Chinese Auto Market Continues Its Decline; U.S. Future Also Looking Bleak

Matt Posky
by Matt Posky
chinese auto market continues its decline u s future also looking bleak

China’s auto sales declined for the ninth consecutive month in March, further proving that the market isn’t as infallible as once thought. The assumption was that, as North America surpassed peak growth and flattened out, Chinese auto sales would continue an upward trajectory. But, while China did surpass the U.S. in becoming the world’s largest auto market, it’s not living up to its billing as a golden goose.

That’s not to suggest the U.S. is about to stand triumphantly atop that mountain. Automakers are issuing profit warnings for 2019 and Moody’s Investors Service expects light vehicle sales to fall 1.2 percent this year.

“The accommodative financing environment that had helped buoy U.S. car sales is receding. Maintaining operating and financial discipline will be crucial [for 2019],” the bond credit rating business advised.

While Moody’s take occupied the median position, most analysts are of a similar mind. A combination of rising interest rates and increasingly lofty transaction prices (for both new and used vehicles) are expected to finally push U.S. sales growth back down the slope. Fortunately, experts have been wrong before. Most analysts expected 2018 to end in a sales decline too, but it didn’t happen.

Still, there are more reasons to concerned in 2019 — and not just for North America. Automakers everywhere are discovering shareholders are less interested as technology investments gradually lose their luster and serious questions emerge regarding their financial wellbeing. Meanwhile, Europe’s stagnating sales and China’s own problems seem to be pointing at a global recession.

The government-backed China Association of Automobile Manufacturers reported on Friday that Chinese vehicle sales fell 11.3 percent, year-over-year, to 6.37 million in the first quarter of this year. According to The Wall Street Journal, that decline followed 12-percent and 9.6-percent dips in the previous two quarters.

From The Wall Street Journal:

Passenger-car sales declined 13.7 [percent] in the January to March period, while commercial-vehicle sales increased 2.2 [percent]. Low confidence among consumers and curbs on peer-to-peer lending businesses have made it harder for dealers to move inventory, according to auto analysts.

“The market is still in recession, and companies are under great pressure,” said the association’s assistant secretary-general, Chen Shihua. “It’s still hard to say when the point of returning to growth will come.”

[Image: welcomia/shutterstock]

Join the conversation
5 of 19 comments
  • Jeff S Jeff S on Apr 14, 2019

    Today there are fewer new vehicles that make you want to have them. Most look the same with bland lines and bland colors. White, black, and different shades of grey with black and grey interiors. Many of today's new vehicles are like appliances and like appliances they are getting more expensive. Yes vehicles are safer and offer more features but when do they reach peak features and how much are those features worth to most people excluding safety features.

  • JD-Shifty JD-Shifty on Apr 14, 2019

    If any of this were true a lot more people would be buying the cheapest available cars, and those base trucks under 25K

    • See 2 previous
    • Thelaine Thelaine on Apr 16, 2019

      @jack4x Yeah. Pickups have undergone a frkin revolution in the past 10-15 years. They are sooooooo much easier to own and drive now, and the options are endless. OEMs have poured money into them. You can get affordable ones all day long, but if you want something more, you gotta pay. It's worth it. They are amazing.

  • Brett Woods 2023 Corvette base model.
  • Paul Taka Hi, where can I find 1982 Honda prelude junkyards in 50 states
  • Poltergeist Make sure you order the optional Dungdai fire suppression system.
  • Prabirmehta I charge my EV at home 100% of the time. The EV is used for in-town driving and the gas guzzling SUV is used for out of town trips. This results in a huge cost saving and rare trips to the gas station.
  • Conundrum Three cylinder Ford Escapes, Chevy whatever it is that competes, and now the Rogue. Great, ain't it? Toyota'll be next with a de-tuned GR Corolla/Yaris powerplant. It's your life getting better and better, yes indeed. A piston costs money, you know.The Rogue and Altima used to have the zero graviy foam front seats. Comfy, but the new Rogue dumps that advance. Costs money. And that color-co-ordinated gray interior, my, ain't it luvverly? Ten years after they perfected it in the first Versa to appeal to the terminally depressed, it graduates to the Rogue.There's nothing decent to buy on the market for normal money. Not a damn thing interests me at all.