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After the inventory of independent brands drives up sales and overdraft, there is still a hard battle to fight.
The content below was translated by Tencent automatically for reference.

SMM News: by the national Wuqing inventory pull, June independent brand cars ushered in a wave of rise. Among the car companies that have announced sales in June, only one seahorse car company fell from the same period last year, while the rest, including SAIC Roewe, Mingjue, BYD, Jianghuai Automobile, Guangzhou Auto Chuanqi and other car companies, saw a rise in monthly sales.

In June 2019, BYD sold 38700 vehicles, up 3.08 per cent from a year earlier. From January to June 2019, BYD's cumulative sales volume was about 228100 vehicles, an increase of 1.59% over the same period last year, of which the cumulative sales of new energy vehicles increased by 94.50% compared with the same period last year. GAC Chuanqi also changed its previous downturn, with terminal sales reaching 54500 vehicles in June, up 57.6 per cent from a year earlier; as a result, Chuanqi's sales reached 283200 vehicles in the first half of the year, up 5.6 per cent from a year earlier.

In addition, Jianghuai sold 32000 vehicles in June, up 11.47 per cent from a year earlier. Roewe, which is owned by Shanghai bus, sold 47600 vehicles in June, up 40 per cent from a year earlier; 210000 vehicles were sold in the first half of the year, up 6 per cent from a year earlier; Mingjue brand sold 25000 vehicles a month, up 55 per cent from a year earlier, and 126900 vehicles in the first half of the year, up 3.8 per cent from a year earlier. As things stand, only the seahorse has yet to stop falling, with sales of just 3702 vehicles in June, down 34.16 per cent from a year earlier, and 14400 vehicles in the first half of the year, down 65.16 per cent from a year earlier.

According to data released by the China Association of Automobile Manufacturers, the market share of independent brands fell to 36.17% in May from a peak of 45%. In the first five months of this year, the market share of independent brands fell from 39.7% to the level of 2014. The recovery in June was not very sustainable. After a brief "recovery", the industry predicted that the car market in July will be due to overdraft and down, the challenge for their own brands will be more difficult. In the short term, it is the overdraft brought about by the stock of Guowu Qing. From the long-term market trend, the Chinese car market from the incremental competition into the stock competition, the joint venture brand further down, and the independent brand in the range of less than 100000 yuan fierce war. Joint venture downward exploration brought pressure at the same time, including the A0 level, including the middle and low end of the market due to consumption upgrading caused by shrinking demand, further squeezed the living space of independent brands.

According to the share of retail sales at all levels of the passenger car market in 2018, minicars account for only 1.5% of the overall market sales, while small cars account for 15.48%. Compact models account for 55.25% of the overall market, making it the largest and most competitive market.

Since last year, not only have weak brands such as Lifan, Bixie and Zhongtai struggled in the dynamic market squeeze, including companies such as SAIC GM Wuling, which once bore the halo of a "magic car". But also because of the contraction of the middle and low end of the market and the inability of the brand to break through upward. If you look at the internal sales data of relatively successful companies such as Geely and the Great Wall, you can also find that the decline is also evident in entry-level models such as the Harvard H2 and Geely Vision. In the first five months of this year, great wall H2 sales fell 57 per cent from a year earlier. Sales of Geely Vision models also fell more than 50% in May from a year earlier.

In March, Xu Haidong, assistant secretary-general of the China Association of Automobile Manufacturers, said: "in 2019, self-branded passenger cars are likely to miss the red line of 40 per cent market share." Unexpectedly, two months later, the market share of Chinese brands fell to 36.17% in May, falling back to the level of five years ago.

However, compared with the same period in 2014, the competition pattern of independent brands has changed a lot. In 2014, the top five Chinese brands were Changan, Great Wall, Chery, BYD and Geely. At that time, Changan sold 710000 vehicles and the Great Wall 610000, while the remaining three sold between 400000 and 500000 vehicles. In addition to the top five, the second echelon of Jianghuai cars, passenger cars, and so on, the annual sales volume is only about 200000. A large number of cars are sold in a range of more than 100,000 vehicles a year, forming a "long tail."

Data from 2018 and the first five months of 2019 show that the market concentration of independent brands has increased significantly. In 2018, Geely and Great Wall sold more than 1 million vehicles, including 1.5 million in Geely, 874000 in Changan, 729000 in SAIC and 535200 in Guangqi. Whether it is the overall size, or the sales price of the model, have reached a new level. Judging from the market situation in the first five months of this year, although the sales volume of many of the above-mentioned car companies have declined, but the market share has not dropped significantly, on the contrary, there is an upward trend. Geely, for example, accounted for 6.68% of the market in the first five months of this year, up from 6.2% at the end of 2018.

In the fierce competition with the joint venture brand, different independent brands play differently. SAIC passenger cars on the market this year several new cars, have adopted a low-price strategy. In the view of Wang Xiaoqiu, president of SAIC Group and general manager of passenger car company, "2019 is the cruelest year in China's automobile market. It is necessary to eliminate many enterprises. In the end, there is hope to survive." The bus chose to trade short-term profits for living space. However, from the longer-term systematic approach, Wang Xiaoqiu said in an interview with reporters earlier: if you want cars to seize car market share from other brands, find their own position in the market, upgrade their scale, and turn technological advantages into market advantages; we should enhance the competitiveness of the system and the whole life cycle, enhance the stability and residual value of models, and speed up the layout of overseas markets.

Accelerating the layout of overseas markets is also a powerful weapon for Geely to hedge against the downturn in the domestic market. However, Geely holding Group, auto group president, CEO an Conghui also said that if Chinese brands are to gain an advantage in the stock market, the price war has failed and must make a breakthrough in value. In the traditional sense, the value includes the competitiveness of products, technology and quality, and in the dimension of automobile transformation to "four modernizations", the value breakthrough also includes the layout and strength of enterprises in electrification and intelligence.

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