China Association of Automobile Manufacturers (CAAM): In the first half of the year, there was a rare consecutive month-on-month growth in passenger vehicle sales. If negative growth occurs in July, it should be considered a normal phenomenon.

On July 10th, the China Association of Automobile Manufacturers (CAAM) released its analysis report on the national passenger vehicle market in June.

The report shows that in June 2023, the retail sales of passenger vehicles reached 1.894 million units, a year-on-year decrease of 2.6% but a month-on-month increase of 8.7%.

In the first half of 2023, the retail sales of passenger vehicles showed a continuous month-on-month growth, a trend that has never been seen since the beginning of this century. From January to June this year, the cumulative retail sales reached 9.524 million units, an increase of 2.7% compared to the same period last year.

According to the analysis by CAAM, in the first half of the year, there were frequent policy guidelines at the national level aimed at stabilizing and expanding automobile consumption. The Ministry of Industry and Information Technology and the Ministry of Commerce promoted the consumption of new energy vehicles in rural areas, launched the "Hundred Cities Joint Action" Auto Festival and the "Thousand Counties, Ten Thousand Towns" New Energy Vehicle Consumption Season, and other activities, which had good effects. The colorful promotional activities such as local auto shows and distribution of consumer vouchers, combined with the strong end-of-year push by manufacturers, have all had a positive impact on boosting consumer confidence.

Penetration Rate of New Energy Vehicles in June: 35.1%

According to CAAM data, the wholesale sales of new energy passenger vehicles reached 761,000 units in June, an increase of 33.4% compared to the same period last year and a month-on-month increase of 12.1%. From January to June this year, the cumulative wholesale sales reached 3.544 million units, an increase of 43.7% compared to the same period last year. The retail sales of new energy vehicles in June reached 665,000 units, an increase of 25.2% compared to the same period last year and a month-on-month increase of 14.7%. The cumulative retail sales since the beginning of this year reached 3.086 million units, an increase of 37.3% compared to the same period last year.

The penetration rate of new energy vehicles has further increased compared to the same period last year. In June, the domestic retail penetration rate of new energy vehicles reached 35.1%, an increase of 7.8 percentage points compared to the penetration rate of 27.3% in the same period last year.

Among them, the degree of electrification of domestic independent brands is far ahead. In June, the penetration rate of new energy vehicles in domestic independent brands reached 58.8%, while in luxury brands it was 30.9%, and in mainstream joint venture brands it was only 3.7%.

In terms of monthly domestic retail market share, in June, the retail market share of new energy vehicles in mainstream domestic independent brands reached 69%, an increase of 8 percentage points compared to the same period last year; the market share of new energy vehicles in joint venture brands was 4.8%, a decrease of 1.2 percentage points compared to the same period last year; the market share of new energy vehicles in emerging brands was 12.8%, a decrease of 4 percentage points compared to the same period last year; and the market share of Tesla was 11.2%, a decrease of 3.5 percentage points compared to the same period last year. In terms of specific car manufacturers, in June, BYD maintained its position as the top-selling brand with a wholesale volume of 251,685 vehicles. Tesla and GAC Aion followed closely in second and third place with wholesale volumes of 93,680 and 45,013 vehicles, respectively.

Outlook for July Car Market: Post-Epidemic Summer Vacation Boosts Car Consumption

Looking ahead to the car market in July, the China Association of Automobile Manufacturers (CAAM) believes that this year's summer vacation, which is the first one after the end of the epidemic control measures, will see a higher enthusiasm for travel and car purchases. Buying or replacing cars for travel will become a new choice for some families, which will benefit car consumption. The local market will also benefit from activities such as transporting students during the summer vacation and short-distance summer camps, which will contribute to the recovery and acquisition of travel market orders.

However, CAAM also pointed out that the halving of the vehicle purchase tax, which was implemented on June 1 last year, resulted in a resonance of delayed purchases from March to June last year during the policy implementation period. This led to an exceptionally high base in July last year, which is not conducive to a year-on-year growth rate in July this year. Therefore, if negative growth occurs in July this year, it should be considered a normal phenomenon.

In addition, CAAM also indicated that the significant promotions in the first half of the year have disrupted the normal price trend in the car market. It will take some time for terminal prices to stabilize. Moreover, the excessive consumption effect caused by the strong promotion in the second quarter may weaken the effect of trading quantity for price in the third quarter.

After experiencing a price war in the first half of the year, it is expected that car manufacturers will optimize their market expectations, product structure, and listing pace, entering a period of consolidation.

According to data monitored by CAAM, from January to May 2023, the retail sales of Chinese domestic brand vehicles in the local market increased by 47% year-on-year. Among them, the retail sales of domestic brand vehicles exported overseas in May increased by 61% year-on-year, maintaining a strong growth momentum. The recent changes in the exchange rate of the Chinese yuan are favorable for exports. Based on this, it is predicted that China's passenger car exports will continue to maintain strong growth in July, driving the overall domestic and international sales volume of passenger cars in July to continue to grow steadily.