China Making Moves to Improve Its Crippled Auto Market

Matt Posky
by Matt Posky

While you’ve heard the media prophesying a global recession for months now, one that will effectively obliterate the younger generation’s purchasing power for the rest of their lives ( or so they say), the United States is actually in relatively good shape vs other markets. The People’s Republic of China already appears to be in a recession, and it’s no state secret that its automotive market is hurting.

Part of that is due to the ongoing Sino-American trade war, but there are other factors at play. We’ve previously covered how China’s overzealous adoption of increasingly rigid efficiency mandates upset auto sales. As it turned out, the nation’s commitment to zero-emission vehicles and swelling emission rules scared off a subset of buyers. Others simply couldn’t rationalize making such a large purchase during a period of economic uncertainty.

This all resulted in China’s automotive market experiencing more than a full year of consistently negative growth — something the PRC would like to see fixed posthaste. On Tuesday, the Chinese State Council announced a tentative plan to fix its struggling economy.

While the strategy deals with everything from boosting consumption goods to fixing up idle areas of various cities, automobiles play an important role. According to Reuters, China believes local governments that placed restrictions on auto sales should explore gradually relaxing or removing those hurdles. However, it also noted they should simultaneously continue encouraging the purchases of “new energy” vehicles.

Part of the country’s problem stems from numerous municipalities’ early adoption of China’s evolving emission rules. By adhering to new standards early, local dealerships could no longer sell some models that would have been totally legal elsewhere in China. That, in addition to citywide bans of certain internal combustion engines, left consumers flummoxed. Why bother purchasing a new vehicle if you can’t drive it everywhere and have no idea if it’ll even be legal to place on the secondhand market?

Details of the fix-it plan are still being ironed out, with most operating under the presumption that additional economic support measures will trickle in through the remainder of 2019. Still, the general goal should remain the same — remove hurdles to domestic consumption (primarily in cities) and incentivize consumer spending without upending China’s plan for the proliferation of new-energy/zero-emission vehicles.

From Reuters:

[The State Council] said Beijing would extend retail hours to promote “the night economy”, with convenience stores and restaurants open longer.

Beijing will additionally allow city-level governments to approve retail sales of refined oil products, it said, adding that it would also encourage credit support for purchases of new energy vehicles and smart home appliances.

[Image: Destinyweddingstudio/Shutterstock]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • TS020 TS020 on Aug 28, 2019

    Bad news for people wanting to ban ICE vehicles; if one of the biggest governments in the world can't make it work, what chance do they have? Then again, they'll just stick their head in the ground and repeat their mantras.

  • TimK TimK on Aug 28, 2019

    “Negative growth” — is that like “lethal humanitarian aid”?

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