SINOMACH: Weak recovery of demand in import market in 2017

On November 26, 2017, the “14th China Imported Automobile High-Level Forum” organized by China National Machinery Industry Corporation and China Automobile Industry Association, China National Automobile Industry Corporation and China Imported Automobile Trading Co., Ltd. was held in Beijing.

At the forum, SINOMACH released the "Research Report on the Development of China's Imported Automobile Market (2017-2018)".

According to the analysis of the report, in 2017, the production and sales of domestic automobiles grew steadily, and the year-on-year increase in commercial vehicles increased significantly. The production and sales of passenger vehicles showed a slight increase, and the sales pressure on terminal sales was relatively high. China's imported automobile market showed a rapid rebound in import volume, continued inventory coverage, weak recovery in terminal sales, stable market depth, and dealer inventory at a reasonable level. With the encouragement of a series of favorable policies, parallel imported cars have seen rapid market growth.

In 2018, it is expected that the Chinese automobile market will show a slight increase due to the full withdrawal of the purchase tax preferential policies of 1.6L and below. The report predicts that the balance of supply and demand in China's imported auto market will be basically balanced in 2018, and the period of covering up the inventory will end. Customs imports and sales volume will both show a single-digit growth. The scale of parallel import car market will further expand, and the proportion will continue to increase. It is suggested that multinational automobile companies should objectively analyze the market environment in China to establish sales targets for 2018 and explore the development of parallel import channels.

In 2017, the sales of imported vehicle terminals recovered weakly, the import volume of new energy vehicles increased, and the market size of parallel imported cars further expanded.

The production and sales of domestic automobiles have grown steadily, and the year-on-year increase in commercial vehicles has increased significantly. According to the data from the China Association of Automobile Manufacturers, from January to September 2017, the production and sales of automobiles respectively completed 20.3942 million vehicles and 20.2245 million vehicles, which was an increase of 4.8% and 4.5% year-on-year. Passenger car production and sales amounted to 17.328 million and 171.505 million, an increase of 3.0% and 2.4% year-on-year, and the growth rate was lower than expected. Commercial vehicle production and sales were 3.021 million and 3.074 million, respectively, an increase of 16.0% and 17.9% over the same period of last year.

Imported car inventory continued to cover, and terminal sales recovered weakly. Due to the demand for inventory, China accumulatively imported 884,000 vehicles, up 18.2% year-on-year, which is a 21.6 percentage point increase from the negative growth of 3.4% in 2016. The sales volume of dealer-delivered customer-imported vehicles (AAK) was 664,000, an increase of 1.9% year-on-year, reversing the decline in 2015-2016, but the recovery was weak.

In terms of industry inventory, inventories of the imported car industry in 2017 were at a relatively stable level. The market supply and demand were in a balanced state. In September, the industry inventory was 3.5 months, returning to the level of 2012-2013; the inventory depth of imported dealers in September was 1.23 months. MoM fell, below the reasonable level of 1.5 months

In terms of vehicle structure, all three models in January-September 2017 achieved growth, with SUV growth of 15.2%, the lowest growth rate among the three major models, and the share remained below 60%. In terms of displacement structure, the displacement was less than 3.0L. Slight decline, 1.5-2.0L shares continue to increase, reaching 45.2%, for the fourth consecutive year as the largest interval.

In terms of imported new energy vehicles, from January to September 2017, the number of new energy vehicles imported reached 17,000, an increase of over 80.3% year-on-year, new energy vehicles accounted for 1.9% of the total imports, and Tesla's import scale reached 13,700, up The increase of 144.3% led to a substantial increase in the size of pure electric imported vehicles, and the share increased to 86.7%.

In terms of parallel imports of automobiles, with the encouragement of a series of favorable policies, the parallel imported automobile market has grown rapidly in 2017, showing five characteristics: parallel imports of automobiles have grown at a high rate, which accounts for the overall market share of imported vehicles; the SUV is absolutely the main force. The proportion of models, pickups, cars, and MPVs are all below 5%; large-displacement models are common, and the 2.0-4.0L displacement range accounts for nearly 90%; the Toyota brand is leading and the top six brands are highly concentrated; Tianjin Port The status of parallel imported cars is difficult to shake, and the share of other ports is below 6%.

In 2018, the supply and demand of China's imported automobile market will be basically balanced, and the period of covering up the inventory will end; the market size of parallel imported vehicles will further expand.

In 2018, China’s economy has shifted from a high-speed growth stage to a high-quality development stage. It is now in the period of tackling the transformation of development methods, optimizing the economic structure, and transforming the growth momentum. It is expected that the development characteristics of macroeconomic “stable growth + quality improvement” will continue. In terms of industry policies, the "Guidance Catalogue for Foreign Investment Industries (Revised in 2017)" and "Measures for the Concurrent Management of the Average Fuel Consumption of New Passenger Vehicles and New Energy Vehicles" have been formally released. The market scale for new energy vehicles is expected to expand further in the future. The competition will be fiercer; the "Automotive Sales Management Measures" has been officially implemented on July 1, 2017. The role of the auto market in promoting healthy development, maintaining a fair and just market order, and protecting the legitimate rights and interests of consumers will gradually be revealed; The market has entered a new normal state of low-speed growth and increasingly intensified market competition. Due to the full withdrawal of purchase tax incentives for 1.6L and below, it is expected that the Chinese auto market will show a slight growth trend in 2018. According to incomplete statistics, 43 new imported cars will be introduced from the fourth quarter of 2017 to 2018. In the Chinese market, the limited number of new models for "quantity sales" has limited the overall sales volume of imported cars. The market size of parallel imported cars will further expand and the proportion will continue to increase. Controlling the number of pilot enterprises, improving the operating level of pilot companies, and establishing and improving the exit mechanism of pilot enterprises will be the focus of the next phase.

Based on the above factors, it is believed that in 2018, it is expected that the supply and demand of China's imported automobile market will be basically balanced, and the period of covering the inventory will end. Customs imports and sales volume will show a single-digit growth.