China Auto Manufacturers_ CPCA Expert Call Takeaways_ Policy and Demand Update

Summary of China Auto Manufacturers CPCA Expert Call Takeaways Industry Overview - Industry: China Auto Manufacturers - Key Expert: Mr. Cui Dongshu from China Passenger Car Association (CPCA) Core Insights and Arguments 1. 2025 Old-for-New Subsidy Expansion: - The scope of the old-for-new subsidy will expand to include gasoline vehicles registered before June 30, 2012, potentially driving 1.2-1.8 million incremental unit sales in 2025 [1][3] 2. Demand Pull Forward: - Demand of 1.0-1.6 million units has been pulled forward from the first half of 2025 to the second half of 2024 due to policy changes [1][4] 3. January 2025 Sales Forecast: - Expected decline in January 2025 retail sales by 20% YoY, with a 40% MoM drop observed in early January [1][5] - NEV wholesale volume is projected to drop 40% MoM to approximately 900,000 units, but still show a 30% YoY increase [1][5] 4. 2025 Sales Growth Projection: - FY25 sales are expected to grow by 2% YoY, with a strong rebound anticipated in the second half of the year due to the full execution of the old-for-new policy and a halving of NEV purchase tax exemptions starting in 2026 [1][7] 5. 2024 Sales Performance: - FY24 retail and wholesale volumes grew by 5.5% YoY, reaching 22.9 million and 27.2 million units, respectively, exceeding earlier forecasts [1][8] 6. December 2024 Sales Trends: - December 2024 retail sales reached 2.64 million units, a 12% YoY increase, but still below the historical peak of 2.75 million units in 2017 [1][9] - NEV wholesale volume in December 2024 was 1.51 million units, a 36% YoY increase [1][9] 7. Pricing Trends: - December 2024 pricing remained stable with average discounts of 9% for ICE vehicles and 8.9% for NEVs [1][11] - Price competition is expected to intensify in 2025, particularly among domestic brands leveraging PHEV cost advantages [1][12] 8. Competitive Landscape: - Traditional automakers like BYD, Geely, and Changan are expected to lead in volume growth, while NEV startups may face challenges due to a lack of PHEV models [1][14] Additional Important Insights - Subsidy Impact: The total subsidy for the old-for-new program is estimated at RMB 60-70 billion, with local trade-in volumes outperforming expectations [2][3] - Production Adjustments: Leading OEMs intentionally scaled back production in December 2024 to prepare for moderate growth in FY25 [1][10] - Market Sentiment: Consumer purchasing power and confidence appear weaker compared to previous highs, impacting sales performance [1][9] This summary encapsulates the key points from the expert call regarding the current state and future outlook of the China auto manufacturing industry, highlighting both opportunities and challenges.