Cango Newsletter 20231109
Cango (NYSE: CANG) is a leading automotive transaction service platform in China, connecting dealers, financial institutions, car buyers, and other industry participants. Follow us on Twitter (https://twitter.com/Cango_Group) for updates.
Below please find our latest Cango newsletter. Our goal is to share the most newsworthy articles in today’s macro economy, auto industry, as well as our recent developments. Below please find the abstract and news link for more details.
1. China’s Nominal GDP Expected to Grow Around 4.5% in 4Q23 and Full-Year 2024
According to an article issued by a China-based equity research institute, China’s year-over-year real GDP growth is projected to rebound to over 5% in the fourth quarter of 2023, partly due to a low base effect in Q4 last year. For full-year 2024, the article forecasts that China’s real GDP will grow around 4.5% year-over-year. Considering the short-term surge in consumption triggered by China’s reopening in 2023, it is expected that China’s economic growth throughout 2024 will be more in line with the “New Normal.” In view of the inflation outlook for 2023-2024, it is expected that China’s year-over-year nominal GDP growth will be around 4.5% both in the fourth quarter of 2023 and full-year 2024. [Link]
2. 3Q23 Reports of Chinese Cities in the Trillion-Yuan GDP Club: Chongqing Solidifies Its Position as the Fourth Largest Chinese City by GDP
Economic data reports for the first three quarters of 2023 are in for all 24 Chinese cities that have crossed the trillion-yuan GDP threshold. Both Beijing and Shanghai delivered GDP of over RMB3 trillion, while Chongqing has further solidified its position as the fourth-largest Chinese city in terms of GDP. Among these 24 cities, 13 have achieved economic growth rates higher than the national average of 5.2%, with Chengdu taking the lead, followed closely by Zhengzhou and Hefei. Notably, there may be new additions to the Trillion-Yuan Club this year, with Yantai potentially emerging as the third city in Shandong Province to achieve RMB1 trillion GDP, and Changzhou on track to be the fifth city in Jiangsu Province to hit this milestone. [Link]
1. A Rising Trend: Luxury Car Owners Are Switching to Chinese MPVs
Amid a surge in demand for vehicle replacements and upgrades throughout China, multi-purpose vehicles (MPVs) are gaining fresh growth momentum. The extensive array of choices in the mid- to high-end MPV segment has ignited heightened interest among car buyers, propelling rapid growth across the market. With increasingly diverse product offerings, the MPV market is set to cater to a wider range of consumer demographics and become more refined. Pioneering market entrants have rolled out MPVs equipped with “classy sofa-style seats” and “high-end large screens,” delivering a cost-effective solution that meets consumers' demands for interior space and exceptional comfort. In the meantime, with the influx of emerging automakers into the MPV market and more premium models being rolled out by established brands, the MPV segment has evolved to a whole new level. Automakers’ upgrades will redefine our impressions of MPVs, unlocking the potential for more advanced and even flagship models in the segment, offering enhanced intelligence and smart mobility. [Link]
2. NIO CEO William Li Announces 10% Workforce Cut to Enhance Efficiency and Bolster Key BU Investments
On November 3, William Li, the Founder, Chairman and CEO of NIO, issued an all-employee memo announcing a workforce reduction of approximately 10%, which will be completed in November. This move is intended to enhance operating efficiency and ensure critical business segments receive adequate resource allocation. In his memo, Li stated, “This has been a difficult decision. The Company had to respond to the intense market competition.” Li believes that the next two years will represent the most competitive phase in the automotive industry’s transformation, with significant external uncertainties. He revealed that over the past two months, NIO has conducted over 30 sessions to analyze and discuss its two-year operational plan, aiming to define the goals, key success factors, priorities, action plans, and required resources for each business unit over the next two years while identifying opportunities for organizational optimization, cost reduction and efficiency improvement. [Link]
3. With Sales Overtaken by Leapmotor, NETA Resorts to Lower Prices to Boost Sales
NEV makers’ October sales data revealed a significant disparity in emerging EV manufacturers’ performance. Notably, Li Auto achieved monthly sales volume exceeding 40,000 vehicles, retaining its top position among NEV manufacturers. XPeng Motors saw its monthly sales surpass 20,000 for the first time. Meanwhile, Leapmotor and NIO both witnessed modest year-over-year and sequential growth. However, NETA Auto, the sole emerging automaker facing both year-over-year and sequential sales declines, has remained at the bottom of the sales chart for three consecutive months. In contrast, NEV brands incubated by traditional automakers have displayed relatively strong performance. For instance, in October, Zeekr’s sales reached 13,077, up 29% year-over-year, marking a historical high; Voyah sold 6,076 units, an increase of over 138% year-over-year; and AITO recorded sales of 12,700 units, with 10,547 sold for the AITO M7 model, hitting a new record high with monthly sales of 10,000 units for a single model. Additionally, IM Motors, Avatr and HiPhi also achieved some growth, though their sales figures were not as exceptional. [Link]
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