According to data from the China Passenger Car Association, passenger vehicle production in June reached 2.34 million units, representing a year-on-year decrease of 3% and a month-on-month increase of 6%. Wholesale figures stood at 2.36 million units, down 6% year-on-year but up 6% month-on-month. The export of electric vehicles is creating new growth opportunities and financial support for automakers, with industry exports expected to continue exceeding expectations. The firm maintains its recommendation for the three leading EV export players: Geely Automobile Holdings Ltd. (HKG: 0175), Leapmotor (HKG: 9863), and BYD Company Limited (HKG: 1211), noting their recent valuations offer attractive investment value.
Key Insights from the Report
Exports Continue to Outperform, Domestic Demand Remains Subdued
Passenger vehicle wholesale sales in June were 2.36 million units, down 6% year-on-year but up 6% month-on-month. For the second quarter, wholesale sales totaled 6.69 million units, a 5% year-on-year decline but a 14% increase from the previous quarter. Notably, passenger vehicle exports reached a new high of 880,000 units, surging 76% year-on-year and 9% month-on-month. New energy vehicle exports approached 500,000 units, soaring 150% year-on-year. Retail sales are estimated at approximately 1.69 million units, down 19% year-on-year but up 15% month-on-month. Despite the strong export performance, overall wholesale sales still declined year-on-year.
Breakdown of Key Metrics
1) Exports: Monthly exports of 880,000 units again surpassed expectations to set a new record, rising 76% year-on-year and 9% month-on-month. Within this, new energy vehicle exports hit 500,000 units, a 150% year-on-year and 18% month-on-month increase. After passenger vehicle exports first exceeded 700,000 units in March and April, they surpassed 800,000 units again in May and June, demonstrating the continuously improving global competitiveness of Chinese brands. New energy vehicle exports have grown month-on-month since March, reaching nearly 500,000 units in June from a previous high of around 300,000 units in December last year.
2) Electric Vehicles: Wholesale sales of new energy vehicles reached 1.48 million units in June, up 19% year-on-year and 10% month-on-month. The wholesale penetration rate of new energy vehicles reached a new historical monthly high of 63%, an increase of 13.4 percentage points year-on-year and 2.2 percentage points month-on-month.
3) Domestic Brands: Wholesale sales by domestic automakers totaled 1.78 million units in June, up 7% year-on-year and 7% month-on-month. Their market share reached 75.5%, an increase of 8.5 percentage points year-on-year and 0.3 percentage points month-on-month.
4) Pricing: Industry discount rates declined slightly in late June (primarily for fuel vehicles), with the discount rate at 9.4% as of June 25th, down 1.0 percentage points year-on-year and 0.1 percentage points from June 10th.
5) Inventory: Corresponding terminal channel inventory decreased by 230,000 units, compared to a historical seasonal decrease of 0-50,000 units, indicating automakers' cautious approach to wholesale.
Full-Year Outlook and Risk Factors
Exports, particularly for electric vehicles, have consistently exceeded expectations in the first half of the year, setting successive records. This non-linear growth is attributed to several factors: an increase in automakers and models involved in exports, a significant expansion of sales channels, higher inventory-to-sales ratios at dealerships for stockpiling, and rapidly rising demand at overseas outlets. Looking ahead, the likelihood of exports continuing to surpass expectations remains high, prompting the firm to further raise its full-year export forecast to 9.48 million units.
Regarding domestic sales, performance has been weak this year due to factors such as rising oil prices and price increases for new models. The firm forecasts full-year retail sales growth at -13%. Combining estimates for retail sales, exports, and inventory changes, overall passenger vehicle wholesale sales are projected to decline by 3% year-on-year.
Potential risks include macroeconomic conditions, domestic consumption falling short of expectations, automobile exports underperforming, new energy vehicle sales missing targets, and fluctuations in raw material prices.
Comments