Semi-annual auto market test: Can you expect a market outbreak after the epidemic?

Halfway through 2022, the entire first half of the year, for the domestic auto market, can be described as ups and downs. The first half of the trip was like riding a roller coaster, with the peaks and valleys coming violently.

As for the reason, it is also very clear that the sudden new round of epidemic has disrupted the overall layout and development rhythm of many car companies, especially those companies in the eyes of this round of epidemic storms, which have been particularly affected.

However, after entering June, with the full resumption of work and production in Shanghai, the market of local car companies in Shanghai rebounded quite violently.Tesla’s Shanghai factory began to “run at full power”, andthe capacityutilization rate returned to 100%; the situation of SAIC Group is also improving rapidly.According to SAIC Motor's June production and sales report, 484,000 new cars were produced and sold at the group level, an increase of 33% month-on-month and a year-on-year increase of 47.2%.Among them, SAIC Volkswagen's performance was the most eye-catching, with wholesale sales of 126,000 vehicles in June, a year-on-year increase of 93.9%, and a month-on-month increase of 44.8%.In addition, although nearly 3 months have been affected by the epidemic, in the first half of this year, SAIC Volkswagen's cumulative wholesale sales volume was 575,000 units, a year-on-year increase of 7.9%, which is not easy.

Image credit: Gasgoo

Auto market "half-year test"

After the domestic auto market bid farewell to the "three consecutive declines" in 2021, and theproduction and salesboth exceeded 26 million units, the Chinese auto market will perform steadily in the beginning of 2022. In the context of a high comparison base in the same period in 2021, it still achieved a good start.

The wholesale sales announced by the Passenger Federation shows that in January this year, domestic car companies sold a total of 2.172 million vehicles, an increase of 6.8% year-on-year;In mid-March, the epidemic broke out again in many parts of the country, and many major automobile towns (the National Bureau of Statistics of China's provincial automobile production data shows that Shanghai and Jilin, which have been greatly affected by this round of epidemics, each account for about 11% of the country's total automobile production) All have been affected one after another. The production of some complete vehicles and related companies was once stagnant. The tight production capacity and the tight logistics will inevitably affect the overall market performance of the company.In March, the domestic passenger car market saw a slight decline in sales, down 1.6% year-on-year.

In April and May, several important auto cities, including Shanghai, began to carry out sealing and control management, which further increased the impact on automobile production and sales. In addition, the impact of unfavorable factors such as the overall lack of cores in the industry and the price increase of parts and components was added. Many OEMs are under huge market pressure.On the whole, the total wholesale sales volume of the domestic passenger vehicle market in April was 946,000 units, a year-on-year decrease of 43.0%. The situation improved in May, and the overall decline was recovered to 1.3%. Speaking of which, the auto market in May remained "silent", with sales "returning to zero" and the production side continuing to resist pressure.

The industrial layout organized by Gasgoo shows that, as an important center of the domestic automobile industry, Shanghai has concentrated a large number of vehicle enterprises.Among them, SAIC Volkswagen has a production capacity of 970,000 vehicles in Shanghai. SAIC-GM also has a production capacity of 480,000 vehicles in Pudong District, Shanghai. Tesla's Shanghai Lingang plant currently has a production capacity of 480,000 vehicles. Shanghai's production capacity is also as high as 300,000 vehicles.In April and May, under the influence of the epidemic, it is obviously difficult to ensure the normal operation of such a large-scale industry. It is not only the local market that is affected, but also an important impact on the national auto market.

Model Y, image credit: Tesla

Fortunately, after entering June, Shanghai was unblocked, and the local auto industry began to fully recover.Tesla's sales in China reached 78,000 in June, doubling from May.SAIC Volkswagen, SAIC-GM and SAIC Passenger Cars, three major car companies under SAIC Group, haveproduced13,000 vehicles in Shanghai in a single day, returning to the normal level before the epidemic at the beginning of the year, and directly driving more than 1,000 companies in the upstream and downstream of the industrial chain. Parts supporting enterprises resume production.In particular, it is worth mentioning that SAIC Volkswagen achieved a year-on-year growth rate that nearly doubled in June, creating a rare auto market situation in recent years for traditional big manufacturers.

What is the head of the auto market in

Obviously, throughout June, Shanghai local car companies ushered in an overall explosion in the market.Then the question also comes, what is the reason for these auto companies that have just experienced the severe impact of the epidemic to deliver strong market performance so quickly?The local epidemic has been gradually brought under control, and the gradual return of production and life to normal must be an important reason. Is there any more specific reason besides this?

Based on the situation of several car companies, the following points are the main reasons.

The first is the stimulus of industry policy.Recently, many local governments, including Shanghai, Guangdong, Shandong and other places, have introduced a series of "market rescue" measures.Taking Shanghai as an example, not only has the quota for non-commercial passenger car licenses been increased, but also the relevant financial subsidy policies for car purchases have been issued.From a national perspective, on May 31, the State Council issued the "Notice on Printing and Distributing a Package of Policies and Measures to Stabilize the Economy", which mentioned that it is necessary to steadily increase large-scale consumption such as automobiles and home appliances.On June 1, the Ministry of Finance and the State Administration of Taxation issued a policy of halving the purchase tax of passenger vehicles; the General Office of the Ministry of Industry and Information Technology, the General Office of the Ministry of Agriculture and Rural Affairs, the General Office of the Ministry of Commerce and the General Office of the National Energy Administration They jointly issued a notice to carry out 2022new energy vehiclesto the countryside, and began to encourage automobile consumption in multiple directions.

Secondly, many car companies have entered an intensive product renewal period in the first half of 2022, which has significantly increased the enthusiasm for car purchases in the end market.According to statistics, SAIC Volkswagen has been renewing its products very frequently recently. From the second half of last year to the first half of this year, more than 10 main models of SAIC Volkswagen flags, including Lavida, Lingdu L, Weiran, Passat, Tiguan L, and Tourang, etc. All models have been updated or replaced, the design of new products has become younger, and the degree of intelligence has also ushered in a substantial upgrade, which is more attractive to end consumers.To be honest, we are looking forward to the market performance of SAIC Volkswagen in the second half of the year.In addition, in the first half of this year, models such as Buick Envision, Encore and Chevrolet Chuangku have all been remodeled, while Cadillac has brought a new model Ruige.

New Lavida, photo source: SAIC Volkswagen

Being in the center of the epidemic storm, but still able to deliver a stable market performance, the underlying logic is self-evident: the corporate heritage and the brand's user reputation.With the gradual easing of the domestic epidemic, production, supply, and sales channels have all returned to the right track. Coupled with the stimulus of multiple favorable policies, the overall domestic auto market is rapidly recovering.Some car companies that were originally highly regarded, such as Tesla and SAIC Volkswagen, will definitely show their market appeal again after the consumption environment gradually returns to normal. It may even be due to the concentration of orders squeezed when the production capacity was insufficient before. Released, the second half of the year is expected to usher in a new round of growth.