Geely and Chery 20 years ago, Chinese automakers now have stronger technical and financial support, and have accumulated rich operational experience overseas. For example, companies such as BYD have even begun to take full control of the operation of car ro-ro ships. Affected by many favorable factors, the export volume of SAIC, Chery and BYD will reach 120 in 2023820,000 units, 93710,000 and 2520,000 units.
Dr. Luo Rentong, a senior researcher at the Guangdong Innovation Strategy Research Association, said that the position of Chinese automakers in the global market is constantly improving, and it is expected that China will continue to occupy the first position in global auto exports in the next few years.
In the future market, Chinese automakers will face various challenges, including the complexity of the European market, the difficulty of conquering the US market, and the fierce competition in the Southeast Asian market. Central Asia, Russia and the Middle East provide huge room for Chinese automakers. Especially in the Middle East market, Chinese automakers are expected to realize the dream of luxury cars.
In the Southeast Asian market, Thailand will become the first choice for the overseas bridgehead of China's automotive industry. In 2023, the sales of new energy vehicles in Thailand will reach 7630,000 units, a year-on-year increase of nearly 7 times, Chinese brands accounted for 834% market share. In addition, Chinese automakers such as BYD, Changan, and GAC Aion have announced the construction of factories in Thailand, with BYD's 150,000 production capacity plant scheduled to start production in 2024.
In 2023, the market share of Chinese automobiles in the Russian market has exceeded 50%, and this proportion is expected to surpass that of the domestic market by 2024. At the same time, the Middle East market will also become a key variable for China's auto exports in 2024, and there are currently 9 Chinese car companies, 13 Chinese brands, and a total of more than 20 models sold in the Middle East.
In 2024, important developments in China's auto exports will take place in the European market. BYD cut its price in Germany by 15 percent, bringing the price of its ATTO3 model to less than 40,000 euros, which is lower than Volkswagen's entry-level electric ID3。This price reduction is not a war, but in response to Germany's policy of canceling subsidies for electric vehicles. After becoming the world's largest exporter, China's auto industry is getting bigger and bigger, but it may take some time to enter Europe.
Correlation analysis: Chinese brand new energy vehicles are booming in Thailand, can Japanese fuel vehicles still hold the Southeast Asian market?
How will the internal landscape of Chinese brands change?
In 2023, although the overall market share of Chinese brands continues to grow and shows strong momentum, not all Chinese brands are thriving. Some of the once high-profile brands, such as Roewe, Trumpchi, MG, etc., are actually declining in sales. In the process of industry transformation, it is not only joint venture brands that have been affected, but also those Chinese brands that are smaller and have failed to seize the development opportunities of new energy vehicles. Even in the field of new energy vehicles, the fate of each brand is different. For example, BYD and Geely have achieved remarkable results in terms of sales, entering the 60,000 club and stabilizing at around 40,000 monthly sales respectively, while brands such as Aion, Changan, Great Wall and Chery have performed relatively weakly.
Looking ahead to 2024, Chinese brands will face a knockout round. However,A significant advantage for Chinese brands is that most brands are able to offer a complete set of NEV solutions, which gives them more confidence than many traditional joint venture brands in the face of market changes. As the market competition intensifies, new technologies will become the main focus of competition, as ** has been pressed to the lowest point in the previous year's competition. In order to further improve the value for money, brands need to reduce costs or improve product quality through technological innovation.
In fact, Chinese companies have already achieved a leading position in the field of new energy vehicle technology. From battery technology innovation to electronic and electrical architecture upgrades, to the rapid application of silicon carbide motors and high-power technologies, as well as the continuous iteration of intelligent cockpits and driving systems, Chinese automakers and leading companies have demonstrated innovation capabilities beyond their overseas counterparts in the past year. For example, the domestic substitution of air springs and the development of wire-controlled chassis, as well as the significant reduction in the cost of lidar, have provided strong technical support for Chinese brands.
Although on the surface, the competition between Chinese car companies seems to be mainly focused on the best and cost-effective, but in fact, the real competitiveness comes from technological innovation. Only through technological progress can enterprises achieve truly competitive advantages. Therefore, it is foreseeable that in 2024 and beyond, those Chinese automakers that can continue to carry out technological innovation will not only be able to gain a foothold in the market, but even achieve stronger growth.
Can joint venture brands stop the decline?
In the Chinese market, joint venture brands must re-examine their positioning and adapt to the new market environment. In the case of Volkswagen, the German brand has quickly accepted the reality, and its price reduction strategy is particularly obvious, especially in the field of new energy vehicles. For example, the price of Volkswagen's ID series of new energy vehicles in the Chinese market has caused dissatisfaction among European consumers, and is even comparable to the Dolphin model of local brands such as BYD.
In the new energy vehicle market, joint venture brands have lost their ability to pay a premium for their brandsEspecially in the price range of 100,000 to 200,000 yuan, independent brands have mastered the dominance of pricing. Despite this, some luxury brands such as BMW, Mercedes-Benz and Audi (BBA) have maintained strong competitiveness in the third- and fourth-tier cities by cutting prices and leveraging brand advantages.
As German brands such as Volkswagen adjusted their strategies more quickly, their market share in the fourth quarter of 2023 increased month by month. However, while Volkswagen still retains its position as the number one brand in the Chinese market, it may be difficult for them to maintain this position in 2024.
In contrast, Japanese brands such as Honda and Nissan have seen double-digit declines in sales for two consecutive years. In addition, Toyota's sales have also begun to decline, and GAC Toyota's sales have even fallen below the million mark.
The conservative attitude of Japanese brands when it comes to new technologies has led to their disadvantage in the market competition. As a result, Japanese joint venture brands may need to consider new strategies, for example, Honda reportedly plans to resume sales of the MPV Odyssey model in Japan in 2024, and the car will be manufactured by China's Guangqi Honda.
Correlation analysis: In the new energy era, can Japanese cars that have fallen behind keep up with the wave?
Will Reverse Joint Ventures Accelerate?
In the era of traditional automobiles,"Joint ventures"The model is usually that domestic manufacturers provide manpower, land and capital, while foreign manufacturers contribute technology and brand. However,With the rise of the electric vehicle industry, this model has changed.
For example, Mercedes-Benz and BYD have previously jointly established a joint venture, and the joint venture between Toyota and BYD has also begun operations. In addition, Mercedes-Benz has joined forces with Geely to jointly create an electric version of the smart.
In 2023, Volkswagen will invest in Xpeng, Audi will cooperate with SAIC, and Stellantis, the world's fourth-largest automaker, will also buy a 20% stake in Leap. These new joint ventures or cooperation models are different from the past, as brands have become technology exporters in China. Since China accounts for 60% of the global new energy market share, no foreign brand wants to miss this opportunity, but because of their average technical strength, they need to find technology exporters.
Which country has the most new energy vehicle manufacturers and the most advanced technology in the world? The answer is China. It is expected that by 2024, we will see more cases of reverse joint ventures, which is undoubtedly a change of times.
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Will high-end intelligent driving become more popular?
In the first half of the race for electric vehicles, electrification technology dominatedIn the second half of the competition, intelligent technology has become the core focus of competition. As the market share of new energy vehicles continues to expand, major brands have begun to focus on the competition of intelligent driving technology.
The concept of autonomous driving has been proposed as early as the beginning of the electric vehicle industry, but in 2023, this technology has suddenly ushered in rapid development and gradually penetrated into more accessible models.
For example, the BMW Group announced on December 14 that its vehicles equipped with Level 3 autonomous driving functions have obtained a high-speed autonomous driving test license in Shanghai. Immediately afterwards, Mercedes-Benz, Zhiji, Aion, Jihu, Deep Blue, AVATR and other brands have also obtained corresponding test licenses in different cities.
In the classification of autonomous driving technology, Level 3 autonomous driving means that the vehicle is able to do most of the driving maneuvers, but still requires the driver's attention to take over the vehicle if needed. Compared to the L2 level, the biggest feature of the L3 class is that it allows the driver to take his eyes off the road for an extended period of time under certain conditions.
Although major brands are competing to launch "L2+", L25" and other innovative concepts, trying to occupy a place in autonomous driving technology, but according to the relevant regulations of the Ministry of Industry and Information TechnologyOnly driving automation that reaches Level 3 and above can be officially recognized as autonomous driving, while technologies that reach Level 2 and below can only be called assisted driving.
In the market competition in 2024, the brand that takes the lead in achieving Level 3 autonomous driving will undoubtedly win wide recognition in the industry, but this does not mean that brands that fail to achieve Level 3 will necessarily be at a disadvantage.
In summary,Although L3 autonomous driving has attracted much attention, in practical applications, factors such as safety, practicality and cost-effectiveness are the key criteria for judging its value. Dr. Luo Rentong, a senior researcher at the Guangdong Provincial Innovation Strategy Research Association, believes that with the continuous advancement of technology, the small-scale commercial use of L3 autonomous driving is also expected to become a reality, and at the same time, L2+ autonomous driving technology will dominate the market for a period of time. Looking ahead, the development momentum of intelligent driving technology is strong, and it is expected that by 2024, high-end intelligent driving will become the standard configuration of mainstream new energy vehicles.
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How big is Huawei's impact on the auto market?
Huawei's automotive business has been operated independently, with the HarmonyOS intelligent cockpit, DriveOne power platform, and ADS2 in its handsBased on core equipment such as 0 high-end intelligent driving system, we build nests to attract phoenixes and constantly recruit partners from all walks of life.
Driven by the Mate 60 series and with the help of Huawei's brand and ecosystem, the new M7 has achieved a double improvement in product power and cost performance, making it a phenomenal product in 2023.
Looking ahead, the AITO brand plans to launch two new models, the new M5 and the M8. At the same time, Huawei will also cooperate with Chery, BAIC, JAC and other car companies to launch three new models based on Huawei's smart car model, namely the Zhijie S9, X4 and X6.
In the new energy high-end SUV market, the competitors of Wenjie are mainly ideal brands. In contrast, the cost performance of traditional giants such as BBA is not competitive, and the layout of other car companies in this market segment is relatively small and weak. Therefore, the market space left for Wenjie is very broad. However, in stark contrast to the hot sales of Wenjie, the Zhijie S7 brand cooperated with Chery is relatively cold.
In addition to the Zhijie S7 and Star Era ES, there are also Zeekrypton 001, Geely Galaxy E8, Changan AVATR 12, SAIC Feifan F7 and the slightly shorter wheelbase Zeekrypton 007, BYD Han and many other models are competing for market share. These medium and large sedans are the key products of their respective car companies, and the huge investment in resources can be imagined, and the competitive pressure can be imagined.
As its product line continues to expand and sales surge, Huawei also faces many challenges. Are there any other large manufacturers joining Huawei's circle of friends? How do you increase productivity while maintaining product quality? How do you ensure differentiated positioning between each brand? And how to effectively promote each product when it comes to market? These issues will become the focus of Huawei's attention and urgent problems to be solved in 2024.
Correlation analysis: Huawei, which does not make cars, will make a big move at the end of the year, and "sell at a loss" will also be a "locomotive".
Will Huawei build its own cars?
Can BYD continue its high growth?
BYD's sales will continue to soar from 2022 to 2023, with a single-year increase of more than 1 million units, with its strong core technologies, such as blade batteries, e-platform 30. Super hybrid DM-I DM-P, etc., as well as the strong lineup of the two series of models and multiple sub-brands of Dynasty and Ocean, unless there are major changes, there is no doubt that it will continue to maintain the first position in the world in 2024.
BYD's ultra-high growth rate is achieved by relying on popular models in one market segment. However, with the gradual aging of some models and platforms, new models are expected to be launched in 2024, and sales are likely to rise further. However, the growing strength of competitors, and even surpassing in some technologies, may hinder BYD's market share expansion. Despite this, BYD's current sales growth mainly relies on popular models in various market segments, such as the Seagull, Dolphin, Qin, Yuan, Song, etc., as well as the Han, Tang, Denza D9, etc.
As BYD enters more segments, such as the hardcore off-road and luxury car markets, while these markets are more profitable, their market size is relatively small. As a result, BYD's sales growth is expected to slow down in 2024, but the growth of revenue, profit, and average price per vehicle may accelerate, changing the situation where revenue growth has been slower than sales growth since 2022.
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BYD, which has the largest market capitalization but does not have a large amount, will it turn around against the wind or will it be exaggerated?
How many car companies will fall?
In 2023, WM Corporation in the field of new energy vehicles is in trouble, while established automakers such as Mitsubishi may choose to withdraw from the market. Companies that are expected to face difficulties in 2024 include Goho, Infiniti, and Skoda.
It is expected that in the next few years, many second-tier luxury brands of joint ventures may choose to exit the Chinese market or retain only imported cars. As sales of joint venture brands shrink every year, these second-tier luxury brands are the most affected.
The process of exiting the Chinese market is almost the same: first a large price cut, then sales temporarily maintained for a while, then sales fell sharply, consumer confidence was frustrated, sales fell further accelerated, and finally dealers withdrew from the network en masse, and finally withdrew from the Chinese market.
Brands that can hold on until 2024 and sell normally should not have much of a problem with the fundamentals of R&D, manufacturing, sales and service. The eliminated companies are defeated in the fierce competition in 2023. These companies are different from those that have gone bankrupt in the past few years in that they usually have some valuable assets in their hands, such as advanced manufacturing plants, etc. Companies that can survive 2023 usually mean that their financial problems have not yet reached the point where they cannot be solved.
The biggest problem they face is a cash flow shortage due to the inability to sell cars. So, after 2024, even if the car companies face a difficult situation, they will probably do so in a relatively decent way.
Correlation analysis: Can WM Motor survive the cold winter of the industry?
Summary
In 2024, China's auto industry will face even greater challenges, especially in the field of new energy vehicles, which will be the main revenue and profit for many automakers**. In 2023, new energy vehicles will develop rapidly, and local Chinese brands will perform well in this field.
By 2024, the market will be more competitive, and products, technologies, services and user experience will be improved. In addition, China's strengths in the NEV value chain, such as CATL and BYD's plans to reduce EV batteries**, will provide automakers with more room for cost savings and efficiency improvements.
It is expected that by 2024, more than half of China's auto companies will be profitable in the new energy vehicle business. At the same time, due to the shrinking market of gasoline vehicles and the increasing operating pressure of joint ventures, the potential of China's auto market has not yet been fully developed.
Many ICE vehicle brands have launched unprecedented low price strategies in 2023, and this trend is expected to continue in 2024. These brands are highly competitive in the sinking market, so although China's fuel vehicle market is still facing challenges, there are still plenty of opportunities for automotive companies to explore in the sinking market.
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