"Town Youth" Is Still The Largest Incremental Market When The Car Market Is Bottom.

The continued decline of China's auto market failed to rebound in the "golden nine silver ten".

In October 14th, the China Automobile Industry Association (hereinafter referred to as "China Automotive Association") released data show that in September this year, China's automobile production and sales volume were 2 million 209 thousand and 2 million 271 thousand, respectively, down 6.2% and 5.2% compared to the same period, 1-9 months, automobile production and sales 18 million 149 thousand and 18 million 371 thousand, down 11.4% and 10.3% compared to the same period.

Although the decline in September narrowed, this was mainly due to a large negative growth in the same period last year, resulting in a lower base. Compared with the first half of the year, the car market rebounded slightly in the second half of the year, but the magnitude and speed of the recovery did not meet expectations.

Prior to this, China Automobile Association predicted that China's auto sales this year will decline by 5%. On October 14th, Xu Haidong, Assistant Secretary General of the China Automotive Industry Association, told reporters in an interview with twenty-first Century economic report that from the current situation, the annual decline of the car market is expected to further narrower than the current 10.3%, but the decline narrowed to 5%. The car market will drop more than 5% this year.

In 2018, China's automobile market witnessed its first negative growth in 28 years. More and more voices in the industry believe that the car market will not be able to get out of the downstream channel in the short term, and the Chinese car market will undergo a period of adjustment.

Lang Xuehong, Deputy Secretary General of the China Automobile Circulation Association, is more pessimistic about the trend of China's car market. She believes that the Chinese auto market has not yet explored the bottom this year, and will continue to explore next year. There will be a signal of recovery next year. It will be restored to the pre crisis level in 2021 and 2022, and it will be possible to sprint 30 million vehicles by 2023.

At the same time, in the past period of time, the structural problem of automobile consumption has already appeared.

"The most serious decline in automobile consumption is mainly in the three or four line market, the rural market and the northern market, but the second tier cities and the luxury car market are still growing. There are more obvious automobile consumption faults. The high-end group is upgrading in consumption, but the low-end group can't afford to buy a car. In October 13th, Cui Dongshu, Secretary General of the information conference of the national passenger car market, told an interview with the twenty-first Century economic report.

Independent brand life and death test

In the ten years from 2008 to 2017, China's auto production and sales increased from 10 million to 28 million, the sinking of the automobile market played a crucial role, mainly due to the improvement of the living standard and consumption power of the residents in the three or four line and below market, which led to the rapid growth of the whole car market. Now the car market is down, precisely because this part of the market has slowed down.

From the data of motor vehicle insurance, in the first half of this year, vehicle sales in developed areas were basically flat; the growth rate of the eastern coastal provinces auto market reached 5%-10%; in a large number of underdeveloped western provinces, the growth rate of the automobile market was about -10%, or even lower. In terms of sub city level, the cities with more than three lines have been rising steadily, and the cities below three lines are negative growth. The five or six line cities are negative growth of more than two figures.

Cui Dongshu believes that since the first half of 2018, the rise in housing prices in the three or four tier cities has diverted residents' savings and consumption to a certain extent, resulting in consumers temporarily having no spare funds to purchase vehicles.

Previously, the flagship market for Chinese brands, which sell low-end vehicles, encountered more severe market pressure.

"The main reason for this decline is mainly from the transformation of macro-economy, and the impairment of consumer power at the bottom, and their purchase target is mainly their own brand. When the joint venture brand is competitive, the brand effect technology reserve is stronger than the independent brand, and the ability to resist risks is stronger. According to this trend, the pressure on independent brands will be more and more severe. Xu Haidong, assistant secretary of China Automotive Industry Association, told reporters on twenty-first Century economic report.

Before September, China's brand passenger cars sold 5 million 903 thousand vehicles, down 18.5% compared to the same period, and the market share was 38.7%, down 3.3 percentage points.

The reduction of the market share of Chinese brand passenger cars is mainly affected by the SUV market. During the previous period, China's brand in the SUV market was far ahead of the joint venture brand because of the dividend gained from China's SUV market and the first step to increase the layout. However, due to the strength of many joint venture brands in recent two years, Chinese brand SUV gradually lost its market advantage. In the first half of September this year, the market share of Chinese brand SUV dropped from 58.4% last year to 52.2%.

China Automobile Association Secretary General Jianhua believes that China's auto industry has reached a critical stage.

"China's auto industry has entered a structural adjustment to the point of survival of the fittest. After the rapid growth of automobile industry, China's independent brand is facing the problem of survival. It is not a question of whether we live well or not, but whether we can live. " Shi Jianhua said in an interview with the twenty-first Century economic report.

China's auto market is shifting from "quantity" to "quality". For Chinese brands, new challenges should be found in the process of confrontation with the joint venture brands.

"If China's independent brand develops in a rugged and cost-effective way, it will be difficult to continue. China's independent brand has already launched a positive and comprehensive competition with the joint venture brand, so we must choose our strategy and positioning. Xu Haidong said.

Town Youth's car consumption upgrade

I must mention that the rapid growth of China's own brands in recent years is dependent on the three or four line cities. In the weak market, the independent brand with the difference between brand power and international brand is hard to win a large area in the second tier cities. The sinking market is still the main opportunity for Chinese brand cars.

However, due to the increasing layout of the joint venture brands in the recent years, and the upgrading of the consumption of the young consumer groups, the survival space of the independent brands has been further squeezed.

According to the statistics of the Federation, the average price of China's own brands has increased rapidly in the past three years, from 76 thousand yuan in 2017 to 80 thousand yuan in 2018, while the average price of the independent brand in September this year was 87 thousand yuan, an increase of 9%.

It is worth noting that since the second half of last year, the car market began to suffer negative growth, and car dealers and distributors launched a fierce price war, and the price of new cars generally declined. That is to say, even in the low-end independent brand market, it is experiencing consumption upgrading.

This is mainly due to the change of consumption concept of mainstream consumer groups. The town youth, aged 18 and -35, who live in prefecture level cities, counties and towns (i.e., three or four lines and below cities), are becoming the main consumers of China's automobile market. They generally have relatively stable jobs in their hometown, and lower living costs make them have a certain spending power, and have an advanced consumption concept. They are more likely to accept car loans and financial leasing products. Compared with the young people in the first tier cities, they have greater willingness to buy cars.

During the National Day holiday, in twenty-first Century, an economic reporter in a prefecture level city in Hunan found that in the central city of the city, 1 million of the city streets were congested, and roads were covered with various brands of cars. Many locals regarded private cars as necessities for life. In this city's "Auto City", from Mercedes Benz, BMW, to Volkswagen, TOYOTA, to Geely, the Great Wall, different brand positioning cars have opened 4S shops here.

Zhang Wei, a 28 year old college student, returned to his hometown after graduating from university and worked in a newspaper office in the city. In order to get married, he is going to buy a new Volvo XC60.

"The city is still expanding. It will be very inconvenient to travel without a car. Although it's just a walking tool, under the current economic conditions, I want to go all the way to buy a luxury brand car. Zhang Wei told reporters on twenty-first Century economic report.

After graduating from junior high school, Jiang Jian, 16, went to work in a hotel in Guangdong. After fighting for five or six years to save tens of thousands of dollars in savings, Jiang Jian decided to go back to his hometown with his wife and open a restaurant in the town. At the beginning of this year, Jiang Jian's wife was pregnant. In order to facilitate her regular physical examination in the county town, the couple bought a modern sonata. Jiang Jian told reporters that cost performance is the main factor to consider when buying a car. In addition, Sonata's rear seat is large enough to allow his wife to ride comfortably.

The town is nearly 40 kilometers away from the county seat, and it takes about 50 minutes to drive. Like Jiang Jian, more and more young people living in towns and villages began to buy private cars. Jiang Jian told the twenty-first Century business news reporter that before buying a car, we had to go more than 100 kilometers away from the city, and now more and more people choose to buy cars in the county seat, and the car dealers in the county seat and the brands that can buy cars are also rising.

During the national day, there are not many people buying cars in the three or four tier cities. Most people choose to buy cars before the new year. However, this year, dealers in county towns are not having a good time.

"In the past, we only had brands such as Wuling Hongguang, Changan and the Great Wall. Now there are twenty or thirty brands nearby. There are more people watching cars, but the business is getting worse and worse." In October 2nd, a local distributor of SAIC GM Wuling told reporters on twenty-first Century economic report.

He told reporters that Wuling Hongguang was the best seller in the region. Some self-employed people are both commercial and car owners. Some people buy and run for rentals. But now, more than MPV, more people tend to buy SUV, and as the income grows, the brand of car buying is also more and more high-end.

According to production and sales data released by 600104.SH, the sales volume of SAIC GM Wuling was only 1 million 127 thousand in the first half of September this year, down 24.64% compared with the same period last year.

"In the low-end market, Wuling Hongguang sold well before, but in the past two years, Taobao and the logistics industry have developed rapidly, and small business hawkers are under great pressure to survive. The market pressure of related vehicles will also increase. Cui Dongshu told reporters.

The car consumption in the low-end market has been mainly concentrated in family cars. For the independent brand, although the market pressure is increasing under extrusion, it is still the most important market breakthrough at present. Facing the sinking of the sunken market, independent brands need to respond.

"Although the market of the three or four tier cities is declining now, there is still an opportunity for recovery in the future. The independent brand must make good product strength, upgrade products, and establish a marketing system and channel system suitable for its own characteristics to seize the market. Cui Dongshu finally said. (Editor: Zhou Kaiping)