China Making Moves to Improve Its Crippled Auto Market

Matt Posky
by Matt Posky
china making moves to improve its crippled auto market

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:

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]

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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”?