Introduction

Introduction

The 'golden September and silver October' period has arrived again, bringing some relief to the turmoil in the automotive market, but...

It's hard to imagine that after months of everyone complaining about how difficult it is to make money, this National Day holiday was filled with the scent of money throughout the country.

On October 8th, according to VAT invoice data released by the State Taxation Administration, the consumer market during the entire National Day holiday period showed strong vitality, with the average daily sales revenue of related industries increasing by 25.1% year-on-year. Additionally, some data indicate that nationwide on-site consumption in the lifestyle services sector increased by 41.2% year-on-year, and tourists' average daily spending increased by 69.6% compared to last year's holiday period.

To be honest, given the overall sluggish economic conditions this year compared to previous years, and the evident pessimism expressed by various industries in the first half of the year, we had assumed that the phrase 'golden September and silver October,' with its inherent appeal for spending, would have no relevance in 2024. However, who would have thought that, even ignoring the consumption trends reflected in the data, the spending spree in the end-consumer market was quite eye-catching.

Especially after a slew of economic relief policies formulated by the state, including measures aimed at the automotive industry, took effect during this rare seven-day holiday, we almost forgot that the theme of 'boosting consumption' has permeated the first nine months of this year.

If the consumption momentum led by tourism was the key driver of this spending spree, it seems clear from mainstream media reports that automotive consumption also played a significant role in fueling the fire.

The performance of the automotive market over the past few months has undoubtedly been observed by the outside world. Not only has the market turmoil caused by price wars been bizarre, but automakers' pessimistic expectations for the market have already set the tone for 2024: just maintaining sales and preventing a decline would be considered a victory.

However, looking at the current situation, with only three months left in the year, the surge in sales during this period has, on the bright side, brought joy to the automotive market and may even dispel the gloom that has shrouded sales this year. With the stock market suddenly opening sharply higher, plunging the entire nation into a frenzy of 'heavenly showering of money,' it seems that there is a definitive answer to whether the Chinese automotive market will unleash new vitality from here on out.

The automotive market recovery, catching everyone off guard

From the beginning of the year until now, the automotive market's tumultuous nine months have left a deep impression on industry insiders. The market turmoil caused by price wars is just one aspect; the underlying issues are equally daunting. The relentless competition among automakers, regardless of alliances, and the relentless attacks on traditional automakers in public opinion have created chaos that makes it difficult to make an objective prediction about the future development of the automotive market.

Against this backdrop, what final answer will the automotive market give in the last quarter? Before the National Day holiday, automakers were undoubtedly skeptical about this special holiday.

Fortunately, the real-time feedback has, to some extent, brought belated confidence to automakers.

On the evening of October 7th, Lei Jun eagerly posted on social media that "during the National Day holiday, Xiaomi SU7 received over 6,000 confirmed orders." He then revealed Xiaomi Auto's sprint goal for October: produce and deliver 20,000 vehicles!

In this era of influencer marketing, one might argue that the continued popularity of Xiaomi SU7 is not representative. But as a plethora of similar news emerges, how should the outside world interpret it?

NIO received over 17,000 confirmed orders during the National Day holiday, ZEEKR surpassed 10,000, XPeng gained over 16,000 new orders, LIXIANG received over 20,000 orders, and HONGMENG Intelligent Mobility's entire lineup received a total of over 28,600 confirmed orders during the same period... Clearly, just the explosion of sales in the new energy vehicle market during the National Day holiday is enough to profoundly illustrate the extraordinary resilience of the Chinese automotive market.

And if you think this belated automotive market euphoria is solely the game of new players, you'd be greatly mistaken. It's been a long time since SAIC-GM has issued such a sales report, proudly announcing the National Day achievements of the Envision Plus. With over 7,000 confirmed orders, this is quite impressive considering the current negative public opinion towards gas-powered vehicles.

Similarly, while mainstream joint venture brands like Toyota and Volkswagen have not been eager to share their National Day sales figures, actual visits to dealerships reveal a significant influx of customers that has not been seen in the past few months. Riding on the wave of the special National Day shopping season, the surge in order volumes year-on-year is also quite evident.

"We haven't seen anything like this in a long time." On the front lines, this is perhaps the genuine sentiment expressed by most sales consultants. But to be honest, after months of market struggles, it's high time for the Chinese automotive market to turn things around.

Of course, we cannot deny that a major factor driving the uptick in the automotive market during the National Day holiday is government policy support. Many 4S dealership sales representatives have confirmed that most customers placing new car orders also brought in their old cars for trade-ins.

According to the latest national scrappage subsidy policy for automobiles, the subsidy for scrapping eligible old vehicles and purchasing new energy passenger vehicles has been increased from 10,000 yuan to 20,000 yuan. For scrapping eligible old vehicles and purchasing gasoline-powered passenger vehicles with displacements of 2.0 liters or less, the subsidy has been raised from 7,000 yuan to 15,000 yuan.

Clearly, such subsidies, reminiscent of the halved purchase tax on small-displacement vehicles and the rural auto subsidy program in the past, can stimulate potential customers at the root level, further heating up the automotive market.

Indeed, amidst cyclical economic fluctuations, when consumers' finances are strained this year, automotive purchases can often be postponed. However, can the Chinese automotive market really withstand such a consumption downturn? The ongoing price war that has infiltrated various market segments has made its intentions clear.

Riding on the wave of the National Day holiday shopping spree, the Chinese automotive market has preserved its dignity. But ultimately, regardless of the changes in consumption stimulus measures, the goal is to shore up the automotive industry amidst internal and external pressures, enabling it to shoulder the responsibility of driving the economy forward amidst the troubled real estate sector.

Can a booming stock market drive the automotive market?

Regardless, the National Day holiday has come and gone. The state always hopes to clear away all the previous development obstacles for automotive consumption. But how to rebuild consumption confidence thereafter? It's no easy feat to rely solely on this wave of concentrated market promotions.

As the stock market closed late on the first day after the holiday, the three major indices opened sharply higher before settling back down. The Shanghai Stock Exchange Composite Index still ended the day up 4.59% at 3,489.78 points; the Shenzhen Component Index closed up 9.17%; the ChiNext Index surged 17.25%; and the Beijing Stock Exchange 50 Index gained 24.71%. On that day, the total trading volume in the two markets reached a record high of 3.4519 trillion yuan, exceeding the previous trading day's volume by over 859.4 billion yuan; net outflow of funds from the broader market exceeded 219.33 billion yuan.

It goes without saying that if the stock market recovery can alleviate most people's emotional concerns, the automotive market, to some extent, will likely follow a similar upward trend until the next round of volatility arrives.

From start to finish, the ups and downs of the stock market are closely tied to the health of the economy. When the market falls, not only are large-scale purchases affected, but all consumer spending related to daily life is also impacted.

When the market rises, investors' optimism about the future economy will, to some extent, boost consumption confidence. In other words, once consumers' investment confidence is bolstered, it naturally spurs their willingness to spend. Given that automobile purchases, as a bulk commodity that costs significantly less than real estate but still requires a substantial investment, are inevitably tied to consumption confidence and personal finances.

Needless to say, when the stock market is performing well, investors who reap short-term large gains may turn their attention to the automotive market, and the ripple effects this generates could spur the automotive market to unleash another wave of potential in the final stretch of the year.

In the end, this year's automotive market has been nothing short of magical. In the past, it would have been difficult to justify placing hopes for market recovery solely on a stock market rally. However, given that everyone's anxieties have remained unresolved in the first nine months of the year, it's not entirely unreasonable to suddenly entertain such thoughts now.

This National Day holiday, the automotive market indeed witnessed a long-awaited dawn. The positive reports from various automakers are eagerly conveying signs of market recovery. From new players to traditional automakers, from domestic brands to foreign ones, this brief spending spree has once again instilled confidence in their performance for the entire year. After months of price wars, it's high time to inject some vitality into the future development of the automotive market.

Not surprisingly, with the continued favorable policies and the stock market temporarily propping up consumers in a state of effortless money-making, the smiles in the automotive market will likely persist for some time.

However, in my opinion, maintaining 'vigilance' should remain a priority for all automakers amidst the joy of rising sales. With multiple factors at play, consumption confidence can quickly rebound, which also means that it's easy for the market to plummet overnight. Especially given the ongoing price wars, the prevalence of smear campaigns among automakers, and the unresolved sentiment of creating an 'oil vs. electricity' divide in public opinion, any fleeting moments of glory achieved through external forces are not worth clinging to.