This article is the first of our three part introduction to China's automobile industry.
In this article, we
Introduce the size and scale of China's auto industry in the global context with references to other key auto markets such as the US, Japan, Germany, and India
Examine domestic vehicle sales and production numbers including new energy vehicle sales and annual vehicle export volumes
Summarize key policy developments that have shaped the evolution of China's auto industry
In Part 2, we provide a brief overview of the top 15 Chinese auto companies and examine statistics on the country's bestselling automakers and vehicle models.
In Part 3, we discuss the future of China's auto industry.
This article is part of our China auto industry series, which includes:
An Overview of China's Auto Industry: Part 1, Part 2, and Part 3
Standard State-Owned: Changan Automobile, SAIC (Part 1 and Part 2)
Value-For-Money State-Owned: Wuling Motors
Traditional Private: Great Wall Motor, Geely, BYD (Part 1 and Part 2)
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Global Perspective
We first look at China's auto industry from a global perspective by examining global sales and production data to facilitate a relative comparison. Raw data are extracted from the International Organization of Motor Vehicle Manufacturers (OICA) website.
Global Sales
The following graph presents the number of passenger, commercial, and total (defined as the sum of passenger and commercial) vehicles sold globally each year for the past ten years. As shown below, global vehicle sales reached a peak of 95,660,606 vehicles sold in 2017 and a low of 78,787,566 vehicles sold in 2020 with the onset of the COVID-19 pandemic. In 2022, a total of 81,628,533 vehicles were sold, comprising of 57,485,378 (70.4%) passenger vehicles and 24,143,155 (29.6%) commercial vehicles. During the past decade, passenger vehicles accounted for 68% to 74% of total vehicles sold each year.
Note: the OICA reports vehicle sales and registrations together. We use the word "sales" and "registrations" interchangeably in this article.
Next, we examine passenger, commercial, and total vehicle sales individually by ranking the five largest contributor countries for each category.
Passenger Vehicle Sales
The table below summarizes the top five countries accounting for the highest number of new passenger vehicle sales and registrations each year over the past ten years.
Key findings include:
China accounted for the highest number of passenger vehicle sales globally each year, with an increasingly growing share that rose from 28.3% of global passenger vehicle sales in 2013 to 41.0% in 2022
The US and Japan accounted for the second and third highest number of global passenger vehicle sales, although both experienced a general decline in number of passenger vehicles sold over the last decade
Germany ranked between fourth and fifth each year, with a generally increasing trend in number of passenger vehicles sold until the COVID-19 pandemic hit in 2020
Though a seemingly large market, India only made the top five starting in 2015 with the drop-out of Brazil, and did not show strong growth until 2022
Note: the unit of measurement is number of cars sold, while percentages measure each country's market share as a proportion of total passenger vehicles sold globally
Commercial Vehicle Sales
The table below summarizes the top five countries accounting for the highest number of new commercial vehicle sales and registrations each year over the past ten years.
Key findings include:
Rankings are relatively fixed each year, with the US accounting for the largest market share of commercial vehicles sold, followed by China in second place, Canada in third place, Japan in fourth place, and Brazil in fifth place to be replaced by India starting in 2015
The US's share of global commercial vehicle sales increased from 37.4% in 2013 to reach a high of 47.1% in 2022, while China's share shrank from 18.3% to 13.7% over the same time period
In terms of raw units of vehicles sold, China recorded a series of fluctuations over the past decade with no clear increasing or decreasing trend
Note: the unit of measurement is number of cars sold, while percentages measure each country's market share as a proportion of total commercial vehicles sold globally
Total Vehicle Sales
The table below summarizes the top five countries accounting for the highest number of total (i.e. passenger and commercial) new vehicle sales and registrations each year over the past ten years.
Key findings include:
China accounted for the highest share of total vehicle sales globally, with an increasing share that rose from 25.7% in 2013 to 32.9% in 2022
The US accounted for the second highest share of total vehicle sales with a market share of just under 20% each year
Japan recorded the third highest number of total vehicles sold over the past decade but gave way to India in 2022
Brazil dropped out of the top five starting in 2015, as India entered the ranking and alternated between fourth and fifth place with Germany
Note: the unit of measurement is number of cars sold, while percentages measure each country's market share as a proportion of total vehicles sold globally
Global Production
The following graph presents the number of passenger, commercial, and total (defined as the sum of passenger and commercial) vehicles produced globally each year for the past ten years. As shown below, global vehicle production followed a similar pattern as vehicle sales, with a peak of 96,746,801 vehicles produced in 2017 and a low of 77,650,152 vehicles produced in 2020. In 2022, a total of 85,016,728 vehicles were produced, comprising of 61,598,650 (72.5%) passenger vehicles and 23,418,078 (27.5%) commercial vehicles. During the past decade, passenger vehicles accounted for 71% to 76% of total vehicles produced each year.
Next, we examine passenger, commercial, and total vehicle production data individually by ranking the five largest contributor countries for each category.
Passenger Vehicle Production
The table below summarizes the top five countries accounting for the highest passenger vehicle production volume each year over the past ten years.
Key findings include:
China produced the most passenger vehicles globally each year with an increase in market share from 27.6% in 2013 to 38.7% in 2022
Japan accounted for the second highest passenger vehicle production volume with an approximate 11% to 12% market share, while Germany ranked third from 2013 to 2020 with a 7% to 8% market share before being overtaken by India
Though a large consumption market for automobiles, the US only ranked fourth in terms of passenger vehicle production and eventually dropped off the top five ranking by 2017
South Korea ranked fifth in every year except 2021
Note: the unit of measurement is number of cars produced, while percentages measure each country's market share as a proportion of total passenger vehicles produced globally
Commercial Vehicle Production
The table below summarizes the top five countries accounting for the highest commercial vehicle production volume each year over the past ten years. Rankings are relatively fixed, similarly to the rankings for commercial vehicle sales.
Key findings include:
The US accounted for the largest share of global commercial vehicle production, followed by China and Mexico in second and third place respectively
Both China and the US do not exhibit a clear increasing or decreasing trend in number of commercial vehicles produced or market share
Japan and Canada alternated between fourth and fifth place in every year until 2021, during which Thailand replaced Canada's place in the ranking
Note: the unit of measurement is number of cars produced, while percentages measure each country's market share as a proportion of total commercial vehicles produced globally
Total Vehicle Production
The table below summarizes the top five countries accounting for the highest volume of total (i.e. passenger and commercial) vehicle production each year over the past ten years.
Key findings include:
China produced the most vehicles in the world with a generally growing market share that increased from 25.3% in 2013 to 31.8% in 2022
The US had the second highest production volume with a 11% to 13% market share, followed by Japan in third place at 9% to 11%
Germany ranked fourth during the most part of the last decade before being overtaken by India and South Korea
Note: the unit of measurement is number of cars produced, while percentages measure each country's market share as a proportion of total vehicles produced globally
China Perspective
We turn to focus specifically on China and examine the country's sales and production statistics over the past 18 years. Raw data on vehicle sales and production volume are taken from the OICA, while new energy vehicle sales data and export volume data are from the China Association of Automobile Manufacturers (CAAM)(中国汽车工业协会).
Vehicle Sales
The graph below presents the number of passenger, commercial, and total (defined as the sum of passenger and commercial) vehicle sales and registrations in China from 2005 to 2022.
Key findings include:
Sales quintupled from 5,758,189 vehicles sold in 2005 to reach a peak of 28,878,904 vehicles sold in 2017
Passenger vehicles comprised the majority of total vehicle sales and accounted for approximately 80% to 88% of total vehicle sales over the past ten years
In 2022, a total of 26,863,745 vehicles were sold, constituting of 23,563,287 (87.7%) passenger vehicles and 3,330,458 (12.3%) commercial vehicles
New Energy Vehicle Sales
The graph below provides a breakdown of passenger vehicle sales based on whether each car is a new energy vehicle (including both pure electric vehicles as well as hybrid vehicles) or a traditional internal combustion engine vehicle. We note that data on new energy vehicle sales is only available starting in 2016.
Key findings include:
The share of new energy vehicle sales as a percentage of total passenger vehicle sales increased rapidly in 2021 and 2022
In 2022, new energy vehicles accounted for 27.5% of all passenger vehicle sales
Vehicle Production
The graph presents the number of passenger, commercial, and total (defined as the sum of passenger and commercial) vehicles produced in China from 2005 to 2022. As a whole, China's vehicle production trend closely followed the trend of vehicle sales.
Key findings include:
Production quintupled from 5,708,421 vehicles produced in 2005 to reach a peak of 29,015,434 vehicles produced in 2017
Passenger vehicles comprised the majority of total vehicle production and accounted for approximately 79% to 88% of total vehicle production over the past ten years
In 2022, a total of 27,020,615 vehicles were produced, comprising of 23,836,083 (88.2%) passenger vehicles and 3,184,532 (11.8%) commercial vehicles
Vehicle Exports
The graph below shows the total (i.e. passenger and commercial) number of vehicles exported from China each year. This includes both vehicles produced by Chinese brands sent to be sold abroad, as well as vehicles by non-Chinese brands (such as Tesla) produced for offshore markets.
Key findings include:
Vehicle export numbers in China followed a generally increasing, wave-like trend from 2005 to 2020 before experiencing rapid increases in 2021 and 2022
2,015,000 and 3,111,000 vehicles were exported in 2021 and 2022 respectively, compared with a previous peak of only 1,056,000 vehicles exported in 2012
Policy Developments
In this section, we outline the major policy developments that took place and shaped the evolution of China's auto industry over the past 14 years.
2009
The Chinese central government unveiled the Car Industry Adjustment and Revitalization Plan (汽车产业调整和振兴规划) with the purposes of: (1) boosting China's car manufacturing capacity, (2) promoting domestic brands, and (3) encouraging the development of key technologies and new energy vehicles. This was the first time for new energy vehicles to be included in a national policy. Other notable policy details included: the reduction of vehicle sales tax for low emission cars, a RMB5 billion subsidy scheme to financially support farmers who purchase compact cars, and a RMB10 billion funding scheme to promote the technological development of new energy vehicles.
The Car Industry Adjustment and Revitalization Plan spanned the three year period from 2009 to 2011.
2012 The central government released the Energy Saving and New Energy Vehicle Industry Development Plan (2012-2020) (节能与新能源汽车产业规划 (2012-2020)). The scope of the plan is rather broad and abstract, although certain specific goals were mentioned, such as: (1) achieving a new energy vehicle production capacity of 500,000 cars by 2015 and 2,000,000 cars by 2020, (2) promoting China to become a world leader in electric vehicle batteries and hybrid propulsion systems technologies, and (3) reaching an average fuel consumption level below 5L/100km for new vehicles produced by 2020.
2013
A subsidy scheme for new energy vehicles was launched where auto manufacturers can file for reimbursement subsidies from the government for the new energy vehicles they produce. According to the newly launched scheme, smaller electric vehicles were eligible for up to RMB60,000 reimbursement per car, while electric buses were eligible for up to RMB500,000 per bus. The subsidy scheme greatly boosted China's electric bus sector, but also resulted in certain manufacturers producing small new energy vehicles just to claim reimbursements without real consumer demand backing the production.
2014
The central government implemented a new sales tax waiver for pure and hybrid electric vehicles. The waiver policy has since been extended multiple times and is currently set to expire at the end of 2023.
2015
New energy vehicle subsidy frauds topped headline news throughout the year. A number of auto companies were revealed to have produced buses with smaller than previously disclosed batteries or no batteries at all (larger battery sizes were disclosed to obtain larger subsidies), and in certain cases these buses were not used in actual operations. An investigation by the Chinese regulators revealed that 72 out of 93 investigated automakers were involved in new energy vehicle subsidy frauds of different extents, including large companies such as SAIC.
2016
New energy vehicle subsidy policies were shifted to target higher range and even lower emission vehicles. A new rule was also put into place where buses could only be eligible for reimbursement subsidies after having been in operation for 30,000 kilometers.
2018
The central government removed restrictions on foreign ownership in the car manufacturing industry, as Tesla became the first non-Chinese company to own 100% of its factory in China.
Note: previously, foreign auto companies were required to manufacture cars through joint ventures with Chinese companies.
Starting in 2018, subsidies for new energy vehicles were gradually reduced.
2021
New energy vehicles with a range below 300 kilometers were no longer eligible for any subsidy.
2022 Subsidies for new energy vehicles were completely terminated at the end of the year.
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China Auto
Standard State-Owned: Changan Automobile, SAIC (Part 1 and Part 2)
Value-For-Money State-Owned: Wuling Motors
Traditional Private: Great Wall Motor, Geely, BYD (Part 1 and Part 2)
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