Weekly: PV Sales Continued To Recover In 1-12 Dec 21

Daily average PV retail sales and wholesale shipment grew 11% and 25% mom in the period 1-12 Dec 21. CAAM forecasts 5.4% auto sales growth and 47% EV sales growth for 2022, roughly in line with our forecasts, based on the easing chip shortage, abating pandemic and recovery of the overall economy. Upgrade from MARKET WEIGHT to OVERWEIGHT. Top picks: BYD, CATL, EVE, Xusheng and Nexteer.

WHAT’S NEW

November auto sales down 9% yoy and up 8% mom, in line. According to China
Association of Automobile Manufacturers (CAAM), auto wholesale shipment in China dropped
9% yoy but grew 8% mom to 2.522m units. Segment-wise, the wholesale shipments of
passenger vehicles (PVs) and commercial vehicles (CVs) dropped 5% and 30% yoy and grew
9% and 1% mom to 2.192m units and 330,000 units respectively in Nov 21. November auto
sales came in as expected, and we expect it to recover further from Dec 21 through 2H22 along
with easing chip shortage and abating pandemic impacts.

Channel inventory-to-sales of PVs rebounded from 1.29 months as of end-Oct 21 to 1.35
months as of end-Nov 21,
according to China Automobile Dealer Association (CADA). This is
the second month of rebound in a row since Oct 21, mainly due to easing chip shortage.
Segment-wise, the inventory-to-sales ratios for luxury/imported cars, non-luxury JV brands and
Chinese brands respectively rebounded from 0.99 months/1.31 months/1.47 months as of end-
Oct 21 to 1.07 months/1.37 months/1.49 months as of end-Nov 21.

PV sales continued to recover in 1-12 Dec 21. Daily average retail sales and wholesale
shipment of passenger vehicles (PV) in China grew 11%/25% mom to 46,735 units/55,695
units in 1-12 Dec 21, still 12%/6% below those in the same period last year. The recovery of PV
sales was due to the easing chip shortage.

EV sales surged 126% yoy and 17% mom to 450,000 units in Nov 21, beating estimates.
EVs’ market share in China’s auto market spiked by 12.8ppt yoy and 8ppt mom to 17.8% in
Nov 21. In 11M21, China’s EV wholesale shipment grew 171% yoy to 2.99m units, beating our
estimate when compared to our full-year 2021F estimate of 3.36m units (+146% yoy).
November sales came in above our estimates. Going forward, EV sales will likely continue to
outpace the overall market on the back of supportive government policies and increasing
offerings of appealing EV models by OEMs.

CAAM forecasts China auto sales and EV sales to grow 5.4% and 47% to 27.5m and
5.0m units in 2022.
China Association of Automobile Manufacturers (CAAM) bases the
prospective recovery of auto sales by 2022 on the easing chip shortage, recovery of Chinese
economy and abating of COVID-19 pandemic. CAAM estimates the chip shortage will cause
China to lose 1.3-1.4m units of production volume in 2021, representing 5% of the potential
sales volume. CAAM expects chip shortage for China’s auto industry to continue easing in
2022 and the supply-demand will be balanced by end-22. Additionally, CAAM expects
consumption to recover along with the recovery of the overall economy and the abating
pandemic. CAAM’s forecasts are roughly in line with ours.