World's Largest Car Market Continues Tanking
After rising steadily for almost three decades, China’s end of the economic seesaw seemed to hit its maximum elevation early last year, thus kicking off a swift plunge. For foreign automakers hoping to cash in on a burgeoning middle class hungry for cars, lofty dreams were pared back.
New vehicle sales in the world’s most populous country fell for the first time in 28 years in 2018, and the first two months of 2019 show no change in the market’s downward trajectory.
According to the China Association of Automobile Manufacturers (CAAM), buyers picked up 1.48 million vehicles in February — a 13.8 percent year-over-year decline, Reuters reports. That’s on the heels of a 16-percent decline in January, making February the eighth consecutive month of declining sales.
Economic factors turned cloudy last year, with the country ending 2018 with auto sales down 5.8 percent. This, from a market once viewed as nearly unstoppable.
While sales of “new energy vehicles” (electrics, plug-in hybrids) rose 53.6 percent last month, fuelled by a continued incentivization push from the country’s government, most of the automakers selling these vehicles are domestic.
“The trend experienced last year has continued into this year, and the economic situation has also been weak. This has dragged down consumption,” CAAM’s Deputy Secretary General Shi Jianhua told reporters in Beijing. “Consumers are also waiting for more government policies.”
The country’s leadership plans a number of measures to stimulate both the economy and car buying. First, there’s billions of dollars worth of infrastructure projects and tax cuts in the works. In rural areas, further measures are planned to encourage vehicle ownership, especially that of new energy cars.
Ford saw its fortunes take a hit in China last year, with its sales in that country falling 37 percent. General Motors didn’t fare quite as badly, recording a sales drop of 10 percent.
[Image: Ford China]
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China's downturn has been coming for few years now, its been building up since the GFC. 18 million vehicles a year is still good, the bad is the overcapacity for vehicle production. This has been a trait in many Chinese industries, even realestate and construction. Sooner or later this over capacity will catch up and we will hopefully see to poorer investments go under rather than be propped up. The Chinese vehicle industry has many manufacturers and will need to rationalise them, eg, under performing manufacturers bought out by larger more profitable manufacturers. The Chinese are in the midst of a transitioning economy and maybe Trump's attempt at isolating the Chinese will accelerate the transition into a service based and modernised economy. This will make them richer and more powerful. We (OECD) might have been better off leaving the Chine as cheapass factory workers. The Chinese will adapt and hopefully as the people in China gain affluence the freedom for them will materialise. Or, as I reckon, China will have a civil war, between the capitalists (private sector) and Central Committee. The Provinces in China are in some cases almost autonomous and not as staunch at following the Central Committee as most think. China is communist, but Chinese society is capitalist. That's what we in the West need to target.