Chinese new energy vehicle (NEVs) price cuts have continued to rage on, which in turn has affected the sales situation of micro EVs. Suppliers in China's automotive supply chain stated that major car brands were all actively selling low-priced micro EVs to compete in the market. Despite that, pressured by the fierce price wars recently, micro EVs are already facing a market depreciation crisis.
Since SAIC-GM-Wuling launched the Hongguang Mini EV, traditional car makers like Chang'an and Geely and startups like Geometry and Dongfeng Nano all began planning for the micro EV market. However, overall car prices have continued to drop recently, which has caused the previous price advantage of micro EVs to slowly dissipate.
Suppliers in China's automotive supply chain pointed out that micro EVs have traits such as shorter range and small car space, but also limited practicality. Affected by the price, the outlook of the micro EV market is concerning.
Benefiting from the Chinese government's subsidy policies, the NEV market started to rapidly grow in 2020. However, after the subsidy plan ended in December 2022, the Chinese automotive market started to decline. Both international and domestic car makers in China began to initiate price reductions, which quickly worsened the market.
Data from the China Passenger Car Association (CPCA) showed that from January to March 2023, Chinese car sales decreased by 13%. Among them, traditional car sales saw a significant decline while sales growth for EVs also showed signs of slowing down. As for the microcar market, its total volume saw a 55.3% year on year decrease in the first quarter of 2023, making it the only product type in China's NEV market to report negative growth.
Chinese automotive supply chain sources stated that starting in 2022, the price wars in China's automobile market are growing fiercer. Micro EVs, which previously targeted the low-price market with their good cost-performance ratios, have been on a gradual decline amid the constant price cuts. It is estimated that the future micro EV market will be concentrated on a few major car manufacturers. It will be difficult for small- to mid-sized carmakers to survive.
The Wuling Hongguang Mini EV occupies the top spot in China's micro EV market. Although it is still the best-selling micro EV right now, it has recently begun to face a sales crisis as well.
In mid-April 2023, Wuling announced that starting from May 31, 2023, every purchase of Wuling's NEV car models can be subsidized up to CNY10,000. Since the price range of the Wuling Hongguang Mini EV is around CNY32,800 to CNY99,900, a subsidy of up to CNY10,000 is quite a noticeable discount.
CPCA data showed that the Wuling Hongguang Mini EV sold 23,000 units in March 2023, a year on year decrease of 44.8%. In the first quarter of 2023, around 70,000 units were sold. Compared to 94,000 units in the first quarter of 2022, this was a 26.3% decrease.
China's automotive supply chain sources pointed out that by observing the current automotive consumption market, one can discover that most consumers tend to purchase China's domestic micro EVs as their regular commuting vehicle. Nevertheless, with the overall auto market stuck in one vicious price cut after another, the competition in the micro EV market will become even more fierce.
