HMG’s China Business Continues to Prove Sluggish
The author is an analyst of NH Investment & Securities. He can be reached at soohong.cho@nhqv.com. -- Ed.
- In July, China’s car sales fell to about 1.5mn units (-6.2% y-y), with sales growth (y-y) turning downward for the first time since July of last year. High-base effect (return to growth from July after demand shock caused by Covid-19) and tight inventory levels due to semiconductor supply issues are largely to blame. By power source, sales of ICEVs decreased to about 1.27mn units (-15.8% y-y), and sales of xEVs (EVs/PHEVs) came to 222,242 units (+169.2% y-y). In July, the portion of xEVs (EVs/PHEVs) out of the total automotive market arrived at 14.8% (vs 5.2% in Jul 2020 and 14.6% in Jun 2021), setting a monthly record high.
- In July, Tesla’s wholesale sales (including exports of Tesla models produced in China) stood at 32,968 units, similar to the previous month (33,155 units). However, of these, Tesla’s domestic sales totaled 8,621 units in July (Model 3: 6,477 units, Model Y: 2,144 units; 3.9% of xEV market in July) versus 28,138 units in June (Model 3: 16,515 units, Model Y: 11,623 units), with its xEV market share dropping sharply m-m from 12.3%. We attribute this decrease to delayed demand following the launch of Tesla’s Model Y standard-range version (sales price of RMB276,000, about 20% cheaper than the long-range version). Meanwhile, China’s three new xEV startups (ie, Nio, Xpeng, Li) recorded combined July sales of 22,361 units (+188.7% y-y) and China market share of 11.1% (vs 10.3% in Jul 2020 and 9.7% in Jun 2021).
- Hyundai Motor Company (HMC) and Kia’s July China sales (retail) totaled 33,125 units (-10.7% y-y; M/S of 2.2%) and 12,258 units (-37.8% y-y; M/S of 0.8%), respectively. Unlike sales improvement in the global market, Hyundai Motor Group (HMG)’s Chinese business continues to prove sluggish. Business restructuring effects are anticipated to kick in from 2022.