Greater China sales

November 2022: -11.5%; 2.11 million units vs. 2.38 million units

YTD 2022: +2.7%; 22.32 million units vs. 21.74 million units

• In November 2022, 2.11 million light vehicles were sold in Greater China, marking an 11.5% decrease compared with the same month of 2021. Specifically, light vehicle sales in mainland China decreased 11.8% from 2.34 million units in November 2021 to 2.06 million units. Passenger vehicles recorded sales of 1.83 million units, a 9.0% decrease year on year (y/y), and light commercial vehicle (LCV) sales contracted 28.9% y/y to 0.23 million units.

• On a year-to-date (YTD) basis, light vehicle sales in mainland China increased 2.8% from 21.31 million units to 21.91 million units. Precisely, passenger vehicle sales increased 7.6% y/y to 19.32 million units, while LCV sales decreased 22.9% y/y to 2.6 million units. Segment-wise, YTD sedan sales increased 11.1% y/y from 8.84 million units to 9.83 million units, and the sport utility vehicle (SUV) segment increased 4.7% y/y from 8.43 million units to 8.82 million units. YTD sales of multipurpose vehicles (MPVs) decreased 1.5% y/y to 0.68 million units.

• Chinese auto sales in November were severely hindered by COVID-19 restrictions in China. The prolonged pandemic has slowed the country's economic growth, with its GDP forecast to grow 2.8% in full-year 2022, much lower than the target set at the beginning of the year of 5.5%. Starting from the beginning of December, a raft of cities has begun to ease COVID-19 pandemic-related restrictions, after the central government urged local authorities to optimize pandemic-containment measures, including lifting lockdowns, reducing the frequency of mass testing, and allowing home quarantine for close contacts. The relaxing of containment policies has set the stage for a broader economic recovery from COVID-19 disruptions, although it will take time for consumer confidence to climb.

• In November, sales of internal combustion engine (ICE) vehicles in the broader passenger vehicle market contracted by 30% y/y, with consumers turning to new-energy vehicles (NEVs). The strong growth in NEV demand is helped by government incentives, including subsidies and purchase tax exemption. Passenger vehicle sales in December may be helped by incentives provided by automakers in an attempt to clear inventories and boost year-end sales. The end of central government electric vehicle (EV) subsidies by the end of 2022 will also help to convince customers to make their purchases within the year. In the fourth quarter, vehicle sales will be constrained by the resurgence of COVID-19 infections in the country. Automakers are trying to counter downward pressures in the domestic market with a renewed push for exports. In the year to date, NEV exports doubled y/y to nearly 600,000 units, and new-vehicle exports increased 55% y/y to 2.785 million units. In addition, the NEV purchase tax exemption will be extended into 2023, while cities such as Shanghai will likely withdraw some of their preferential policies on plug-in hybrid electric vehicles (PHEVs) from 2023 to shift their focus to battery-electric vehicles (BEVs). We expect NEV penetration to edge close to 26% in 2022, supported by strong products.

• With strong year-end stimulations and marked easing of COVID-19 related restrictions, light vehicles sales should grow by 3.6% to 24.76 million units in 2022, of which passenger vehicles are estimated to increase 7.7% y/y to 21.75 million units, while LCVs are forecast to decline 18.8% to 3.01 million units.

Greater China production

November 2022: -15.3%; 2.16 million units vs. 2.55 million units

YTD 2022: +8.6%; 23.85 million units vs. 21.97 million units

• Greater China's light vehicle production in November recorded 2.16 million units for a decline of 15.3% year on year (y/y). In mainland China, light vehicle production decreased 15.5% y/y to 2.13 million units. The spread of COVID-19 in major industry cities led to light vehicle production losing momentum in mainland China in November after October's golden purchasing season. Changan was hit in the first wave as all manufacturing facilities in Chongqing were shut down for 10 days in November. FAW-VW's plant in Chengdu was also shut down temporarily at the end of November owing to local COVID-19 cases. Even production lines in Changchun plants were closed owing to supply shortages. These supply chain interruptions led to Honda's plants in Wuhan shutting down for one week and will even affect global output from Japan.

• The light vehicle production forecast for Greater China for full-year 2022 is set at 26.33 million units, marking a 6% y/y increase. In mainland China, light vehicle production will be 26.08 million units for a 6.1% y/y increase. Heavily damaged by the November lockdown and potential supply interruption in December, we lowered the 2022 mainland China light vehicle production by 350,000 units compared with the November forecast, leading to 6.1% y/y growth in the December forecast (1.5% lower than the November forecast).

• The latest vehicle inventory alert (VIA) index, issued by the China Automobile Dealers Association (CADA), stood at 65.3%—with an increase of 6.3% month on month (m/m) and 9.9% higher than in the same period of 2021—above the threshold. In November, the epidemic continued to expand, and the auto market sales performance fell short of expectations. Auto shows and marketing activities around the country could not be carried out smoothly owing to restrictions to help control the pandemic, and the auto market was relatively quiet. The release of pent-up consumer demand for cars was hindered by the closures of many dealers.

• In November, production of passenger vehicles in Greater China decreased 10.9% y/y to 1.94 million units. Market segment-wise, car production stood at 0.9 million units with a 13.2% y/y decrease. Production of multipurpose vehicles (MPVs) increased 12.2% y/y to 70,219 units. Production of sport utility vehicles (SUVs) decreased 9.9% y/y to 0.97 million units. Plant closures due to COVID-19 cases led to Changan suffering a 45% production loss of 400,000 units in November. FAW-VW could build only 110,000 units, falling 30% in November. On the contrary, motivated by an expiring subsidy, the new-energy vehicle (NEV) market maintained momentum in November. Tesla achieved sales of over 100,000 units, contributed by domestic demand for the Model Y and exportation of the Model 3. Thanks to a reliable in-house supply chain, BYD continued to dominate the passenger car market with industry output of over 2 million units—127% y/y growth in November. The Dynasty series contributed a major share as the Han and Song plus surged up by 145% and 125% y/y, respectively.

• In November, light commercial vehicle production in Greater China posted 0.22 million units, falling 41.6% y/y. Market segment-wise, production of chassis-cabs stood at 0.11 million units, down 47.5% y/y. Production of vans stood at 78,565 units with a 32.2% y/y decrease. Pickups decreased 38.9% y/y to 28,203 units. Full-year production should reach 2.96 million units for a 23.9% y/y decrease.

This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.