Economic Observer reporter Zhou Ju In the past September, the independent car brand created a new history, and the market share exceeded 50% in one fell swoop. According to the passenger car sales data released by the Passenger Car Association, the market share of self-owned brands in wholesale volume reached 50.4% in September, an increase of 2.6 percentage points over the same period last year. From January to September, the cumulative share of self-owned brands reached 48%, a year-on-year increase of 5.3 percentage points.
In April this year, the wholesale sales share of independent auto brands once exceeded 50%, reaching 57.7%. However, the industry background at that time was that both Shanghai and Changchun, two major automobile cities, were affected by the epidemic, and the production and sales of many leading joint venture car companies such as FAW-Volkswagen, FAW Toyota, SAIC Volkswagen, and SAIC-GM were greatly reduced. The “fineness” of independent brands to obtain a high share is insufficient.
In September, as the traditional “Golden Nine Silver Ten” sales season in the auto market, independent brands can still win half of the entire auto market, which is of strong indicative significance.
Extending the time line for ten years, the market share of self-owned brands has never reached 50%, but has been hovering at the level of 40% for many years. It fell below 40% several times, setting a dark moment.
During the period from 2015 to 2017, thanks to the popularity of the SUV segment, independent brands quickly seized the market, and the share reached a high of 44% in 2017. Since then, as the SUV boom has subsided, the market share of independent brands has fallen. After 2020, the share of independent brands began to increase in the second wave. But this time, the speed and intensity of the surge far exceeded the previous one.
“Under the influence of the epidemic, it is very important for enterprises to respond sensitively and act quickly. Relatively speaking, independent brands are in terms of decision-making speed, action power, timely introduction of new products according to market changes, supply chain management and control capabilities, cost control, etc. Show unique advantages, turn the crisis into an opportunity, and take advantage of the momentum to expand market share. At the same time, in recent years, independent brands have continued to invest heavily in technology research and product development, gradually showing the advantage of being a latecomer.” Senior Auto Analyst Shi Mei Songlin said to the Economic Observer reporter.
This ebb and flow. Corresponding to the increase in the share of independent auto brands, the share of strong joint venture brands in the past, such as German, Japanese, and American brands, has been continuously eroded. From “being beaten behind” to “strong counterattack”, what factors are at work between this change in the fate of independent brands? After surpassing the dividing line of 50% share, how big is the stamina of independent brands?
New energy vehicles become the biggest contributor
The explosive growth of new energy vehicles is one of the most direct reasons for the increase in market share of independent brands.
Data show that in September this year, the domestic retail sales of new energy passenger vehicles reached 611,000 units, a year-on-year increase of 82.9%; from January to September, the retail sales of new energy passenger vehicles reached 3.877 million units, a year-on-year increase of 113.2%. The growth rate of new energy vehicles far exceeded the overall growth rate of passenger vehicles.
The independent brand is the well-deserved main force of new energy vehicles. The data shows that in September, the retail share of mainstream self-owned brand new energy vehicles was 67%, an increase of 9.2 percentage points year-on-year; the share of joint venture brand new energy vehicles was only 5.7%, a year-on-year decrease of 3.3 percentage points; the share of new forces was 14.6%, a year-on-year decrease of 2.9 percentage points percentage points; Tesla’s share was 12.7%, down 2.9 percentage points.
If the new forces are roughly counted as self-owned brands, then the market share of self-owned brands in September will account for 81.6%. In other words, the current increase in the domestic new energy vehicle market is basically contributed by independent brands.
In September’s new energy vehicle sales list, 13 of the top 15 are self-owned brand car companies, and the remaining two are Tesla and FAW-Volkswagen. Among them, BYD takes the lead with monthly sales of more than 200,000 vehicles, and the monthly sales of new energy vehicles of SAIC-GM-Wuling, Geely Automobile, GAC Aian, Changan Automobile, SAIC Passenger Cars, and Chery Automobile also exceed 20,000.
In terms of penetration rate, the domestic retail penetration rate of new energy vehicles in September was 31.8%, an increase of 11 percentage points from the penetration rate of 21.1% in September 2021. Among them, the penetration rate of new energy vehicles among independent brands is 55.2%, while the penetration rate of new energy vehicles among mainstream joint venture brands is only 4.2%.
In addition to the help of new energy vehicles, the increase in the market share of independent brands is more related to the improvement of their own technical quality and brand reputation. In the past two or three years, independent car companies have launched a number of mid-to-high-end new brands to compete head-on with joint venture brands, while a number of high-end new energy brands have competed with traditional luxury cars. These new brands utilize each of the most advanced and cutting-edge technologies. Judging from the price development curve, independent brands have climbed from the past 100,000 yuan to the current 300,000 to 400,000 yuan, and their status has advanced from “low-end” to luxury.
Another important growth engine is exports. Statistics released by the China Association of Automobile Manufacturers show that from January to September 2022, Chinese auto companies exported 2.117 million vehicles, a year-on-year increase of 55.5%, which has exceeded the export volume of last year. China has now become the world’s second largest auto exporter. Among the finished vehicles exported from China, there are naturally some models of joint venture brands and wholly foreign-owned brands, but the main force is still contributed by the independent brands.
At present, the automobile market is still constantly disturbed by the epidemic and supply chain interruptions, and the production and sales structure of the industry is still changing. For major auto groups, self-owned brands are usually given priority in obtaining resources over joint venture brands, which is actually another “luck” factor for the increase in the share of self-owned brands. “Joint venture brands such as Honda were greatly affected by the progress of parts supply in September, and sales fell by 30%.” At the recent production and sales data analysis meeting of the Passenger Federation, Cui Dongshu, Secretary General of the Passenger Federation, said so.
Independent car companies emerge new leaders
With the market share of self-owned brands breaking through 50%, the internal competition pattern of self-owned car companies has also changed. Some brands have expanded rapidly, and some brands have fallen behind.
BYD is an undisputed independent star enterprise. Its sales exceeded 200,000 units in one fell swoop in September this year, becoming the first independent car company in China’s auto history to sell more than 200,000 units in a single month. By taking this, BYD jumped to the top of the domestic car company’s sales list, breaking the pattern of the top three in the market being dominated by North and South Volkswagen and SAIC-GM. From January to September, BYD’s sales ranked second, second only to FAW-Volkswagen.
Just five years ago, in 2017, BYD’s annual sales were only 410,000 units, with an average monthly sales of 34,000 units, of which 113,700 were new energy vehicles, accounting for 27.7%. By this year, BYD’s sales in the first half of the year had already surpassed that of last year. The cumulative sales volume from January to September was about 1.18 million, a year-on-year increase of 249.56%, and the average monthly sales reached 130,000, more than three times that of five years ago.
BYD also has nearly a third of China’s new energy vehicle market. Statistics show that BYD’s September sales were almost the sum of the sales of the second to fifth manufacturers, with a market share of over 30%.
In addition to BYD’s “dominance”, Changan Automobile and Geely Automobile also performed well, ranking fourth and fifth in domestic passenger car sales in September, catching up with SAIC-GM. New energy vehicles have also played a significant role in the sales of these car companies.
From the perspective of market share, BYD’s market share reached 7.8% from January to September this year, compared with 1.6% five years ago in 2017; Changan Automobile’s market share was 5.9%, compared with 4.3% five years ago; Geely’s market share is 5.7%, compared with 5% five years ago.
In addition, NIO, Ideal, Xiaopeng, Leapao, Nezha and other new car manufacturers, although the current absolute delivery volume of each company is not much, but also contributed to the increase in independent new energy sales.
While the share of independent brands increased, the market share of joint venture brands began to decline. SAIC Volkswagen’s market share in the first nine months of this year was 6%, compared with 10.5% five years ago; SAIC-GM’s market share was 5.1%, compared with 9.5% five years ago.
With the intensification of competition and the upgrade of automobile consumption, some self-owned brands with insufficient competitiveness have also withdrawn. For example, Zotye Auto and BAIC Magic Speed, which were still ranked in the sales list of their own brands five years ago, sold about 300,000 vehicles five years ago. However, due to the rapid decline in sales, the factories stopped production and are now bankrupt. all.
New challenges after the highs
The self-owned brand has crossed the 50% “red line”, does it mean that it has been advanced and worry-free? How big is the future development space of independent auto brands, and will they be counterattacked by joint venture brands? These are also hot topics that continue to receive industry attention.
The reality is that when independent brands take advantage of the first-mover advantage of new energy vehicles, joint venture brands and luxury brands are also secretly accumulating strength and waiting for an opportunity to regain their position. Taking Volkswagen as an example, the current sales of Volkswagen ID.4 series models continue to increase, showing good competitiveness.
The increase in the sales of Volkswagen brand new energy vehicles is only a first signal for the joint venture car companies to fight back. So far, almost all international brands have announced ambitious plans for electric and smart transformation. The latest data shows that Mercedes-Benz has allocated at least $47 billion for electric vehicle development and production, while BMW, Stellantis, General Motors (GM) and other companies also plan to invest at least $35 billion in electric vehicles and batteries, respectively. In addition, Ford is currently preparing an investment of 50 billion US dollars, planning to produce about 3 million electric vehicles, equivalent to half of the total shipments. Toyota has also previously stated that it will invest 70 billion US dollars in vehicle electrification and battery production.
Compared with independent brands, the advantages of multinational brands and joint venture brands are that they have strong brand endorsements and long-term user accumulation. When their new energy vehicle products are brought to the market in large numbers, the market may usher in a tragic melee.
Although the market share of self-owned brands has risen, the high-end development of brands is still on the way, and it remains to be seen whether they can go on for a long time. A large number of self-owned brand models on the market are still in the low price zone, and the brand premium is limited. For example, the lowest price of SAIC-GM-Wuling’s best-selling MINIEV is less than 30,000 yuan, and BYD’s best-selling new energy model is also 100,000-150,000 yuan. Among the new car manufacturers, the ones with lower prices such as Nezha Auto and Leap Motor have recently gained the upper hand.
New car manufacturers represented by Weilai, Ideal, etc., as well as high-end new energy brands launched by traditional independent car companies, are the current leaders in breaking through the price ceiling of independent brands. The prices of these new companies’ products have risen to 300,000 yuan or even 400,000 yuan. range above the dollar.
However, the high-endization of independent brands has just started, and it is far from a solid foundation. On October 24, Tesla announced a price reduction. Tesla in mainland China will adjust the price of Model 3 and Model Y, with a maximum price reduction of 37,000 yuan. The market generally believes that this will bring huge pressure to a number of new car brands and independent high-end brands.
Can independent brands keep the red line of the 50% market share they just occupied? Mei Songlin is optimistic that if the impact of the epidemic continues, the supply chain continues to be tight, and independent brands continue to invest heavily in research and development, the share of independent brands is expected to rise to a higher level. In the medium term, self-owned brands (including new car manufacturers) are likely to occupy two-thirds of the market share. Self-owned brands will completely occupy the low-end market, and also make great strides in occupying the mid-end market, but occupying the high-end market and luxury car market still needs to be time.
According to the forecast released by Ping An Securities, with the gradual recovery of chip supply, the car update cycle is expected to accelerate in the next few years, and the global strategy of superimposed car companies will accelerate. 70%.