Sales of midsized cars in Europe have declined by double digits in 2018 for the second consecutive year, after a sharp rebound in 2015 and stable sales in 2016. The segment which sold nearly 1 million units as recently as 10 years ago is now down to its lowest volume ever at less than half that volume. At just 450.000 sales, mainstream midsized cars now account for less than 3% of the European market, down from 3,5% in 2017 and from 6,9% in 2007. Only one nameplate in the segment has been able to add volume last year and only two saw single digit declines with the remaining players in double digit decline. Segment leader Volkswagen Passat did only slightly better than the rest of the segment at -16% to increase its share to 34,2% of the segment. Its platform sibling Skoda Superb holds on to 2nd place which means that a VW-Skoda duo finishes on top of the annual ranking in both the compact and midsized segments for the second consecutive year, and that VW Group now sells more than one of every two midsized cars sold in Europe, with these two models. The Opel/Vauxhall Insignia is the only model to even come close to the dominant players, and it was just 3.000 sales behind the Superb at the end of August, with sales up 25%. But then came the new WLTP fuel efficiency testing standards, and sales of the Insignia collapsed as in Q4 the model sold just half of what it sold in the same period of 2017, and it ended 2018 with a 7% loss. At least that means it improved its share of the segment to 15%. [Read more…]
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Sales of compact cars in Europe declined 9% in 2018 to just over 2,13 million units, as Europe’s second largest segment now accounts for 13,8% of the total market, down from 15,1% in 2017. That means it is under threat from both the small crossover segment (up 29% to 12,6% share of the market) and the compact crossover segment (up 17% to 11,3% of the market). That also explains the main reason for the decline of the compact car segment: customers deflecting to crossovers. Segment leader Volkswagen Golf slightly improves its share of the segment despite an 8% loss of sales, translating to almost 37.000 lost sales which is about as much as the Mazda3 sold last year. In second place we find the Skoda Octavia for the second straight year with sales down 5%, but it still sells less than half the number of cars of its sibling. Despite being replaced at the very end of the year and thus being in run-out mode with the outgoing model, the Ford Focus manages to reclaim a podium position after spending 2 years in fourth place. That is a result of the Opel/Vauxhall Astra losing 27% of its sales in 2018 after already losing 14% in 2017. The Astra was #2 of the segment in 2016, #3 in 2017 and is now down one more spot, and only 5.000 units ahead of 5th place.
The subcompact car segment in Europe was stable at nearly 2,79 million sales in 2018, with sales up by just 800 cars. Europe’s largest segment by volume still accounts for 18% of the total market. The top-3 positions remain the same as they were for the last two years and the top-5 rankings are unchanged from last year. That means the Renault Clio celebrates three years on top of the segment, while it’s due for a redesign in 2019 and its closest two rivals have already been updated last year. As a result, the Volkswagen Polo and Ford Fiesta are closing in in the top spot, but have been unable to knock the French model off its throne. The Clio is one of only two models in the top-10 that’s available as a station wagon (together with the Fabia), but that version is expected to be cut for the next generation, so we will see how that influences the fight for the top spot. The Peugeot 208 consolidates its 4th place despite a 5% loss as its closest rival Opel/Vauxhall Corsa is down 7%.
Sales of minicars in Europe decline again by 1% in 2018 to 1,24 million units, which means their share of the total European car market is slightly down from 8,1% in 2017 to 8,0%, which is not a bad performance considering there haven’t been any major updates to any of the models in this segment in 2018. Despite the lack of investment by manufacturers due to the slim margins on this kind of vehicle, the segment is expected to stabilize at this level sales until 2020. Fiat’s dominance in this segment shrinks to a share of 28,7% with its two models, as the aging Panda lost 10% of its volume while the 500 maintains stable despite being just about as old. The decline of the Italian market and the Panda’s dependence on its home market are the biggest reason for that model’s troubles, as Italy is responsible for more than the Panda’s lost volume, meaning sales outside Italy actually increased and the share of its home market is down from 78% to 73,9%. The 500 also loses 14.000 sales in Italy but wins them back in other markets, as now just 21,2% of its European registrations happen in its home market, down from 28,5% in 2017. The Volkswagen Up! is down 3% to just below 100.000 sales but manages to hold on to its podium place that it has held ever since its first full year of sales 2012. [Read more…]
After looking at 2018 European car sales by manufacturer and brand, let’s take a deeper look into how individual models sold last year. It shouldn’t come as a surprise that the Volkswagen Golf is still the dominant leader in Europe, for the 11th consecutive year. However, the Golf was the biggest loser in the top-18 with a loss of 7,6%, which translates to roughly 37.000 fewer sales. [Read more…]
Last year BYD sold more New Energy Vehicles/NEVs than any other company in China. According to a ranking of the Top Twenty Selling NEVs in China, BYD sold more EVs and PHEVs than any other manufacturer. Cumulatively, the company sold 205,800 NEVs and dominated the list (see below) by placing 2nd, 4th, 6th, 8th, and 9th among the top twenty.
Top 20 Selling EVs/PHEVs in China
December 2018 and 2018 (full year)
BYD Quin PHEV (Gen I and II)
JAC iEV S/E
BYD Song PHEV
BYD Tang PHEV (Gen. I & II)
BYD Yuan EV
SAIC Roewe Ei6 PHEV
Geely Emgrand EV
SAIC Roewe Ei5 EV
SAIC Baojun E100
SAIC Roewe eRX5 PHEV
Donfeng Junfeng Skio
BYD’s best sellers included two sedans, the Quin PHEV and the more recently launched e5 450, also known simply as the e5. The price of a Quin PHEV in China is about 185,900 RMB ( approx. $27,600). With a top speed of 185 km/h (115 mph) and the ability to accelerate from 0-100 km/h in just under 6 seconds, the Quin PHEV (pictured below) does not lack in terms of power. When running purely on its 13kWh battery, the sedan has a maximum range of 70 kms.
Inside the car is a 12.3 inch screen with access to navigation systems, multimedia entertainment, and real time fuel economy information.
A number of convenience factors are built in, including smart-key functionality, tire pressure monitoring, and the ability to remotely control the car from outside the vehicle – – for example – – in low speed mode, while positioning or guiding the car into a parking space.
BYD’s other best seller is the e5, a pure (battery only) EV sedan which was originally launched at the 2015 Shanghai motor show. Partly because of its affordability, the e5 has been a popular choice among taxi cab operators.
The “after subsidies” price of the e5 in China is 140,000 RMB (approximately $20,760). The sedan has a fairly long range of 405 km. (253 miles) and a maximum speed of 130 km/h or 81 mph. The battery capacity is 60.48 kWh, and can be fast-charged to an 80% level in 90 minutes.
Inside is a fairly small touch screen, allowing access to the navigation system, multimedia entertainment, internet connectivity, etc.
BYD is a pioneer in China’s NEV industry, yet is often known by Westerners as “the Chinese Electric Vehicle company that Warren Buffet has invested in.” The company makes both NEVs as well as conventional cars (i.e. cars powered by the Internal-combustion engine/ICE). For the year 2018, BYD sold more conventional cars in China (281,991) than NEVs (225,136), however, the gap between these vehicle types is closing. Last year represented a major rise in the number of New Energy Vehicles sold by BYD, while sales volume for conventional cars continued to drop, as can be seen in the graph below.
Within the NEV category it is also interesting to look at the breakdown between EVs and PHEVs, to get a better understanding of growth rates and trends. During the last two years, pure electric vehicles have surpassed Plug-In Hybrid Electric Vehicles (PHEVs), as a percentage share of BYD’s NEVs sold. The growing importance of pure electric vehicles (EVs) can be seen in the graph below.
From a more macro perspective, this year (2019) marks a major development for the automobile industry in China because car manufacturers will be required to comply with new government policies and regulations designed to address air pollution, carbon emissions, and global warming. This will have major implications not only for BYD, but for all manufacturers in terms of their production, and more specifically, the mix of their output in terms of ICEs and NEVs produced. For an excellent overview and explanation of what the new policies and regulations mean for the industry and manufacturers, readers will want to consult the Bloomberg quicktake article “China is About to Shake Up the World of Electric Cars.” In short, manufacturers will have three choices:
- produce more NEVs to meet quotas, that are specific to each manufacturer, as determined by the new regulations,
- don’t meet the quotas but comply with the policy by purchasing carbon-credits from other NEV producers (i.e. competitors) whom have earned surplus carbon credits,
- face stiff and costly fines and penalties for doing neither 1) nor 2) above.
BYD, as a long established leader in China’s NEV market is well positioned to not just comply with the new government policy and regulations, but to generate substantial revenues from selling its surplus carbon credits on the carbon market. Such revenues would be particularly valuable to a company like BYD, or any manufacturer for that matter, because they contribute directly to the company’s bottom line profits and corporate value.
Within the context of China’s new policies and regulations, not all manufacturers are so well positioned as BYD. As seen in the Bloomberg graphic below some of the giants of the industry, for example Toyota, Ford, and General Motors; appear much less prepared. The score shown below is an EV Exposure Index, created by Bloomberg’s New Energy Finance team, which “rates car makers for their readiness for electric vehicles”.
BYD’s success producing and selling NEVs extends beyond sedans, SUVs, crossovers, etc.; or what we normally think of with regards to “passenger vehicles”. One area where BYD has been particularly successful is in the bus business, and more specifically producing and selling electric buses. BYD has delivered more than 35,000 electric buses globally, and has factories around the world in countries such as the UK, France, Hungary, Brazil, and the US.
Financially, 2018 has been a difficult year for BYD. Although full year 2018 financial results are not yet reported, based on BYD’s 2018 Third Quarterly Report here, it is clear that relative to 2017; profits for 2018 will be significantly lower.
BYD attributed lower expected profits to intense competition, as well as lower government subsidies, according to a Reuters article, which noted that 2018 profits could fall by about a third compared to the previous year.
Despite these challenges, BYD as a company ended its third quarter of 2018 sounding enthusiastic and bullish about its NEV business, and its future. BYD’s third quarter report included a “Forecast on the Results of Operations in 2018”. Below is an excerpt from that forecast:
The new energy vehicle business of the Group is expected to continue to maintain strong growth and drive the rapid recovery of the profits of the Group in the fourth quarter. In respect of new energy passenger vehicle segment, new models have accumulated a large amount of orders relying on their strong market competitiveness and their sales are expected to record significant increase compared with the same period of last year due to the easing of battery capacity bottlenecks.
Battery capacity bottlenecks, appears to be a reference to BYD’s battery supply chain, which it continues to invest heavily in. These investments involve not only new battery plants and factories, but also the rights to a guaranteed supply of lithium, from mining operations. Consider the following:
In January of 2018 Chinese media outlet Xinhua reported that BYD has signed a deal with a mining operation in Qinghai province to secure a supply of 30,000 tonnes of lithium carbonate.
In June of 2018, BYD’s opened its third battery plant, also in Qinghai province. The plant’s annual capacity is 10 GWh. The cost of BYD’s new factory is 4 billion RMB, or approximately $633 million dollars.
In August of 2018, BYD signed an agreement with the local government of Chongquing in Southwest China, to build a new battery plant at a cost of approximately 10 billion yuan, or $1.5 billion dollars. The Chongquing plant will have an annual capacity of 20GWh.
In September of 2018, BYD announced its plan to build yet another battery factory in Xi’an, the capital of Shaanxi province. The annual capacity of this facility will be 30GwH, according to an article here, by electrive.
With the three new battery plants referred to above, BYD will have a total of five battery plants in China, making the company a major player in the battery business.
In addition to BYD, the other major Chinese owned battery manufacturer competing for dominance in China is Contemporary Amperex Technology/CATL, which like BYD, has been growing in leaps and bounds in terms of its new or planned battery manufacturing capacity. BYD is planning to reach a total capacity of 60 GWh by 2020, while the corresponding figure for CATL is even higher at 88 GWh.
Benchmark Minerals, a company that specializes in the lithium ion battery supply chain
has recently produced an excellent analysis that poses the following rhetorical question: Who is Winning the Global Lithium Ion Battery Arms Race?
The graph to the left shows the Top Five Lithium ion Battery Producers by Capacity. Both CATL and BYD rank 2nd and 3rd respectively – – behind South Korea’s LG Chem, the global front-runner – – and ahead of Japan’s Panasonic and America’s Tesla – – two better known name-brand competitors.
Although most of the batteries produced by BYD’s factories will likely be inputs into its own cars, some of these same factories will also be supplying other automobile manufacturers – – including BYD’s real or potential competitors. For example, in March of 2018 BYD announced that it would be supplying Changan Auto, as reported here, in an Automotive News China article.
Much of the content above suggests that BYD will continue to ramp up its production and sales of New Energy Vehicles. Given the dynamic and innovative nature of the company, BYD will undoubtedly be an interesting player to watch during 2019, and well beyond.
For a complete list of sources and references used in this article; click here.
Full disclosure: I currently do not own shares in BYD, or any other company mentioned in this article.
The European car market seemed to be on another year of growth after the first half of 2018, when sales were up 3%. After July, the year-to-date figure was up 3,5%, but then the introduction of the new WLTP fuel efficiency standards caused total chaos in the sales charts. August sales were up 26,3% as carmakers rushed to register unsold non-compliant model/engine combinations before the September 1 deadline. From that date onwards, only vehicle types that had been tested under the new standard for fuel consuption and emissions testing were allowed to be sold as new vehicles in Europe. As a lot of model/engine combinations had not been tested yet and would no longer be available in Europe until they were tested. Some brands and manufacturers were better prepared than others, but overall the market sunk by more than 7% in each of the last four months of the year and this adverse effect will continue to negatively influence the European car market in the first few months of 2019. December was actually the worst month of the year, both in terms of absolute figures (just over 1 million sales) and in comparison to the year before (except for the dramatic September month of course), with a decline of 8,6%. [Read more…]
After looking at the November 2018 brand sales ranking, let’s take a closer look at which models were moving up the charts. Traditional leader Volkswagen Golf is still on top, despite a double digit decline, but there’s a close battle for second place with the soon-to-be-replaced Renault Clio staying just ahead of the all-new Volkswagen Polo. In [Read more…]
European car sales have been on a wild ride in the second half of 2018, due to the introduction in September of a new fuel efficiency and emissions testing standard called WLTP (Worldwide harmonized Light vehicle Test Procedure), to which many manufacturers have found themselves unprepared. After September 1st , only vehicle types that had been tested under the new standard were allowed to be sold as new vehicles in Europe. That meant that every version of every model sold in the continent needed to be retested, but despite working round the clock, the testing agencies just didn’t have enough capacity to get this done in time. With some vehicle/engine combinations “illegal” after September 1st, automakers rushed to register these vehicles in August, leading to a 26,4% sales gain in what’s usually the slowest month of the year by far. However, as these unsold vehicles still needed to end up in consumers’ hands, sales in September suffered a backdrop of 23,1% as for the first time in modern history fewer cars were sold in September than in August. In the following months, sales continued to suffer from the continued backlog of pre-registered but unsold vehicles as well as reduced availability of certain model/engine combinations. Some manufacturers have been hit harder than others, with VW Group and Renault-Nissan among the hardest hit by the new testing procedures.
Sales of passenger cars in Europe increased by 7,5% in July 2018, the second largest increase of the year so far, also helped by an extra selling day compared with July 2017. A total of nearly 1,28 million vehicles were sold during this month. The major EU markets showed very diverse results, with Spain (+19,1%) and France (+18,5%) showing the biggest growth of the top 5 markets. Germany also showed healthy growth at +12% while car sales in Italy were up 4,4% and the UK was up 1,2%. Lithuania is the fastest growing market with an increase of 56,4%, followed by Croatia (+43,7%) Romania (+34,2%), Portugal (+26,1%), and Poland (+25,7%).