Chinese Auto Market Still Struggling, but There's Good News for Japan

China’s car market, officially the world’s largest, is bracing for its second year of negative growth. November was the fourth consecutive month of declining year-over-year sales, representing an improvement from October despite volume dropping 4.2 per cent below last November’s tally. Unfortunately for China, the downward trend has not been the exception, but the rule.

According to the Hong Kong based South China Morning Post, the China Passenger Car Association (CPCA) was hoping for better. “The market failed to live up to expectations of a strong rebound in November,” said Cui Dongshu, secretary general of the CPCA. “Consumer demand remained weak as people are reluctant to spend on big-ticket items due to worries about a bleak economic outlook.”

This matters in the West because domestic manufacturers have bent over backwards to try and improve sales within the region, expending no small amount of energy or capital in the process. China’s citizenry are also changing their tastes to cope with a weakening economy, and it would be wise to look at the choices they’re making.

However, let’s first examine who is to blame. The trade war is an obvious contributor but China’s own aggressive expansion is also a culprit. Many analysts have concluded that the nations desire to achieve growth at all costs was hardly sustainable, but it did pretty well for a while. China’s automotive market enjoyed consistent growth since 1992, with only the last two years showing decreases in annual sales.

From South China Morning Post:

For the first 11 months of this year, car sales have slumped 10.2 per cent to 19.27 million units.

China’s car market, the world’s largest, began losing momentum in June 2018 after more than two decades of strong growth. The market has seen year-on-year declines in 17 of the past 18 months.

It was only in June that sales rose 4.9 per cent year on year to 1.8 million units as dealers offered huge discounts that month to clear inventory.

China’s economic output expanded 6 per cent in the third quarter ending September, the slowest pace since records began in 1992, amid a bruising trade war with the U.S.

China also began eliminating subsidies on new-energy vehicles by up to 60 percent in June. Consumers were already uneasy about the the legal ramifications of the country’s aggressive emission mandates and, without incentives, sales of electric cars and plug-in hybrids fell directly into the toilet. The CPCA reports sales of NEVs fell a whopping 42 percent to just 78,000 units last month.

This has worked out well for Japanese brands with joint partnerships, however. Dongfeng Nissan reported sales of 126,573 units, up 13.9 percent from a year earlier, while Dongfeng Honda sold 81,334 units, an improvement of of 17.9 percent on year. Morning Post said Japanese automakers gained roughly 9 percent vs last November, attributing the change to new designs and a growing interest in practicality among the Chinese.

[Image: Destinyweddingstudio/Shutterstock]