The automotive production and sales report for China in December 2024 has been released, showing a strong start for the automotive market!

In December, as the year-end approached, various companies ramped up efforts to meet annual goals, causing the automotive market to heat up continuously. The "Two New" subsidies (trade-in for new, scrapping and updating) expiring at the end of the month brought a strong boost to the policy-touched automotive market. Additionally, some demand for vehicle purchases ahead of the Spring Festival will be released in advance, but there are still small areas where the trade-in subsidies have been used up, temporarily causing a slowdown in retail trends in the second half of the month. Various factors combined promoted a strong release of purchase demand in December last year.

On January 9, Thursday, the Passenger Car Association announced the national Passenger Vehicle market data for December. Retail in December reached 2.635 million units, a year-on-year increase of 12.0% and a month-on-month increase of 8.7%. Cumulatively, retail since the beginning of 2024 has reached 22.894 million units, an increase of 5.5% year-on-year.

Among them, retail of New Energy Passenger Vehicles in December reached 1.302 million units, a year-on-year increase of 37.5% and a month-on-month increase of 2.6%. Retail for January to December 2024 totaled 10.899 million units, a year-on-year increase of 40.7%.

In terms of production, 2.941 million Passenger Vehicles were produced in December, a year-on-year increase of 9.7% and a month-on-month decrease of 2.7%. This production volume in December was 0.27 million units higher than the historical peak of 2.67 million units in December 2023. Production of luxury brands decreased by 20% year-on-year and 12% month-on-month; joint venture brands saw a year-on-year decrease of 17% and a month-on-month decrease of 5%; while domestic brands experienced a year-on-year increase of 29% and a month-on-month decrease of 1%.

New Energy exports have rebounded, accounting for nearly one-third of total exports.

Overall automotive exports in 2024 continue the strong growth trend seen last year. Passenger Vehicle exports reached 4.8 million units, a year-on-year increase of 25%, but the growth rate in the fourth quarter was only 8%, showing clear signs of slowing down.

Data from the Passenger Car Federation shows that in December, the export of Passenger Vehicles (including complete vehicles and CKD) reached 404,000 units, a year-on-year increase of 6% and a month-on-month increase of 2%; from January to December, the cumulative export of Passenger Vehicles was 4.791 million units, a year-on-year increase of 25%. In December, Electric Vehicles accounted for 30.2% of the total exports, an increase of 3.1 percentage points compared to the same period.

In December, the export of independent brands reached 345,000 units, a year-on-year increase of 4% and a month-on-month increase of 1%; joint ventures and luxury brand exports stood at 58,000 units, a year-on-year increase of 16%.

In December, the export of Electric Passenger Vehicles was 122,000 units, a year-on-year increase of 21.5% and a month-on-month increase of 52.9%. However, in November, Electric Vehicle exports saw declines both month-on-month and year-on-year.

The penetration rate of Electric Vehicles is nearly 50%, with sales of Electric Passenger Vehicles expected to reach a record high in 2024.

In December, the retail market for Electric Passenger Vehicles was 1.302 million units, a year-on-year increase of 37.5% and a month-on-month increase of 2.6%. From January to December 2024, retail sales will reach 10.899 million units, a year-on-year increase of 40.7%, achieving a record high for Electric Passenger Vehicle sales.

In December, the domestic retail penetration rate of Electric Vehicles was 49.4%, an increase of 9.1 percentage points compared to the same period last year.

In December, the penetration rate of Electric Vehicles among independent brands in domestic retail was 71.3%; for luxury cars, it was 33.9%; while the penetration rate among mainstream joint venture brands was only 4.8%.

From the perspective of monthly domestic retail share, in December, the retail share of mainstream independent brand Electric Vehicles was 72%, an increase of 2 percentage points year-on-year; joint venture brand Electric Vehicles accounted for 2.8%, a decrease of 2 percentage points year-on-year; the new power share was 17.2%, with brands like Xiaomi Autos driving a year-on-year growth of 2.3 percentage points; Tesla's share was 6.4%, a decline of 1.6 percentage points year-on-year.

2024 Review: The automotive market shows a U-shaped growth trend, with wholesale, production, and exports all reaching historical highs for the year.

In 2024, the national automotive market displayed a U-shaped growth pattern, with strong support for trade-ins and scrapping renewal subsidies in the second half of the year, driving an overall retail growth of 5.5% to 22.894 million units.

"In 2024, wholesale, production, and exports all reached annual historical highs, with prominent inventory reduction characteristics. The annual retail still has a gap of nearly one million units compared to the peak in 2017, meaning there remains significant potential to encourage consumption in 2025. The price war has stabilized, with discounts and promotions from August to December being significantly less frequent than those from February to April, while the fourth quarter's market promotions maintain a stable level."

Regarding Electric Vehicles, domestic retail reached 10.899 million units, with a growth rate of 41%, which is 5 percentage points higher than the growth rate in 2023, altering the previous pattern of gradual decline. The annual penetration rate of Electric Vehicles reached 47.6%, an increase of 12 percentage points year-on-year, with the penetration rate exceeding 50% for five consecutive months in the second half of the year. With an export penetration rate of 27%, there remains ample space for the international development of Electric Vehicles.

The Passenger Vehicle Association also stated that domestic brands are fully leading, with independent auto enterprises rapidly becoming the absolute main force. BYD, Geely, Chery, and Chongqing Changan Automobile continue to hold leading positions, with market share rising from 32% last year to 39% in 2024, indicating a successful transformation of traditional independent enterprises toward Electric Vehicles.

Outlook for 2025: Retail trends are relatively weak at the beginning of January, with trade-in policies in 2025 basically maintaining last year's subsidy intensity.

The Passenger Vehicle Association indicated that January is a time of significant fluctuation in the car market, where the external economic environment and seasonal demand greatly impact the market, especially due to the Spring Festival. The automotive consumption promotion policies in 2024 have yielded unexpectedly good results, also influencing the car market at the beginning of 2025. Consumers are likely to pre-purchase, and currently, as the policies are in transition, shoppers have heightened expectations for new policies, resulting in weak retail trends in early January.

The "New Year Opening Red" in January has been a direction that local governments and auto enterprises have jointly worked towards for many years, thus generating a certain amount of wholesale transfer. Combined with the fact that some enterprises still have a considerable scale of orders pending delivery in the current market, it is estimated that the year-on-year sales decline in January will not exceed 20% under a dual hedging effect.

It is noteworthy that on January 8, the National Development and Reform Commission has released the "Notice on Implementing Large-Scale Equipment Updates and Replacing Old Consumer Goods with New Ones by 2025." The Passenger Vehicle Association believes that this move will surely continue to promote the growth of domestic Auto consumption, boosting car sales in January.

The Passenger Vehicle Association estimates:

"The old-for-new replacement in 2025 will basically maintain the subsidy intensity of 2024. A rough estimate of the overall subsidy fund required for scrapping updates and old-for-new replacements is expected to exceed 200 billion yuan, which will far surpass the historical peak of subsidies. Therefore, it is significant to regulate the subsidy limits for old-for-new replacements in various regions."

Currently, based on the policy of 2024 being largely continued, it is determined that the retail market for domestic cars in 2025 will be 23.4 million units, an increase of 2%, with retail sales of Electric Vehicles at 13.3 million, reflecting a growth of 20%, and a penetration rate of 57%.

Editor/lambor