By on August 27, 2019

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]

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15 Comments on “China Making Moves to Improve Its Crippled Auto Market...”


  • avatar
    redgolf

    Fire Sale – Good used cars from China to USA! “We’ll take anything that doesn’t eat!

  • avatar
    SCE to AUX

    China really needs to stay the course on clean(er) energy and energy-consuming products. Breathable urban air is important, and they don’t have much of it.

    But it’s humorous to see the communists struggle to invigorate their neo-capitalist economy.

  • avatar
    CaddyDaddy

    China is going to follow the Socialist here in the ol’ USA, instead of forcing you to buy overpriced healthcare that subsidizes others, they will force you to purchase a car or face additional taxes and a lower Social Credit Score.

    • 0 avatar
      Robbie

      Insurance is an un-American concept..?

      • 0 avatar
        CaddyDaddy

        Voluntary insurance un-American, No! Forced requirement by the power of the Govt. to purchase an expense mitigation scheme simply because you have a heartbeat is un-American. Besides, the Supreme Court called it a Tax.

        • 0 avatar
          Hydromatic

          Hey, if you live in a state where you can self-insure, put your money where your mouth is and put down that surety bond. I’m sure you have an extra $10,000 to $150,000 lying around, right?

    • 0 avatar

      Nobody forces you to buy overpriced insurance. I mean you have to buy insurance and yes it is overpriced but you do not pay full price. You pay $1 or $100 and etc depending on your income. The rest $2000 is paid by taxpayers and I find it fair. When I lost my job I paid $2 a month for Covered California and insurance cost was about $1800 a month. Who paid the rest I have no idea. I just had income barely above poverty level. When I worked I had almost free healthcare because company paid premiums.

  • avatar
    Crosley

    China is clearly in a real recession/depression. And it will only get worse as companies look to other places for their supply chain. Already companies like Apple are scrambling to move their manufacturing to places like Vietnam and India.

    It is funny though people rooting for an Authoritarian, Communist country like China with a horrible human rights record versus the US because one officeholder offends them.

    • 0 avatar
      Robbie

      I think nobody is rooting for China. But realistically, America has now lost its place as leader of the world, and is actively contributing to economic and military instability. The rapid decline of American economic and moral power will create a vacuum, and combined with China’s growth, it is obvious that China will now become the dominant world power.

      • 0 avatar
        James Charles

        Robbie,
        My view is the US is on a downhill trajectory at the moment. The US could of remained the dominant power and player by strengthening its alliance with all OECD nations, thus forming a bloc larger and more influencal than the Chinese could create.

        I really believe the EU will be the trend setters in the future. Because as we are currently witnessing the US is more a disruptor than a constructive influence.

        The Chinese though will be able to expand their influence greater than what would of been under a reliable US lead alliance.

        The EU can and will allow the US to go down the path of chaos it has undertaken as this is allowing the EU to create a bigger following.

        China doesn’t have the ability in using soft power that well in middle income and rich nations.

  • avatar

    How comes that communist government can not force unwashed masses to buy Toyota Camries? The problem with ICE cars is easy to solve – outlaw them and everyone will be forced to buy EV.

  • avatar
    TS020

    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.

  • avatar
    TimK

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


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