By on April 12, 2019

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]

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19 Comments on “Chinese Auto Market Continues Its Decline; U.S. Future Also Looking Bleak...”


  • avatar
    Higheriq

    The situation in China was inevitable; there are too many barriers, restrictions, and regulations to car ownership in China. Many people have decided that the nightmare just isn’t worth it.

  • avatar
    Funky D

    I wonder if it has much to do with the fact that car prices have entered the stratosphere and you have buyers that are either already maxed-out, or buyers (like me) that aren’t really interested in going into debt up to their necks.

    • 0 avatar
      sgeffe

      Doesn’t help if the captive-financial arm of the manufacturer has their worst rates on cars that need all the help they can get to move! Honda Civics are selling reasonably well without Honda Financial incentives, but Accords aren’t, and the best rate, from 24-36 months, is 3.9%, with 48-60, which will get you a payment that won’t eat the lion’s share of a monthly wage, at 4.49%! This while they still have 0.9% on Pilots, CR-Vs, and the like!

  • avatar
    Tele Vision

    In an era of $100,000 pickup trucks and 84 month auto loans perhaps more people are doing basic math – as they should do.

    • 0 avatar
      sgeffe

      What concerns me is what will happen when the automakers all realize that their product is overpriced across the board, and they start reducing prices! People by the thousands will be underwater overnight!

      Interesting that my “anti-Millennial” Millennial boss and his wife just leased a new Chevy Traverse last evening; he’ll be selling his cherry 2007 Avalanche to his brother, and will be driving his wife’s Journey until the end of its lease (he has a fourteen mile round-trip commute versus his wife’s constant running as a wedding photographer; the Journey was an emergency lease after her Acadia suffered from a stretched timing chain), then will buy lease-to-buy something different. They just had their third child, and the quarters are much roomier for the two older daughters, versus the Journey, which was a doable fit (and more room in the back of the Avalanche for two boosters and a baby seat).

      Unlike his some in his age cohort who can’t afford new cars, he and his wife have always had car payments, due to differing life circumstances and the changing needs of a young family. At some point they’ll find “keepers,” I’m sure, but they seem to manage OK.

      I just can’t get my arms around paying for anything without some return at the end, even if the asset is depreciating. Until this year, I’d have been a perfect lease candidate, since I am fastidious with cars (including spending some two-grand on paint-protection film before taking delivery, if possible), and only put about 7,000 miles a year on a car! However, my normal commute route will be under construction for the next three or four years, and the best alternative route will add double the time per leg, and double the mileage, in order to avoid crawling along at 45mph, which will double my time anyway; I like to be moving, instead of sitting in traffic!

    • 0 avatar
      DenverMike

      Minus options and inflation (and drama), show how much more cars and trucks costs now, vs The Good Ol’ Days. I’m sure in many cases they’ve gone down in prices, Apples vs Apples (as much as possible), Old vs New.

      And you could always take a shorter term.

    • 0 avatar
      Higheriq

      1. Where are these $100,000 pickups? 2. Anyone who is considering a $100,000 pickup, has already done the math and decided that they can afford one.

  • avatar
    Jeff S

    Agree vehicles are overpriced and there is a limit to how much most people can afford and how many months a loan can be extended. I believe a lot of the increase in sales was due to pent up demand from those who postponed buying a new vehicle during the economic crisis and also many switching from cars to trucks and truck like vehicles.

    • 0 avatar
      thornmark

      “easy’ financing blew up the prices of homes, cars and college

      all three have undergone extreme inflation as a result

      peak house

      peak college

      peak car

      all pushed to the limits by financing, w/o that financing prices would never have accelerated the way they did

  • avatar
    DenverMike

    The expert analysts snivel over the (OMG) 3% increased ATP while US inflation was 4.6% in that time frame (’16-’18), and obviously leases (renting) have nothing to do with interest rates.

    They’re just too afraid to let automakers know, consumers just aren’t that into the stuff you’re selling.

    The used/older stuff is slightly more attractive. Replacing what you’ve got is mostly a lateral move.

    Except the absolutely booming aftermarket sector should tell automakers all they need to know. But they already know.

    Automakers don’t want the reality getting out, spoken about, no doubt inspiring more and more copycat consumers seeking other alternatives to new, or late model autos. Automaker’s stockholders also need to be kept in the dark. Better investments are all around.

    Part of what makes older classic cars/trucks so damn attractive is their prices don’t really keep up with inflation or they’re immune, while aftermarket parts prices, including accessories, upgrades, mods, audio, wheels, lifts, etc, are extremely competitive, or even dropping.

    Looking around the showroom, $35,000 doesn’t get you much. But it leaves a huge tremendous budget for clean, low miles, classic, Wranglers or Miatas, LX 5.0s, mid-engine, pre-emissions diesel 4X4s, last of the Big Block gassers, V10s, pre gadgetry/processor overload, etc, and or Hot Rod from the ’80s to ’00s. Supercharged, turbo, manual stick, etc.

    Stock, unmolested, modded to your specifications, re-geared, tuned, tasteful “turnkey”, or somewhere in between.

    But new autos are good too…

    • 0 avatar
      Hummer

      FCA is the only automaker that could get me in the door right now, (well Miata I suppose) the auto market is full of bland overpriced junk. technology that used to be worth getting is now either stock or bundled with junk you don’t want. I have too many vehicles as is now but I still love getting my hands on something new and exciting every now and then. I don’t see the future being kind to auto enthusiasts. I stay with my older vehicles because they offer capabilities, options, and good design that cannot be bought with any amount of money today.

    • 0 avatar
      Scoutdude

      Interest rates have everything to do with leases. They may call it a money factor to through off the less savy, but it is the interest rate and it does affect the final lease payment. Of course the MFG often subsidizes the money factor just like they do the interest rate on purchases, as well as over estimate the residual to hit a target advertised payment (for vehicles that don’t actually exist on most dealer’s lots).

      • 0 avatar
        DenverMike

        It’s just one more reason to pay cash, but once you’re doing that, you’re staring down the barrel of losing thousands, yeah “real money”, just driving it off the lot, 3 or $4K typically. That takes some real love.

        Still, I get it. Many new car buyers want nothing to do with (or don’t have a clue) servicing or replacing worn parts, even if they’re taking it to a repair shop. Yet DIY (owner) repairs and upgrades are at an all-time high. On-line videos and forums will hold your hand through most anything.

        Thing is, you can bet OEMs will cut you off on the 10th year (or sooner) as far as processors, sensors, control modules, electronics go (with every generation there’s tons more), not to mention model, year, engine specific mechanical, powertrain, body, trim and suspension pieces. The aftermarket cannot possibly re-pop everything for every vehicle, so it’s always better to stick to the popular and mainstream, new or used.

        Yes OEMs are doing everything they can to keep you coming back for more, but not in a good way (long con).

  • avatar
    Jeff S

    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.

  • avatar
    JD-Shifty

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

    • 0 avatar
      Higheriq

      Amen – the people who b***h and moan about the high prices of pickup trucks, would not be caught dead in the base trim level. It’s pure comedy.

      • 0 avatar
        jack4x

        My experience is that most of the people b***hing about truck prices don’t even own a truck, or at most a 90s Ranger. They want something that can’t and won’t ever be sold again, so they complain instead about the trucks we have, which are in fact better than ever. If the whiners would actually spend some time behind the wheel of a modern pickup, they might understand why thousands of people are willing to fork over $50K or more to drive one.

        • 0 avatar
          thelaine

          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.


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