Carmakers confident despite market's slow start to the year

Sales in January hit by end of subsidies and Spring Festival holiday closures

Carmakers saw sales of new energy vehicles slow down in January, primarily because of the earlier-than-usual weeklong Spring Festival holiday, but executives and analysts are optimistic about the sector's expected rapid growth for the whole year.

Retail sales of passenger NEVs were expected to stand at 360,000 units last month, up 1.8 percent year-on-year but down 43.8 percent from December, said the China Passenger Car Association last week, based on surveys of carmakers and dealers.

Overall passenger car sales were estimated to see a steeper year-on-year decline of 34.6 percent, with deliveries falling to 1.36 million units, said the CPCA.

Almost all of the major electric startups suffered losses last month. Nio sold 8,506 cars in January, down 11.87 percent year-on-year and 46.22 percent from December.

"The Spring Festival this year fell in January, which means we had one less working week than usual," the New York-listed startup said in a statement.

Nio CEO William Li said that the first half of 2023, especially the first quarter, would be tough for carmakers, as some car buyers placed orders late last year to be eligible for subsidies that ended on the last day of 2022.

China initiated the subsidies in 2009 to foster the sector's growth. It began to phase out the financial stimuli from 2017 as the segment gradually learned to stand on its own.

But the startup is confident in its performance for the year 2023.CEO William Li said it will outsell Toyota's premium marque Lexus in China, which will require Nio to double its sales from 2022.

Other startups saw their January sales tumble as well. Hozon, which was the best-selling startup in 2022, delivered 6,016 units in January, down 45.35 percent year-on-year. Xpeng followed by selling 5,218 units, down 59.62 percent from the same month last year.

Xpeng, based in Guangzhou, Guangdong province, is going through a management reshuffle that started late last year. It has appointed veterans from Great Wall Motors and Geely as president and marketing chief respectively to help it to steer out of the downturn.

"Sales are something that concerns a carmaker's dignity," Xpeng CEO He Xiaopeng said.

NEV arms of established giants saw their sales slump as well, but they are speeding up their preparations in terms of models and dealerships for a bumper 2023.

GAC's Aion sold 10,206 units in January, down 36.3 percent year-on-year and 66 percent from the same month last year. It cited the Spring Festival holiday as well as the withdrawal of subsidies as the major causes.

But the carmaker said its sales goal this year is 500,000 units, which would be a surge from its 2022 sales of 271,000 units.

Geely's electric Zeekr brand saw an 11.73 percent year-on-year fall in January, delivering 3,116 vehicles. But its sales target for the year is to double its 2022 figure, which stood at 70,000 units.

Aito, backed by Huawei, sold 4,475 units last month, down 55.88 percent month-on-month. The brand began deliveries of its model, the Aito M5, in March 2022.

Despite the fall in January, Zhang Yongwei, vice-president of China EV 100, an automotive think tank, is sanguine about the sector.

He said car buyers in smaller cities are emerging as a new customer group, which is a sign of such vehicles' rising popularity.

In the first 11 months of 2022, 54 percent of China's NEVs were sold outside tier-one cities, and the figure is expected to rise further this year, said Zhang.

A growing number of available NEV models will help boost sales as well, he said. A survey by China EV 100 shows automakers will launch at least 100 NEV models this year in the country.

Cui Dongshu, secretary-general of the CPCA, expects the market to take a turn for the better starting from February. The CPCA estimates passenger NEV sales in China will reach 8.5 million units in 2023, up from 6.5 million units in 2022.

Cui was echoed by analysts at Cinda Securities, who said January would be the lowest point for the year and sales will go on the rise starting from February to April.