2025 sand table deduction, evolution path of passenger car industry

1. Historical review: Similarities and differences between passenger car popularization paths in China and Japan and South Korea

Economic development is the core driving force for the growth of passenger car ownership

We reviewed the historical data of the long cycle of passenger vehicles in the United States, Japan, South Korea, China and other countries. From a long cycle point of view, the popularity of automobiles shows a very obvious positive correlation with economic development: By horizontal comparison of countries' economic development level and car popularity data, we can see that countries with higher per capita GDP (the more developed the economy) tend to have higher car ownership per thousand people. The specific car penetration rate, popularization path and ownership ceiling are subject to the comprehensive constraints of different factors such as infrastructure, energy structure, economic structure and consumer culture in different countries.

Review and Contrast: Similarities and differences between China and South Korea and Japan

China is currently in the "third decade" of automobile popularity. From the point of view of the popularity stage, the popularity of automobiles in a country has obvious stages: Taking the annual sales growth rate of automobiles as the basis for division, observing the history of automobile popularity in the United States, Japan and South Korea, we can see that Japan and South Korea have the characteristics of "three decades", that is, the industry growth rate of >25% of the rapid popularity period, the growth rate of 7-10% of the steady growth period, and the growth rate of 2-3% of the low growth period. For Japan, it was the 1960s, 1970s, and 1980s, and for South Korea, it was the 1980s, 1990s, and 2000s. The United States, with its leading automobile industry in the world, experienced a steady growth period of 5% CAGR for 40 years from 1933 to 1973. The four decades since 1973 have been stagflation. After entering a period of stable growth, the concentration of domestic auto self-supply ratio in Japan, South Korea and the United States has always been high and the pattern is stable. Among them, the two giants of Hyundai and Kia in South Korea have steadily occupied 40% and 35% of the domestic share, and the three giants of Toyota, Nissan and Honda in Japan have maintained a total share of about 60% in nearly 40 years.

Looking back at the popularization path of passenger cars in various countries, it can be found that China's growth and popularization path in the past 30 years is highly similar to that of South Korea: When China reached the same per capita GDP as South Korea in the historical period, it also reached a similar number of thousand cars. In terms of car ownership, the current Chinese market is more similar to South Korea in 1995 and Japan in 1971. In contrast, the popularity of passenger cars in Japan happened earlier, but the shape of the popularity curve is comparable. In 2020, the number of cars per thousand people in China is 195, basically reaching the world average, and the number of cars per thousand people is basically equivalent to that of South Korea in 1995/1996 (188 and 210/1,000) or Japan in 1971 (197/1,000). We believe that among all the comparable countries of China, South Korea is the most similar comparable country to China, followed by Japan.

After 1995, the South Korean passenger car market resumed: sales growth was mainly driven by exports, and the number of thousand people increased steadily. South Korea reached China's current level of 1,000 cars in 1995 and 1996, when domestic car sales reached 1.56 million and 1.64 million, respectively, but domestic car sales soon halved after the 1998 Asian financial crisis (during which time GDP per capita fluctuated wildly). Due to the lack of timely and effective consumer stimulus policies, passenger car sales in South Korea did not recover to 1.62 million units until 2002, seven years later. However, in the six years from 1995 to 2001, the number of cars per thousand people in South Korea remained very stable at 273 vehicles per thousand people. At the same time, South Korea's export sales grew rapidly after 1990, and the proportion of export sales increased from about 30% in the early 1990s to more than 60%, and the development of export markets effectively hedged the decline of domestic automobile sales.

The Japanese passenger car market recovered after 1971: the first oil crisis (1973) led to rapid sales growth until the first demand peak in 1990. In contrast, Japan had 197 cars per thousand people in 1971, which is basically equal to China's car penetration rate in 2020. That year, Japan sold 5.8 million cars, of which 4.02 million were sold domestically and 1.78 million were sold overseas. In the following five years, car sales in Japan also experienced fluctuating growth (Japan's domestic sales had reached 4.95 million in 1973, but fell back to 4.1 million in 1976), but the number of cars per thousand people also gradually increased to 273 vehicles per thousand people. There are many reasons for the fluctuations in sales, including fluctuations caused by economic growth and changes in the landscape of the automobile industry caused by the 1973 oil crisis. After the oil crisis, demand for Japanese-made cars, known for their fuel economy, exploded.