The Chinese market decelerated further in February, according to data just released by consultancy LMC Automotive.* Light Vehicle (LV) wholesales were 1.94 million units, which is a growth of 14% year‐on‐year (YoY). Passenger Vehicle (PV) wholesales came to 1.68 million units, an increase of 11% YoY while Light Commercial Vehicle (LCV) wholesales, at 262k units, increased by 37% YoY. As for production, the total LV figure in February was also 1.94 million units, increasing by 12% YoY and 26% MoM.
However, the cumulative LV production from January to February in the world’s largest market, fell by -14% YoY. At the component level, passenger vehicle production in February increased by 12% YoY while cumulative PV production to February decreased by 14% YoY, the same as the decrease in LV overall.
Light Commercial Vehicle output at 255,000 was up 9% YoY. but down by -17% YTD. The February selling rate was 21 million units/year, down 11% from a weak January, and the lowest rate since the Shanghai lockdown of April 2022. In YoY terms, however, sales (wholesales) increased by 14.3% against a low base, due to the timing of the Chinese New Year, said LMC.
Weak sales in January and February were attributed by LMC to two major tax incentives, which ceased at the end of last year. The temporary purchase tax cut on ICE PV models and the decade‐old NEV subsidy program both ended in December 2022 – and thus pulled sales ahead from early 2023 into late 2022.
As sales are now slumping, automakers are cutting vehicle prices and provincial governments are rushing to offer subsidies (LMC thinks this won’t last for very long). Following big price cuts by Tesla, the price war has spread beyond BEVs to ICE models. Local industry associations and dealers are asking central government to re‐introduce a national‐level subsidy program. As a result of this possibility, and the ongoing price cuts from makers, many consumers are now taking a “wait‐and‐see approach in the hope of even lower prices,” said LMC.
In February, the top‐three selling models in the retail domestic market (wholesales minus exports) were the BYD Song, the Tesla Model Y, and the BYD Yuan Plus, which were all New Electric Vehicles – either BEVs or PHEVs. In February, NEV sales increased by 62% YoY, taking ~30% of passenger vehicle sales and 26% of total light vehicle sales. While February PV sales were in line with the LMC forecast, LCV sales fell below its projection. LMC has now cut its 2023‐2024 forecast.
With the depressed market, the share of exports increased to 16% of total PV production in February. Among them, Chery Group accounted for the largest portion at 20.1% of the total. They were followed by SAIC with 16.3% and Tesla with 15.3%. New energy vehicles fare the main part of China’s automotive export growth. Aside from Tesla’s significant exports from China, the brand value of domestic NEV producers has been gradually increasing in the international market.
“Assuming that political factors don’t negatively influence proceedings, the export volume of Chinese local brands will continue to rise as long as international brands are not able to offer equally competitive products in the same price range,” LMC said.
*LMC Automotive – a GlobalData Company
LMC Automotive is a leading independent and exclusively automotive focused provider of global forecasting and market intelligence in the areas of vehicle sales, production, powertrains and electrification. The company’s global clients include car and truck makers, component manufacturers and suppliers, financial, logistics and government institutions. LMC Automotive is part of the LMC group, as is J.D. Power. LMC is also the world’s leading economic and business consultancy for the agribusiness sector.
The Global Light Vehicle Sales Forecast. Published in association with Jato Dynamics Ltd, builds on macro‐economic forecasts generated by our partner, the renowned Oxford Economics, which, combined with an examination of demographics, fiscal and regulatory influences by LMC’s own specialist automotive research team, presents twelve‐year forecasts at a global, regional and country level for Light Vehicle demand in 137 countries.
In its most detailed form, model level forecasts are updated monthly and are provided in annual, quarterly and monthly time periods. Quarterly summary reports analyze the current market situation and likely future evolution from the perspective of developments at a country level and from the position of each major OEM. For more information about LMC Automotive, visit www.lmc-auto.com. or contact LMC directly at forecasting@lmc-auto.com.
About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn.
He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe.
Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap.
AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks.
Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.
Chinese Vehicle Sales Still Slumping
The Chinese market decelerated further in February, according to data just released by consultancy LMC Automotive.* Light Vehicle (LV) wholesales were 1.94 million units, which is a growth of 14% year‐on‐year (YoY). Passenger Vehicle (PV) wholesales came to 1.68 million units, an increase of 11% YoY while Light Commercial Vehicle (LCV) wholesales, at 262k units, increased by 37% YoY. As for production, the total LV figure in February was also 1.94 million units, increasing by 12% YoY and 26% MoM.
However, the cumulative LV production from January to February in the world’s largest market, fell by -14% YoY. At the component level, passenger vehicle production in February increased by 12% YoY while cumulative PV production to February decreased by 14% YoY, the same as the decrease in LV overall.
Light Commercial Vehicle output at 255,000 was up 9% YoY. but down by -17% YTD. The February selling rate was 21 million units/year, down 11% from a weak January, and the lowest rate since the Shanghai lockdown of April 2022. In YoY terms, however, sales (wholesales) increased by 14.3% against a low base, due to the timing of the Chinese New Year, said LMC.
Weak sales in January and February were attributed by LMC to two major tax incentives, which ceased at the end of last year. The temporary purchase tax cut on ICE PV models and the decade‐old NEV subsidy program both ended in December 2022 – and thus pulled sales ahead from early 2023 into late 2022.
As sales are now slumping, automakers are cutting vehicle prices and provincial governments are rushing to offer subsidies (LMC thinks this won’t last for very long). Following big price cuts by Tesla, the price war has spread beyond BEVs to ICE models. Local industry associations and dealers are asking central government to re‐introduce a national‐level subsidy program. As a result of this possibility, and the ongoing price cuts from makers, many consumers are now taking a “wait‐and‐see approach in the hope of even lower prices,” said LMC.
In February, the top‐three selling models in the retail domestic market (wholesales minus exports) were the BYD Song, the Tesla Model Y, and the BYD Yuan Plus, which were all New Electric Vehicles – either BEVs or PHEVs. In February, NEV sales increased by 62% YoY, taking ~30% of passenger vehicle sales and 26% of total light vehicle sales. While February PV sales were in line with the LMC forecast, LCV sales fell below its projection. LMC has now cut its 2023‐2024 forecast.
With the depressed market, the share of exports increased to 16% of total PV production in February. Among them, Chery Group accounted for the largest portion at 20.1% of the total. They were followed by SAIC with 16.3% and Tesla with 15.3%. New energy vehicles fare the main part of China’s automotive export growth. Aside from Tesla’s significant exports from China, the brand value of domestic NEV producers has been gradually increasing in the international market.
“Assuming that political factors don’t negatively influence proceedings, the export volume of Chinese local brands will continue to rise as long as international brands are not able to offer equally competitive products in the same price range,” LMC said.
*LMC Automotive – a GlobalData Company
LMC Automotive is a leading independent and exclusively automotive focused provider of global forecasting and market intelligence in the areas of vehicle sales, production, powertrains and electrification. The company’s global clients include car and truck makers, component manufacturers and suppliers, financial, logistics and government institutions. LMC Automotive is part of the LMC group, as is J.D. Power. LMC is also the world’s leading economic and business consultancy for the agribusiness sector.
The Global Light Vehicle Sales Forecast. Published in association with Jato Dynamics Ltd, builds on macro‐economic forecasts generated by our partner, the renowned Oxford Economics, which, combined with an examination of demographics, fiscal and regulatory influences by LMC’s own specialist automotive research team, presents twelve‐year forecasts at a global, regional and country level for Light Vehicle demand in 137 countries.
In its most detailed form, model level forecasts are updated monthly and are provided in annual, quarterly and monthly time periods. Quarterly summary reports analyze the current market situation and likely future evolution from the perspective of developments at a country level and from the position of each major OEM. For more information about LMC Automotive, visit www.lmc-auto.com. or contact LMC directly at forecasting@lmc-auto.com.
About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn. He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe. Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap. AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks. Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.