China's auto market outlook in 2022

The coronavirus pandemic remains the biggest uncertainty for the growth of the automotive market. The continuation of the epidemic and the dynamic zero prevention policy will continue to inhibit the full recovery of the macro economy and household consumption, and the bottleneck of the supply chain is also expected to continue. However, the policy expectations of loose monetary policy and the tax cut subsidy program for small and medium-sized enterprises are expected to hedge the potential negative impact of the epidemic on the economy and consumer confidence. In addition, the supply constraints of core components such as raw materials and chips will also be effectively alleviated with the release of new capacity in the second half of the year.

Looking forward to 2022, both sides of supply and demand will form a joint force to drive car sales steadily upward, and it is expected that car sales will achieve 3% growth throughout the year. Aside from short-term fluctuations in production and sales, China's auto consumption is full of resilience in the medium and long term, and will open a new growth curve.

First, from the supply side, the market has significantly increased the number of new models such as smart electric vehicles to choose from, catering to the different needs of different market segments and target groups. Secondly, the Oems have established system-level capabilities and ecosystems in emerging fields such as three-power technology, intelligent cockpit, and high-level assisted driving, and have accelerated the production and scale of core technologies (including high-specific energy power batteries, 800V high-pressure platforms, large computing power vehicle regulation chips, lidar, etc.) to promote the upgrading of automotive technology paradigms. Comprehensively enhance the attractiveness of smart electric vehicle products to consumers.

From the demand side, the increase and purchase will lead the structural growth of China's automobile consumption. In 2021, the demand for replacement purchases exceeded the first purchase to become the main source of growth in China's auto sales, and there is a strong correlation with the growth of both the low-end market (A00 class cars) and the middle and high-end market (above B class). In addition, after the market cultivation in recent years, consumers' acceptance and recognition of emerging vehicle technologies and the use value they bring has been significantly improved, which is not only reflected in the outbreak of new energy vehicle sales, but also reflected in the continued rise of high-level auxiliary driving software installation rate. According to Deloitte's 2022 Global Automotive Consumer Survey, 40% of Chinese consumers who are interested in buying a car are considering buying energy-saving and new energy vehicles, and more than 70% of the surveyed car owners are willing to pay a higher premium for electric vehicles than fuel vehicles of the same class. Nearly 70% of consumers are willing to pay more than 2,500 yuan for owning advanced autonomous vehicles and safety features, of which nearly 20% are willing to pay more than 10,000 yuan for autonomous driving features.

New energy vehicles: crossing the critical point, open 1-100 high growth

After crossing the penetration rate of 10%, the new energy automobile industry will officially move from 0-1 to 1-100, entering a stage of high growth driven by the market. It took nearly ten years for the penetration rate of new energy vehicles in China to increase from 0 to 5%, but it took only one year to complete the breakthrough from 5% to 10% and then to 13%. Looking forward to 2022, despite the further decline of subsidies and their official withdrawal at the end of the year, China's new energy vehicle market is fully transforming into a demand-driven high growth stage, and forming a strong support for sales on four key drivers: product quantity and competitiveness, total car ownership cost, consumer preferences and attitudes, and infrastructure readiness.

Liu Xiaoming, China partner at Deloitte Management Consulting

Under the trend of intelligent electric, car companies reshape the research and development system

New energy intelligent connected vehicles have become one of the key trends in the global automotive industry. New energy vehicles, especially pure electric vehicles, are not only facing the upgrading of the power system, but also reshaping the structural design of automotive products, making the structural design of the vehicle relatively simplified, and the number of assembled parts is greatly reduced, which provides the possibility for the design and manufacture of more standardized products. This is one of the reasons why sliding chassis technology has been able to develop rapidly recently.

The development of new energy and intelligent network technology also has a profound impact on the research and development system of automobile companies, including research and development positioning, research and development mode, research and development infrastructure, and research and development management system.