China’s automobile production and sales have reached a new high, but the industry profit rate is still low.

After the production and sales exceed 30 million vehicles and the export ranks first in the world, the next development of China’s automobile industry needs to be optimistic and rational.

In terms of scale, according to the data of China Automobile Industry Association, in 2023, the production and sales of automobiles in China were 30.161 million and 30.094 million respectively.A record high. Cui Dongshu, secretary-general of the Association, issued a document saying that in 2023, China’s automobile production and sales scale has occupied 33% of the world automobile market share, and in the future, China’s automobile production and sales share will exceed 40% and move towards 50%.

The data shows that in 2023, the overall income of China’s automobile industry exceeded 10 trillion yuan, and the profit reached.508.6 billion yuan, the profit growth rate is lower than the income growth rate. In addition, the profit rate of the automobile industry is 5.0%, which is lower than the average profit rate of the whole industrial enterprise of 5.8%.In the past decade, the profit rate of China’s automobile industry has shown a downward trend, and this figure will reach 8.7% in 2015.

Cui Dongshu pointed out that the recent decline in profits of the automobile industry is still relatively large, and automobile companies are facing greater profit pressure. The production and sales of the automobile industry are good at a high base. However, as the source of profits mainly depends on exports and high-end luxury models, most other enterprises have experienced a sharp decline, and some enterprises have increased their survival pressure.

Under the transformation of new energy, the automobile industry is currently in a situation where fuel vehicles are profitable but shrinking rapidly, and new energy vehicles are growing at a high speed but losing a lot.

Yang Jing, director of Fitch Ratings Asia-Pacific Enterprise Rating, told Interface News that the decline in profits of the automobile industry was affected by factors such as the shortage of supply chains of previous joint venture brands, the increase in short-term costs, and the decline in sales of fuel vehicles. Although Chinese independent brands have made up the market share of joint venture brands with new energy vehicles, their profitability is still weak.

In addition, from the perspective of scale effect, BYD and other head companies have a large market share, but the market share of other brands is still small. "If the sales scale of new energy brands does not reach a certain level, it is difficult to significantly improve profit margins just by reducing costs and increasing efficiency."

Yang Jing believes that at present, it is difficult for the profit rate of the automobile industry to return to its original level in a short period of time, and the industry as a whole may show a downward trend in the medium and long term. In the future, it is necessary to pay attention to the decline of battery costs and intelligent profitability.

At the same time, Cui Dongshu pointed out that going to sea will be the next explosion point of China’s automobile industry in the next decade.

Cui Dongshu said that China’s automobile export market has shown strong growth in the past three years, and the growth rate of China’s automobile export will remain at 56% in 2023. From the perspective of export amount, in 2023, automobile exports reached 101.6 billion US dollars, with a growth rate of 69%, and the average price of bicycles also increased from 18,000 US dollars to 19,000 US dollars.

According to the full-caliber data of the Association, the overseas sales of China automobile manufacturers such as SAIC passenger cars and Chery have reached more than half of the sales of enterprises, and BYD’s export sales have also jumped by 334%.

However, it is worth noting that Fu Bingfeng, executive vice president and secretary general of China Automobile Industry Association, said in an interview that the number of automobile exports of a country is counted according to the principle of territoriality, which also includes the number of automobiles produced locally by foreign brands and then exported, so the number of automobile exports cannot be simply used as a criterion.

For automobile export, the export of automobile products is in the primary stage, followed by building factories overseas to produce automobiles. Most automobile manufacturers such as Japan and Germany adopt this model (not included in the statistics of export volume). Cui Dongshu pointed out in the article that Japanese automobile exports are weaker than overseas production scale. In 2022, Japanese automobile production at home and abroad accounted for 69%, and major automobile manufacturers accounted for more than 70% overseas.

In the past two years, BYD, Changan, SAIC, Great Wall Motor, Chery and many other American automakers have begun to invest and build factories in South China and Southeast Asia, which will have great potential in export and overseas production in the future.