2016 China Market Overview

Automobile

Summary：

• In recent years, China was undergoing automobile market slump, with lower growth rate and price. Moreover, experts estimated that this trend would continue in next few years.

• The restriction of vehicle purchasing and auto licenses, along with bus reform and auto market saturation, were the main reasons for the weak auto market.

• Though the whole auto industry was in depression, auto parts manufacturers performed well and steadily with the fuel from the Internet.

Summary：

• Chinese government has placed great emphasis on new energy vehicle to control environmental pollution. A series of favorable policies released by the government have improved the production and sales of new energy cars, including high subsidies on purchase tax, no odd-even car ban, and no restriction for auto licenses.

• The elimination of yellow-label cars(Cars that failed to meet fuel standards ) and the replacement of old cars also had some effects on the upgrade of vehicle consumption in China.

China’s automobile apparent consumption has increased in recent 5 years, yet with a decreasing growth rate.

China’s Automobile Supply & Demand(million) Apparent Year Output Export Import Consumption 2009 13.79 13.86 0.35 0.42

2010 18.26 18.53 0.54 0.81

2011 18.42 18.63 0.82 1.04

2012 19.27 19.41 0.99 1.13

2013 22.12 22.39 0.92 1.19

2014 23.72 24.25 0.90 1.42

2015 24.50 24.85 0.76 1.10

Affected by market saturation, the trend of 2014 has continued in 2015 that the growth of China’s automobile output and sales kept slowing down.

China’s Automobile Production & Sales(million)

Output Sales Output YoY Sales YoY 30 60%

24.50 24.60 25 23.72 23.49 50% 22.12 21.98 19.27 20 19.31 40% 18.26 18.06 18.42 18.51 32.4%

15 32.4% 30%

10 20% 14.8%

5 13.9% 7.3% 10% 4.6% 0.8% 3.3% 6.9% 4.3% 4.7% 0 2.5% 0% 2010 2011 2012 2013 2014 2015

In 2015，86% of automobile output were passenger cars, while the proportion of commercial cars was at 14%.

China’s Automobile Output in 2015

Commercial Car, 14%

Passenger Car, 86%

The growth rate of China’s passenger car production and sales decreased in 2015. Passenger car output of the year was at 21.08 million, with a year-on-year growth of 17.3%, while sales grew by 5.8% to 21.15 million.

China’s Passenger Car Production & Sales(million)

Output Sales Output YoY Sales YoY 25 40%

33.8% 21.08 21.15 35% 19.92 19.70 20 33.2% 18.09 17.93 30% 15.52 15.50 14.47 25% 15 13.90 13.76 14.49

20% 16.5% 10 15% 15.7% 10.1% 7.2% 10% 5 4.2% 9.9% 5.8% 7.1% 7.3% 5% 5.2% 0 0% 2010 2011 2012 2013 2014 2015

In 2015, Sedan accounted for the highest proportion of China’s passenger car output, followed by SUV.

China’s Passenger Car Output in 2015

Crossover, 5.1% Sedan, 55.2%

SUV, 29.6%

MPV, 10.1%

The proportion of sedan among China’s passenger car sales has decreased year by year in recent 5 years, while SUV and MPV showed a growing sales, especially SUV.

Structure of China’s Passenger Car Market Sedan MPV SUV

2015 58% 11% 31%

2014 68% 10% 22%

2013 74% 8% 19%

2012 81% 4% 15%

2011 82% 4% 13%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

In 2015, Chinese self-owned branded passenger cars occupied the biggest market share in the passenger car market, and turned to have more share in the future. Passenger cars made in Germany, USA, South Korea and France had a slight drop of the market share in 2015.

Market Share of China & Foreign Branded Passenger Cars 2014 vs 2015

2014 2015 50%

41.3% 40% 38.4%

30%

20.0% 20% 18.9% 15.7% 15.9% 12.8% 12.3% 10% 9.0% 7.9% 3.7% 3.5%

0% Chinese Brands Germany Brands Japanese Brands American Brands South Korean Brands French Brands

Among all sedan sales in China, compact cars accounted for the biggest market share, yet had a trend of dropping in proportion year-on-year. However, the proportion of small cars increased as the government set the policy to reduce the purchase tax of 1.6T and below cars by half.

Structure of China’s Sedan Sales Small Compact Medium Medium-to-large

100% 2% 1% 1% 1% 1% 12% 12% 15% 90% 17% 21% 80%

70%

60% 63% 53% 50% 76% 76% 63% 40%

30%

20%

10% 18% 21% 24% 10% 11% 0% 2011 2012 2013 2014 2015

In 2015, among the sales of passenger cars, SVW-Volkswagen’s sales ranked first, followed by SGM and FAW-Volkswagen.

Top 10 in Passenger Car Sales in 2015 (thousand)

SVW-Volkswagen 1,805.6

SGM 1,725.0

FAW-Volkswagen 1,650.2

SAIC-GM-Wuling 1,181.8

Hyundai 1,062.8

Nissan 1,000.7

Chang An 938.0

Ford 868.7

GWM 753.2

DPCA 704.8

In 2015, Volkswagen’s sales has exceeded other brands in, which was 2,666,359.

Top 10 Passenger Car Brands in 2015 (unit)

Volkswagen 2,666,359

Hyundai 1,062,826

Buick 1,035,372

Toyota 1,010,178

Honda 980,662

Nissan 891,361

Ford 865,702

Chevrolet 636,518

KIA 616,096

Audi 509,998

In 2015, Wuling Rongguang and Lavida ranked first in passenger car models and sedan models respectively.

Top 10 Passenger Car Models in 2015 (unit) Top 10 Sedan Models in 2015 (unit)

Wuling Rongguang 655,531 Lavida 379,069

Lavida 379,069 Bluebird Sylphy 334,087

Haval H6 373,229 Excelle 290,213

Bluebird Sylphy 334,087 Sagitar 279,887

Baojun 730 321,069 Santana 276,219

Buick Excelle 290,213 Jetta 274,932

Sagitar 279,887 Elantra 267,085

Santana 276,219 Corolla 254,031

Jetta 274,932 Cruze 246,088

Elantra 267,085 Focus 246,085

In 2015, Haval H6 and Wuling Rongguang ranked first in SUV and MPV respectively, showing the great influence of Chinese self-owned branded cars in domestic market.

Top 10 SUV Models in 2015 (unit) Top 10 MPV Models in 2015 (unit)

Haval H6 373,229 Wuling Rongguang 655,331

Tiguan 255,751 Baojun 730 321,069

JAC S3 196,779 HONOR 142,263

CS75 186,623 Weiwang M20 123,653

CS35 169,332 Lingzhi 105,417

Haval H2 168,517 Fengguang 330 99,622

X-TRAIL 166,385 GL8 78,985

Huansu S3 164,436 JAC 58,428

Envision 162,941 Jade 52,636

CR-V 156,608 K50 48,899

In 2014 and 2015, China’s commercial car output and sales decreased under the circumstance of China’s sluggish economy.

China’s Commercial Car Production & Sales (thousand)

Output Sales Output YoY Sales YoY 5,000 60%

4,500 4,368 4,304 50% 4,033 4,032 4,055 4,000 3,934 3,748 3,811 3,803 3,791 3,424 3,451 40% 3,500 28.2% 30% 3,000 29.9% 2,500 20%

2,000 7.6% 10% 1,500 6.4% -4.7% -5.7% 0% -9.9% 1,000 -10.0% -10% 500 -6.3% -5.5% -6.5% -9.0% 0 -20% 2010 2011 2012 2013 2014 2015

Chinese government has placed great emphasis on new energy vehicle. A series of favorable policies released by the government have improved the production and sales of new energy cars, including high subsidies on purchase tax, no odd-even car ban, and no restriction for auto licenses.

China’s New-energy Vehicle Production & 340,471 331,092 Sales 2014 vs 2015 (unit)

78,499 74,763

Output in 2014 Sales in 2014 Output in 2015 Sales in 2015

In 2015, the sales of pure electric car accounted for more than 70% in China’s new-energy car sales, mainly due to the favorable policy for pure electric cars from the government, including no purchasing and driving restrictions, high government subsidies .

China’s New-energy Car Sales in 2015

Pure Electric Plug-in Passenger Commercial Car, 44.3% Car, 6.9%

Plug-in Passenger Car, 18.3%

Pure Electric Commercial Car, 30.4%

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