Limited sales boost! Vehicle to the Countryside Policy Restarted Actually Drops Inventory

Before the Lunar New Year, 10 ministries and commissions, including the National Development and Reform Commission, the Ministry of Industry and Information Technology and the Ministry of Finance, jointly issued the Implementation Plan for Further Optimizing Supply, Promoting Steady Growth of Consumption and Forming a Strong Domestic Market (2019) (hereinafter referred to as the "Plan"), and the relevant stimulus policies on the automobile sector were placed in the first place. There are six aspects to stimulate automobile consumption this time, which are as follows: promoting the scrapping and renewal of old automobiles in an orderly way; Continuous optimization of subsidies for new energy vehicles; Promoting the upgrading of rural automobiles; Steady progress was made to relax restrictions on trucks entering the city; Accelerate the prosperity of the second-hand car market; And further optimize the local government motor vehicle management measures. Article 3 states that "where conditions permit, appropriate subsidies may be given to rural residents to scrap tricycles and purchase trucks of 3.5 tons or less or passenger cars of 1.6 litres or less." Once this article is published, it is immediately regarded by the industry as a restart of the new round of "automobile-going-to-the-countryside" policy. In January 2009, the State Council proposed in the "Plan for the Restructuring and Revitalization of the Automobile Industry" that from March 1, 2009 to December 31, 2009, the state will arrange 5 billion yuan to provide farmers with one-time financial subsidies for scrapping tricycles, purchasing light trucks and purchasing minibuses with a capacity of less than 1.3 liters. In early 2010, the state said it would extend the "automobile to the countryside" policy by one year, until December 31, 2010. The effect of the policy was immediate. Relevant data showed that the automobile market of China grew rapidly in 2009 and 2010, with the year-on-year growth rates of 46.15% and 32.37%, respectively Passenger car sales exceeded the threshold of 10 million vehicles for the first time in 2009. However, unlike the overall optimism expressed a decade ago when the "automobile to the countryside" policy was launched, the entire industry is having mixed discussions as the new "automobile to the countryside" policy is about to be restarted. Now, the "car to the countryside" policy can pull another handful of car market? What more far-reaching impact will the policy have on China's auto market? Limited policy to boost car market restart actually to go to inventory In a week-long online survey of GE cars, a cumulative more than 70% of participants said the new round of "automobile to the countryside" policy had limited impact on the car market. As we all know, the restart of the "automobile to the countryside" policy was introduced in the context of the downturn in the car market. In 2018, China's auto market experienced its first negative growth in sales since 1990. China's auto production and sales volume in 2018 were 27.809 million vehicles and 28.081 million vehicles, down 4.2% and 2.8%, respectively, from the same period last year, according to the China Association of Automobile Manufacturers. Far from improving, the downward trend continues to expand into 2019. In January 2019, China's auto sales totaled 2.3673 million vehicles, down 11.05% from the previous month and 15.76% from the previous year. Behind the gloomy sales figures are mounting inventory pressures from auto makers and dealers. China's auto dealer inventory warning index survey showed that in January 2019, the auto dealer inventory warning index was 58.9%, down 7.2 percentage points month-on-month and 8.3 percentage points year-on-year. Although inventory pressure is down But the auto dealer inventory warning index has exceeded the warning line for 13 consecutive months. "The most important purpose of the policy restart is not to stimulate sales, but to consume inventories," GAI analysts said bluntly. Its analysis points out that more than 95% of the vehicles currently in stock are "five-year" standards. Without the delay, the inventories would have been hard to digest, which would have been a fatal blow to auto makers and dealers. "According to the latest implementation time, the provinces and regions accounting for 70% of the national sales volume in July this year will be switched to the 'sixth country', the introduction of the 'Plan' can homeopathically allow enterprises to clear inventory, minimize losses, but also for the implementation of the new standards after the re-volume ready to go up. Like most survey participants, the analyst said it was unrealistic to expect the rural market to contribute much to car sales. "On the one hand, China's urbanization rate has reached 60%, the remaining 40% of non-urban areas in a year to contribute to the car market consumption capacity is more limited, in addition, the Chinese people are accustomed to saving, and rural residents of consumption is not as avant-garde as urban residents. Commercial Vehicles Become the Most Beneficial Vehicles Although the restart of the "Automobile to the Countryside" policy has a limited impact on the vehicle market, from the perspective of the six support directions proposed in the "Program", commercial vehicles may become the biggest beneficiaries of the policy. According to the requirements of the State Council's "Three-Year Action Plan to Win the Defense of the Blue Sky", starting from July 1, 2019, the Six-Country Emission Standards for Motor Vehicles will be implemented ahead of schedule in key regions such as the Pearl River Delta and Chengdu-Chongqing. At present Hebei, Shandong, Zhejiang, Shenzhen and many other places have announced that they will implement the sixth national emission standard in July this year. Beijing plans to implement the sixth national emission standard for heavy diesel vehicles from July 1, and implement the sixth national emission standard from January 1, 2020. By the end of 2020, Beijing, Tianjin, Hebei and surrounding areas alone will phase out more than 1 million G-3 and below medium and heavy diesel trucks, which is undoubtedly a major challenge for medium and heavy trucks. It is understood that when medium and heavy trucks are upgrading their emissions, the cost of sixth grade trucks will be significantly higher than that of fifth grade trucks. Once they are switched from fifth grade trucks to sixth grade trucks, terminal sales will fluctuate much more than passenger cars, and it is likely that they will fall off a cliff. "Prior to the implementation of the sixth standard, relevant stimulus policies can ensure a smooth transition in the commercial vehicle market, and relevant provinces, municipalities and regions have policy support and guarantee for replacement and upgrading, which can not only stabilize sales volume, but also possibly bring about certain increments." In addition, in the area of light commercial vehicles, the replacement of third-country and lower-emission vehicles with fifth-country and higher-standard vehicles can be rapidly iterated through the promotion of obsolete vehicle scrap upgrades; At the same time, relaxing restrictions on pickup trucks into the city will also greatly promote the development of the market. It should be pointed out that this new policy is different from the policy of direct subsidies of 5 billion yuan from the state to the countryside in 2009, and the relevant departments have not yet come up with "real gold and silver" to stimulate the market, and there is no specific implementation plan for the "plan" since it was issued. However, in the view of many people in the industry, the future development of the car market depends on the key to the implementation of the rules in different regions As well as the implementation of the follow-up car enterprises. Analysts at the GAI predict that 2019 will remain a tough year for the car market and that the "plan" alone will not work. "It's a big plus for commercial vehicles, and congratulations on passenger cars are now fairly neutral. How can we improve or stabilize sales of passenger cars, which account for the vast majority of the market? Policies are likely to be in place by the end of the year."