At the beginning of 2024, car companies have successively released report cards for 2023.
By Laura King
“Phoenix Automotive Research Institute” counted the annual target completion rates of 15 car companies. Among the new energy car companies that disclosed annual sales (delivery) targets, only 3 completed their annual targets, namely BYD 100.8%; Ideal 125%; Lantu 102%.
Regarding other car companies, GAC Aion’s sales target achievement rate is 96%; Jikrypton’s achievement rate is 84.79%; Leap Run’s achievement rate is 72.1%; Xpeng and Weilai’s achievement rates are only 70.8% and 65.31%.
It is worth mentioning that Nezha Auto’s achievement rate is less than 50%, and Nezha Auto only delivered 5,135 vehicles in December last year, the final month of critical momentum, which is about ten times the ideal December delivery volume.
In terms of growth rate, many “second-generation” new energy vehicles performed well: the annual sales of Shenlan, Lantu, Zhiji, and Jihu in 2023 increased by 389.6%, 160.0%, 665.0%, and 138.0% respectively year-on-year.
In terms of absolute sales volume, only Deep Blue and Ji Krypton have exceeded 100,000 units. Lantu’s annual sales volume is only 51,000 units, which is the lowest sales volume among car companies that have achieved the target. Zhiji and Jihu have only sold 3 About 10,000 vehicles.
“In previous years, brands would basically stop promotions in mid-December or when the whole year’s tasks are completed, leaving potential customers for the ‘good start’ in January next year.
But it was not the case last year. Many brands did not complete the annual sales task, so not only did they intensify efforts to cut prices in December to accelerate sales, but some policies have also been directly extended to this year.”
A sales manager working at a certain brand 4S store told “Phoenix Auto Research Institute”.
The price reduction war will still intensify
On January 12, Tesla China once again started a new round of price war. According to its official website, the price of the new model 3 has been reduced.
The price of the rear-wheel drive version of Model 3 has been reduced by 15,500 yuan, and the price of the new long-range version has been reduced by 11,500 yuan. The price of the Model Y rear-wheel drive version is reduced by 7,500 yuan, and the price of the long-range model is reduced by 6,500 yuan.
The general sales growth of car companies in 2023 is inseparable from the promotion of price reduction promotions.
In January last year, the 13-year “state subsidy” for new energy vehicles officially ended, and the industry generally expected that the new energy market would fall into a short-term downturn.
However, just after New Year’s Day, Tesla took the lead in launching a wave of price cuts in the Chinese market, with the largest reduction exceeding 40,000 yuan.
The starting price of the domestic Model 3 approached 200,000 yuan (229,900), setting a record low price. New car-making forces also passively began to cut prices. Wenjie, Xpeng, GAC Aian, Volvo, SAIC Feifan and other brands have joined the battle.
By the middle of the year, the second round of “price war” was even more aggressive. NIO, which boasted that it would never cut prices, officially announced a price cut of 30,000 yuan for all models.
Brands such as Xpeng, BYD, GAC Aion, and Jikry further lowered the prices of some products. Among them: the YOU version, ME version and WE version of Jikrypton’s 2023 Jikrypton 001 have reduced prices by 37,000 yuan, 30,000 yuan and 31,000 yuan respectively. Tesla has made another official reduction, and Model Y announced a reduction of 14,000 yuan.
Entering the fourth quarter, with the support of the “Golden Nine and Silver Ten” and mid-year promotions, more than 20 car companies have launched various promotional activities such as car purchase subsidies and limited-time discounts to increase sales.
The wave of price cuts in the fourth quarter of last year did not seem to stop when the New Year’s bell rang. On the contrary, it became more and more intense.
This year’s Spring Festival is later than last year, which also means that the window period left for car companies to create a “good start” is longer.
Phoenix Auto Research Institute” compiled and found that as of January 10, about 20 car companies have officially announced New Year promotions. The leader is still Tesla, which announced the launch of New Year’s low-interest financial policy and limited-time insurance subsidies.
Nezha Automobile announced that it has placed orders for Nezha AYA/Nezha X/Nezha S/Nezha GT, and can enjoy an exclusive New Year red envelope of 5,000 yuan.
In addition to new forces, traditional brands and “second generation” brands have also launched new promotion policies. Audi A8L has a price cut of up to 40,000 yuan.
FAW Toyota’s full range of models enjoy direct purchase tax subsidies of up to 5,999 yuan in January. Lantu Dreamer January car purchase benefits are launched, including zero purchase tax, 10,000 yuan replacement subsidy, financial policies, etc.
Lynk & Co directly reduces the price, the official guide price of all models is reduced by 10,000 yuan, and the adjusted starting price is 247,900 yuan. There are also car companies that directly bring policies to “cross the New Year”.
For example, Zhiji announced the launch of a limited-time promotion on December 25 last year, and the deadline is January 31 this year.
Some people in the industry point out that in the future, price cuts and sales promotions by car companies will become as frequent as e-commerce festivals.
On December 13 last year, Bitauto President Liu Xiaoke mentioned in his speech at the “2023 China Automotive Industry High-Quality Development Forum”: “About 71% of brands have adopted price cuts this year.
The Huachuang Securities Research Report further pointed out that the price pressure in the automobile industry will still be great in 2024, and a “price war” that will go down in the history of the Chinese automobile market may occur.
A report released by Fitch Ratings last month also mentioned that competition in China’s auto market will continue to intensify in 2024 as domestic auto brands accelerate the promotion of high-level autonomous driving and global auto brands accelerate the electrification process.
All opinions point to one thing – the price war in 2024 will not only not end, but will even be more brutal than before.
The Matthew Effect of the strong Hengqiang will also be further revealed – with the intensive release and update of new models and new technologies, each car company has no chance to breathe, and must not only face the battle on multiple fronts, but also participate in the war on multiple fronts.
In addition to continuing to carry out promotions and new product research and development, car companies need to focus most on how to cross the break-even point.
In the entire new energy vehicle market, there are very few companies that can “increase both revenue and profits”. Judging from the data reported in the third quarter of 2023, among the eight major A-share passenger car listed companies including SAIC Group, BYD, Great Wall Motors, Changan Automobile, GAC Group, JAC, Cyrus, and BAIC Blue Valley, in terms of net profit Only BYD, Great Wall and Changan achieved profits. SAIC and GAC suffered losses of more than 20% and 30% respectively.
Cyrus and BAIC Blue Valley still suffered losses, but the extent of losses narrowed slightly.
Among the new forces, Xpeng is even more difficult to make profits. Its revenue in the first three quarters of last year was approximately 17.63 billion yuan, and its net loss during the same period was approximately 9.03 billion yuan, which is close to the net loss for the whole year of 2022.
Some people in the industry bluntly stated that the current penetration rate of new energy vehicles is just over one-third, which means that there is still more than 60% of the market that needs to be explored, which requires a large amount of advertising costs, research costs, and manufacturing costs.
Due to the accumulation of short-term costs, it is impossible for new energy vehicle companies to return funds in the short term.
This also means that the industry’s continued “bleeding” will continue, and the prosperity of the new energy vehicle market will still come at the expense of the profitability of car companies.
Going overseas has become a consensus
Going overseas may bring new growth.
According to statistics from the China Association of Automobile Manufacturers, China’s automobile exports from January to November reached 4.412 million units, an increase of approximately 60% year-on-year.
There are roughly three main directions for Chinese cars to go abroad: Europe, Southeast Asia, and South America. Among them, Europe is the first choice for new energy vehicles to go overseas, and it has achieved good results so far.
Take BYD as an example. In the Southeast Asian market, BYD won the cumulative sales volume of pure electric vehicles in Thailand from January to November, and its pure electric market share reached 50.4% in November.
In addition, BYD also won the championship in cumulative sales of pure electric vehicles from January to November in markets such as Singapore, Colombia, and Costa Rica. In Brazil, BYD’s pure electric vehicle market share reached an astonishing 65.6% in November last year. Its blade battery has also won honors such as the UK’s 2024 Innovation Award and the “2024 Brand of the Year” selected by the German media carwow.
According to preliminary data from market research organization Dataforce, in November 2023, new car sales in Europe increased by 6.1% year-on-year, exceeding 1.05 million units.
Among them, 46 automobile brands achieved year-on-year sales growth in Europe, and the growth rate of 37 brands exceeded the overall market growth. Including BYD, Euler, Xpeng and Great Wall, all achieved triple-digit or higher increases.
At last year’s Munich Auto Show, Xpeng Motors stated that it would launch international versions of the P7i and G9 models to the German market in 2024, thereby exploring Germany which is a highly competitive place for auto markets.
NIO, which is also a new power brand, intends to bring full-system services to the European market and promotes the “vehicle and battery separation” model and “battery swap” services. This model has been supported by local governments and car rental companies.
As of last year, By the end of June, NIO had built 18 battery swap stations and 8 supercharging stations in Europe, and the NIO APP was connected to more than 500,000 third-party charging piles in Europe.
Nezha also proposed an overseas plan for 2024. It plans to have a global sales network covering 50 countries, establish 500 overseas sales and service outlets, and target overseas sales of 100,000 vehicles in the next year.
In addition to the above-mentioned brands, going overseas has also become an important goal this year for many car companies such as Leapmotor, Jikrypton, Geely, Great Wall and Chery.
Many new energy brands are replicating the combination of production and sales overseas.
Still taking BYD as an example, its Thailand factory is expected to start operations in 2024, with an annual production capacity of up to 150,000 vehicles. The cars produced at the plant will be put on the Thai market and radiate to surrounding markets.
On December 22 last year, BYD announced that it would build a new energy vehicle production base in Szeged, Hungary. It can be expected that BYD will have more overseas vehicle bases and auto parts base plans in 2024.
Previously, Changan Automobile also publicly stated that it would invest 20 billion baht to build a factory in Rayong Province, Thailand, with a total scale of 200,000 vehicles/year, and a first-phase production capacity of 100,000 vehicles/year. It will be officially put into production in the first quarter of 2025.
Different from general commodities, automobile products have high value, complex usage scenarios, and long life cycles. When new energy vehicles go overseas, they face the dual challenges of “Chinese cars” and “new energy vehicles”.
While emphasizing performance, price, and quality, , there must be complete sales channels, energy replenishment systems and after-sales service guarantees in order to crack the hard nut. And this part of the investment itself is a huge pressure for car companies.
In addition, the risks of price wars and patent wars that may result from the gathering of car companies overseas cannot be underestimated. What is even more difficult to avoid are policy issues.
For example, the withdrawal or termination of electric vehicle subsidy policies represented by Germany and the United Kingdom has also affected the European market. The electrification transformation process of China is no longer clear.
But generally speaking, if China wants to develop from a major automobile country to a powerful automobile country, going overseas is the only way to go. In the short term, compared with international giants, the overseas business of Chinese car companies is still in its “infancy” and is still at the stage of simple trade.
However, we have reason to believe that these companies can benefit from the world’s most “volume” market. Automobile brands that have grown and emerged will surely be able to bear fruit overseas over time.
Automakers have significantly raised their sales forecasts for 2024
As of press time, some car companies have announced their target sales for 2024, which are generally higher than the previous year.
BYD has set a sales target of 4.5-5 million vehicles, significantly exceeding the 3 million vehicles in 2023.
Lideal and Xpeng have set sales targets of 800,000 vehicles and 280,000 vehicles respectively. GAC Aian’s target is 800,000 vehicles, and its zero-run target is 200,000-300,000 vehicles. Jikrypton and NIO are the same, with a sales target of 230,000 units; Lantu and Avita have a sales target of 100,000 units.
However, when it comes to ambition, it has to be Wenjie and Deep Blue. The former’s target sales in 2024 are 600,000 units, while the latter’s target sales are 450,000 units. For comparison, Wenjie’s annual sales in 2023 are only 90,000 units, and Deep Blue’s sales are only 140,000 units. This means that the former needs to deliver at least 6 times more than the previous year to achieve it, while the latter needs to at least triple what it delivered last year to achieve its goal.
Among them, Wenjie’s confidence is based on the two popular models M7 and M9 launched in the second half of last year. Among them, M7’s orders exceeded 20,000 units within 2 weeks of its launch, and daily orders exceeded 1,500 units.
Wenjie staged a “miracle” of “survival from a desperate situation”.
As a luxury SUV with an average price of 500,000+, the sales of the M9 are equally impressive. As of the afternoon of December 28 last year, the total number of M9 orders exceeded 20,000 units, and more than 2,000 units were sold on December 30. According to official figures from Hongmeng Intelligent Technology, on the last day of 2023, Wenjie M9 won 3,173 units in Dading, setting a new high.
Under the high pressure of questioning the world, the ideal began to seem a little weak.
After experiencing the crazy momentum in the last week of last year, as well as the public controversy over the broken A-pillar and MEGA’s difficult delivery, etc., in the first week of 2024, the weekly sales volume of new energy vehicle brands has been overtaken by Qianjie. With a sales volume of 0.59 million units, it exceeded the ideal target of 0.43 million units, becoming the new car-making force’s single-week sales champion.
Previously, it has been widely predicted that there will definitely be a battle in 2024 for the new car-making force’s ambition to become the best-selling car manufacturer and the industry with the strongest momentum.
A car reviewer also told the Phoenix Auto Research Institute, “They are all extended-range vehicles, both are large SUVs, they all focus on luxury and comfort, and their prices are around 480,000 yuan. Anyone can see that Jie M9 is here for the ideal L9.”
In the price range of 200,000 to 300,000 yuan, products related to the number “7” alone include the Ideal L7, Geely Galaxy L7, Xpeng P7, Zhijie S7, Zhiji LS7, Changan Qiyuan A07, as well as Jikrypton 007 and Xiaomi SU7, with the improvement of model and price coverage of various brands, may stage a new “all-powerful campaign” in 2024.
