Xiaomi captures April's car market traffic | Jianzhi Research

The price reduction efforts of terminal car companies continue to strengthen, but the resulting transaction conversion effect has weakened, with Xiaomi becoming the biggest traffic star in the car market in April.

In April this year, the overall sales growth rate of passenger cars turned negative for the first time compared to the previous month. The overall production of passenger cars was 1.988 million units, a year-on-year increase of 14.9%, but a month-on-month decrease of 9.6%; retail sales of passenger cars were 1.532 million units, a year-on-year decrease of 5.7%, and a month-on-month decrease of 9.4%.

Electric vehicle sales have also entered a downward trend on a monthly basis, but the penetration rate of electric vehicles is still increasing. In April, the production of new energy vehicles reached 802,000 units, a year-on-year increase of 33.5% and a month-on-month increase of 0.9%; sales were 674,000 units, a year-on-year increase of 28.3% and a month-on-month decrease of 5.7%. The market penetration rate of new energy vehicles continued to maintain a high level at 43.7%, an increase of 11.7 percentage points year-on-year and an increase of 2 percentage points month-on-month.

1. Market discount rate hits a new high, but inventory pressure remains high

From January to April this year, major car companies offered price discounts through official price reductions, insurance subsidies, and equity subsidies, bringing the overall passenger car market discount rate to a new high. The passenger car market discount rate in April reached 20.7%, a slight increase month-on-month, and a 9 percentage point increase year-on-year.

However, the passenger car sales and inventory levels in April did not improve due to the continuous price reductions at the terminal, and the transaction conversion effect brought about by price reductions has significantly weakened.

The overall retail sales of passenger cars turned negative on a month-on-month basis for the first time this year in April, with a year-on-year decrease of 5.7% to 1.532 million units and a month-on-month decrease of 9.4%, but production is still maintaining positive growth. This has also caused the inventory coefficient of car dealers to shift from a continuous year-on-year decline in the first quarter to a positive growth again.

In April, the comprehensive inventory coefficient of automobile dealers was 1.7, a 9% increase month-on-month and a 12.6% increase year-on-year. Inventory levels have returned above the warning line, and dealer inventory pressure has significantly increased.

The reason for the increase in inventory is that new car models are about to be launched in April, the promotion of the Beijing Auto Show, and the release of the "Action Plan to Promote the Replacement of Old Consumer Goods with New Ones", which has made consumers more cautious.

However, the terminal order volume during the May 1st holiday increased by 10% year-on-year, compared to a 20%-30% increase in the last week of April, indicating that it has captured some of the consumers who were waiting in April.

2. Competition pressure from new car-making forces remains fierce

In the first quarter of this year, many second-tier new car-making forces such as Leapmotor and traditional "second-generation entrepreneurs" car companies such as Leapmotor and Aito have surpassed Li Auto. However, in April, the veteran new car-making forces, except for XPeng, responded strongly to the counterattack of second-tier new car-making forces such as Leapmotor and AitoWith a significant price reduction for all models in mid-April (L models reduced by RMB 14,000-20,000, MEGA reduced by RMB 30,000), Li Auto surpassed Aito in sales for the first time this year, taking the crown of sales leader among new carmakers, with nearly 700 more units than Aito; Nio also slowly started to show effects with a surge in sales in April to 15,600 units, a 32% month-on-month growth rate, the highest among all new carmakers, surpassing Deep Blue and Leapmotor.

In addition, April saw the entry of Xiaomi into the new carmaker arena. The debut of Xiaomi's SU7 in the first month was quite impressive, with a total sales volume of 7,078 units in April solely through the sales network of 59 stores in the first 29 cities nationwide, setting a new record for the delivery volume of a new model from a new brand in the industry.

Previously, the market believed that Xiaomi's high popularity, as well as the advantages of SU7 in terms of configuration and price, would impact the sales of competing car companies. However, as of now, the main competitors of Xiaomi SU7 including ZEEKR (001 and 007), XPeng (P7i), and Nio (ET5) all experienced growth in sales in April, with Tesla (Model 3) being the only one to decline by 30% month-on-month.

This indicates that the continuous price reductions by competing car companies have indeed successfully attracted some consumers. In contrast, Tesla increased its prices by RMB 5,000 on April 1st, although it reduced prices again on April 21st, the initial price increase still had an impact on Tesla's sales.

As of May 1st, Xiaomi's cumulative order volume has reached 88,063 units, with an order growth rate even exceeding Aito, approaching the production capacity limit of Xiaomi's Phase I factory (with a capacity of 80,000-100,000 units in Phase I, and Phase II is not expected to start production until 2025).

Undoubtedly, Xiaomi has become the most eye-catching star in the April car market, and the competitive landscape of new energy vehicles will continue to evolve this year