Output

In 2024, China’s industrial economy achieved steady improvement, and the value-added industrial output of enterprises above the designated size is forecast to grow by about 5.7% year-on-year. In particular, from January to November 2024, the value added in the automobile manufacturing sector increased by 8.1% year-on-year, surpassing the average growth rate for industrial value added. In the first 11 months of 2024, China’s automobile output and sales reached 27.9 million and 27.94 million respectively, with a year-on-year increase of 2.9% and 3.7%, showing a slight upward trend. The new energy vehicle (NEV) sector performed notably well during this period. The national output and sales of NEVs surged by 34.6% and 35.6% year-on-year, respectively, to nearly 11.35 million and 11.26 million. The sales of NEVs accounted for 40.3% of China’s total new car sales.

Domestic Sales

China’s domestic sales were sluggish. From January to November 2024, domestic sales of automobiles in China totaled around 22.6 million, showing a marginal increase of 0.3%. This is mainly attributed to two factors:

1) Low consumer confidence: Influenced by factors such as real estate downturn and the lingering effects of the pandemic, consumers tended to be cautious. China Consumer Confidence remained relatively low, with the confidence index hovering below the neutral level of 100, leading to a subdued demand for new cars or upgrades from existing ones.

2) Diminished effects of policy incentives: Although policies aimed at promoting stable development in the auto industry were successively introduced in 2024, their effects diminished. For example, China issued implementation rules of subsidies for auto trade-ins in April 2024 and local governments subsequently launched corresponding supportive policies, but the effectiveness of these incentives was not significant. This was due to strict policy conditions and a relatively limited target audience, especially in developed cities where vehicles that meet standards were limited, thus leading to an insufficient boost in auto sales. China expanded policies in July 2024 to encourage large-scale equipment upgrades and consumer goods trade-ins. It aims to provide further support for the scrapping and upgrading of old operating trucks, increase the subsidy standards for the renewal of new energy buses, and increase the subsidy ratio for equipment upgrade loans. The impact of this policy, which is more pronounced than the one implemented in April, requires further observation. The notice on adjusting the relevant policies for car loans issued by China’s financial regulators in March 2024 saw a significant reduction in the down payment ratios for consumer loans. However, feedback from enterprises indicates that prior to the policy adjustment, they had already established relatively low down payment ratios, including zero-down options, thereby suggesting minimal impact on the market.

Export

China exported nearly 5.35 million vehicles from January to November 2024, up 21.2% year-on-year, showcasing robust performance in auto exports. During the period, NEV exports totaled 1.14 million, up 4.5% year-on-year. The top three export destinations were Russia, Mexico and Brazil, while the top three markets for NEV exports were Brazil, Belgium and the UK. China’s influence in international auto markets has been increasing with its strong growth momentum of auto exports, leading several countries to impose restrictions on Chinese auto exports. For instance, the EU has imposed temporary anti-subsidy duties on NEVs imported from China, ranging from 17.4% to 37.6%. Russia increased its vehicle scrappage tax by 70-85% in 2024 and tied the amount of scrap collection closely to the localization rate. Further increases are planned for 2025 and 2026. The U.S. has imposed a 100% tariff on all EVs from China. Despite the increasingly stringent international environment, Chinese auto exports are projected to keep growing over the next three years. With ongoing foreign pressure, Chinese automakers could accelerate their overseas expansion efforts to skirt the high tariffs.

Application of Polyether Polyols in Automobile Industry

In automobiles, flexible PU foam is primarily used for seat cushions, interiors and shock-absorbing materials. Molded foam is mainly used in car seats, backrests, headrests, while integral skin foam is typically applied to steering wheels, armrests and other car components. The largest application of PU in automobiles is in car seats, while the fastest-growing segment is PU adhesives for NEV batteries. In 2024, China’s consumption of polyether polyols in the automobile sector reached XX, up XX% year-on-year.

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