China auto sales fall again in 2019
China’s auto sales fell for a second year in 2019 as the trade war with Washington and an economic slowdown depressed consumer confidence and demand for electric vehicles weakened, an industry group reported Monday.
The downturn is squeezing global and Chinese automakers that are spending billions of dollars to meet government mandates to sell electric vehicles.
Sales in the industry’s biggest global market declined 9.6 per cent from 2018 levels to 21.4 million sedans, SUVs and minivans, according to the China Association of Automobile Manufacturers, CAAM.
Total vehicle sales, including trucks and buses, was off 8.2 per cent at 25.8 million.
After two decades of explosive growth, Chinese auto sales fell 4.1 per cent in 2018 as unease over the tariff war with the United States and slowing economic growth prompted consumers to put off big purchases.
Forecasters expect sales to level off this year, but that would be more than three million units below 2017’s peak of 24.7 million.
“Chinese industry sales saw signs of stabilisation in 2019,” said Bernstein analysts Robin Zhu, Luke Hong and Xuan Ji in a report last week. “We think consensus expectations for a flat volume year in 2020 are reasonable but consider higher more likely than lower.”
December sales were off 0.1 per cent from a year earlier, CAAM said, an improvement over double-digit declines in previous months. The group gave no December sales total, but based on other CAAM data it would be about 2.2 million vehicles.
Sales of electric and gasolene-electric hybrid sedans and SUVs in 2019 sank four per cent from a year ago to 1.2 million. That still would make China the technology’s biggest market by far, accounting for at least half of global purchases.
Electrics sales rose by double digits in early 2019 but plunged after Beijing ended subsidies to buyers in July. Regulators shifted the burden of promoting the technology to automakers by imposing mandatory sales targets.
Chinese leaders are trying to accelerate industry development by ending curbs on foreign ownership of automakers.
Global brands that until now were required to work through joint ventures with state-owned Chinese partners were allowed full ownership in electric car manufacturing starting last year, reflecting official confidence that local brands can compete directly with foreign rivals.
Limits on foreign ownership are to be removed from the whole auto industry by next year.
Despite those changes, most foreign automakers are expected to stay in joint ventures with Chinese partners to take advantage of their government connections.