"Golden September and Silver October" has circulated for years. In previous years, entering this season, showroom traffic and transactions would all go up a bit. But this September, the auto market failed to heat up.

According to data from the China Passenger Car Association, September's national passenger car market retail sales were 1.618 million vehicles, down 28% year-on-year, and month-on-month growth was only 5%. January-September cumulative retail sales were 13.334 million vehicles, down 21.7% year-on-year. The magnitude of the decline was the largest among all months since the beginning of the year.

Image Source: China Passenger Car Association

The total volume looks poor, but structural changes are fast. On one side, fuel car retail sales were nearly halved year-on-year. On the other, new energy retail penetration rate surged to a historic high of 67%, and its exports even doubled year-on-year. The changes behind the numbers are far more complex than the single word "slow".

Why was the peak season not busy? Among domestic brands and joint ventures, who is retreating and who is advancing? Where has the landscape between new energy and fuel cars reached? In October, can the auto market recover?

Domestic Brands Near 70%, Joint Ventures Seek Turning Points

First, look at domestic brands. According to China Passenger Car Association data, September domestic brand retail sales were 1.13 million vehicles, down 25% year-on-year, and month-on-month growth was 5%. The domestic retail share in that month was 69.8%, up 2.8 percentage points year-on-year, approaching 70%.

Market share is still rising, but sales volume is falling, which is not contradictory. The overall cake is smaller, but the piece domestic brands took is bigger.

Domestic brands are not resting on laurels either. According to China Passenger Car Association analysis, September's retail decline was exceptionally prominent, the result of multiple factors superimposed. The Mid-Autumn Festival holiday moved to late September, sales volume that week of the holiday obviously weakened. Before some provinces' subsidies expired in last September, there was a concentrated buying spree, raising the comparison base. High oil prices continue to suppress car buying willingness. AI-driven memory and chip price explosions and supply tightness also made the recent new energy product release pace slower. Between the market's hot and cold, domestic brands also find it hard to save themselves.

From the retail structure perspective, domestic brands' roots are deeper. Data shows, September domestic brand new energy vehicle retail penetration rate was as high as 84.5%, and new energy retail share was 64.5%. Early start in electrification transformation and wide product line layout allowed domestic brands to hold their position in this consumption switch. Overseas markets are also providing incremental growth. September domestic brand exports were 812,000 vehicles, up 75% year-on-year, and export ratio for some car companies has already exceeded 50%.

Then look at the joint venture camp, days are tighter. September mainstream joint venture brand retail sales were 310,000 vehicles, down 36% year-on-year, and month-on-month growth was 2%. Among them, German brand share was 12.2%, down 2 percentage points year-on-year; Japanese brand 10.7%, down 0.9 percentage points; American brand share 6.3%, slightly up 0.5 percentage points year-on-year. It is the only force in joint venture factions going against the trend upwards.

Loosening of the base is the root cause. Joint ventures started with fuel cars, but September fuel car market collapsed overall. Mainstream joint venture fuel car retail sales were down 42% year-on-year. The reputation accumulated over decades of engines and gearboxes rapidly depreciated in front of high oil prices.

However, joint ventures are not retreating across the board. China Passenger Car Association data shows, September mainstream joint venture brand new energy car retail sales grew 36% year-on-year, while domestic new energy retail sales declined 19%. Joint venture brand new energy wholesale penetration rate rose to 16.3%, retail penetration rate 15.9%, and new energy retail share 4.8%, up 1.6 percentage points year-on-year.

Absolute volume is still small, but direction has turned. Volkswagen, Toyota, and GM have started seriously betting resources on electrification, and low-sales joint venture car companies are also gradually recovering vitality.

Luxury cars also failed to save themselves. September luxury car retail sales were 170,000 vehicles, down 29% year-on-year, but month-on-month growth was 12%. This month-on-month growth rate was the fastest among the three camps; retail share was 11%, down only 0.2 percentage points year-on-year.

With guide prices returning to reasonable ranges, a lot of price water in luxury cars was squeezed out. More noteworthy is the electrification speed: luxury car new energy wholesale penetration rate 55.4%, retail penetration rate 44.9%, more than half of luxury car wholesale sales volume is contributed by new energy.

The contrast at the production side also explains the problem. September domestic brand production was down only 1% year-on-year, and month-on-month growth was 9%, capacity basically stabilized; joint venture brand production was down 29% year-on-year, and month-on-month growth was 20%; luxury brand production was down 24%, and month-on-month growth was 5%.

In the wholesale pattern, September Leapmotor, Arcfox, GAC Aion, BAIC Passenger Cars and other car companies had year-on-year growth rates exceeding 20%. 22 new energy manufacturers had monthly wholesale breaking 10,000 vehicles, combined accounting for 94.4% of total new energy volume. The top runners are getting faster, and space for the waist and tail is getting narrower.

Domestic brands defending the title, joint ventures self-rescuing, luxury brands turning around, September's camp battle is far from being as one-sided as the share numbers look.

New Energy Penetration Rate 67%, Fuel Nearly Halved

Between camps there is still back and forth, the relative position between oil and electricity is becoming clearer and clearer.

According to China Passenger Car Association data, September new energy passenger car retail sales were 1.084 million vehicles, down 16.7% year-on-year, and month-on-month growth was 7.8%. Wholesale was 1.666 million vehicles, up 11.3% year-on-year, and month-on-month growth was 10%. Retail end is still adjusting under the disturbance of high base and subsidy policies, while wholesale end has already returned to double-digit growth.

Image Source: China Passenger Car Association

More critical indicator is penetration rate. September new energy retail penetration rate reached 67%, up 9.1 percentage points year-on-year, and up 1.7 percentage points month-on-month; wholesale penetration rate 65.4%, up 12 percentage points year-on-year. Both hit historic highs. In other words, among every three new cars sold, more than two are new energy.

Fuel car side is another scene. Data shows, September fuel car retail sales were down 43% year-on-year, among them pure fuel cars down 49%, nearly halved; conventional fuel passenger car retail was only 530,000 vehicles, down 43% year-on-year, and down 0.3% month-on-month. By camp, domestic fuel cars down 47%, joint ventures down 42%, luxury down 41%. In front of high oil prices, camp distinction loses meaning, all fuel cars were impacted.

The most direct reason is still high oil price. China Passenger Car Association data shows, since end of September, gasoline cumulative adjustment this year was 2,375 yuan/ton. Car usage costs remain high, fuel car consumption willingness continuously suppressed. Of course, this cycle correction also superimposed subsidy policy adjustment and high base factors. For many consumers, switching to an electric car is already a logical choice, "oil-electric substitution" has changed from trend to norm.

Inside new energy, differentiation is also obvious. From September wholesale structure, pure electric 1.126 million vehicles, up 18.3% year-on-year, share 67.6%; plug-in hybrid 423,000 vehicles, slightly down 0.1% year-on-year, share 25.4%; extended range 117,000 vehicles, down 4% year-on-year, share 7%. Pure electric strong, plug-in hybrid lost speed, extended range weakened, heat of each technology route is being resorted.

Then look at price brackets, high-end and low-end performance difference is huge. In high-end market, September Class B EV wholesale was 329,000 vehicles, up 21% year-on-year, accounting for 29% of pure electric share, the relatively stable block in pure electric market.

In low-end market, Class A00 pure electric wholesale was only 78,000 vehicles, down 51% year-on-year, share 7%, down 10 percentage points significantly compared to same period last year. The impact of subsidy policy changes on entry models was almost immediate.

There are also highlights in the middle ground: Class A0 wholesale 396,000 vehicles, up 10% year-on-year, accounting for 35% of pure electric; Class A 266,000 vehicles, share 24%, down slightly 2 percentage points year-on-year. New forces retail share reached 23.6%, up 3.4 percentage points year-on-year, among them pure electric share rose to 75%, volume increase obvious for 100,000-150,000 yuan models.

Export data is more eye-catching than domestic retail. Data shows, September new energy passenger car exports were 558,000 vehicles, up 163.5% year-on-year, accounting for 60.8% of total passenger car exports, added 21 percentage points compared to same period last year; January-September new energy exports 3.887 million vehicles, up 138.8% year-on-year. BYD single month new energy exports were about 176,000 vehicles, Chery and Geely follow closely behind.

Car model lists can also explain the problem. September wholesale sales models exceeding 20,000 units reached 23. BYD Song ranked first with 69,266 units, Model Y 62,948 units, BYD Yuan UP 62,711 units, Geely Xingyuan 60,871 units followed closely. Wholesale list top four were all new energy, traditional fuel models squeezed to list middle section.

Looking globally, January-August China new energy passenger cars accounted for 62% of world share, August single month reached 65.3%; in world plug-in hybrid market, Chinese brand share reached 71%. Domestic new energy share in overseas market, August rose to 29%, jumping up 14 percentage points year-on-year.

Electrification is long ago not China's exclusive story, just countries' paces are completely different. China Passenger Car Association aggregated data from various country industry associations, same period world new energy passenger car sales were 15.7 million vehicles, up 15% year-on-year, global penetration rate 24.5%. Germany penetration 33.4%, UK 36%, US only 7%, Japan only 4%, countries' progress difference is huge, Chinese brands still have no small expansion space. Fuel cars retreating, new energy expanding, the speed of this position swap is still accelerating.

October Auto Market, Can it Warm Up?

September's answer paper has been submitted, what about October?

First look at calendar. According to China Passenger Car Association analysis, this year October workdays total 18 days, flat with same period last year. Since Mid-Autumn Festival fell in late September, October's effective sales time is longer, terminal traffic expected to continuously warm up. "Golden September" debt owed, market expects "Silver October" to repay.

Image Source: Chery Automobile

Supporting factors are substantial. National Day auto shows opened densely, local subsidies landed successively, car company peak season promotions fully spread out, three forces short-term support bottom. On policy level, this year trade-in subsidies continue to exert force, subsidy quantity expected to present "low front high back" trend, contrasting with last October subsidy gradually exiting, beneficial for auto market stability.

But pressure also cannot be ignored. Core feature of macro environment is economy weak repair, policy mainly with stock replacement stimulation, market still in stock game stage. Resident income confidence is weak, price wars bring cautious sentiment, consumption end first purchase increment temporarily blocked, replacement stock becomes important support for steady growth.

Consumers accounting is also becoming more detailed, car buying decision from purely looking at car price, turned to comprehensive evaluation of full-cycle usage cost, residual value, smart experience.

High oil price variable remains. China Passenger Association judgment, if international oil prices continue at high position, fuel car consumption will continue to be low, "oil-electric substitution" will also accelerate, new energy penetration rate expected at 65% or above high position operation.

For fourth quarter pace, China Passenger Association person in charge Cui Dongshu expressed, relative to last year, this year market to rise is still relatively hard. September, October base relatively high, October, November will have certain improvement, negative growth magnitude will obviously narrow, December year-on-year decline range expected to be within 10%, gradually closing to flat, laying good foundation for next year growth. In his opinion, this year belongs to a stage connecting past and future.

In structure, there are several clues worth attention. Class A car pure electrification trend is obvious, fast charge technology improvement is pulling Class A EV sales. Replacement demand squeezes first purchase, Class B and above high-end models demand strong, Class A, A00 class economy EV affected by complex factors continue to shrink.

Aging is accelerating, some car companies start layout elderly-friendly products and travel services, A0 class EV expected to win increment.

China Passenger Association also expects, future policy can continue to support economy EV development, encourage miniaturization, give low-price cars more subsidies, push down-market first purchase demand release. Big city penetration high, county/town penetration weak, in such pattern, county first purchase is still a blue ocean to be opened.

In export aspect need to watch wind direction change. EU market trade pressure increased, plug-in hybrid model restrictions already started landing, trend of growth rate slow down will gradually reflect. But stretching time, China cars going global trend has not changed.

Put vision to whole world, this judgment is clearer. Global market can also serve as reference: January-August world car sales 63.43 million vehicles, up 2% year-on-year, China market share 32%, India, Vietnam, Thailand and other emerging market growth leading, "East rise West fall" still is industry main line.

Channel and profit level pressure is also not small. China Passenger Association survey shows, this year de-stocking feature prominent, January-September industry inventory down 680,000 vehicles; dealers new car purchase more cautious, most think this year "Golden September Silver October" peak season effect obviously weaker than previous years, survival pressure and confidence insufficient exist at same time.

In terms of profit, according to China Passenger Association data, January-August auto industry profit 253.4 billion yuan, down 16% year-on-year, operating income profit margin only 3.6%; August single month profit 37.1 billion yuan, up 24% year-on-year, profit margin back to 4%, counts as a bit of warmth in valley. Upstream non-ferrous raw materials, memory chip price rise, downstream demand not strong, price wars not stop, car companies squeezed at two ends situation in short term hard to change.

Put eyes on long term, auto market growth power structure is changing. Marriage total center shifts down, marriage age shifts back, aging accelerates, growth power turning from "new marriage first purchase" to "replacement purchase, additional purchase, new energy upgrade, aging-friendly travel".

October may not see a vengeful rebound, but the demand temporarily suppressed by high oil price, high base and holiday misalignment will not disappear out of thin air.