China’s auto market is likely to shrink for the third consecutive year this year, the country’s top auto body said yesterday, with industry watchers hoping a sales recovery in lower-tier cities helps ease the pace of decline.
The China Association of Automobile Manufacturers (CAAM) said it expects a 2 percent fall in vehicle sales.
That would compare with 8.2 percent last year when sales were pressured by new emission standards in a shrinking economy that was contending with tit-for-tat import tariffs with the US.
CAAM, affirming its forecast announced last month, also said taht auto sales declined for the 18th consecutive month last month.
Annual sales started falling in 2018, by 2.8 percent, halting a growth march that began in the 1990s.
“The negative effect of cutting purchase tax in 2015 to 2017 has disappeared, and car sales in lower-tier cities are expected to recover,” LMC Automotive Ltd senior analyst Alan Kang (康軍) said.
“The easing of trade tensions between China and the United States has also helped restore consumer confidence,” said Kang, who expects China’s vehicle sales to grow 0.05 percent this year.
Sales of new-energy vehicles last month sank 27.4 percent, resulting in an overall 4 percent decline last year.
China’s new-energy vehicle sales jumped 62 percent in 2018, but a subsidy cut hurt sales last year.
Global automakers have been cautious with their predictions after cutting production, shutting factories and firing staff last year.
Executives at automakers such as Geely Holding Group (吉利控股集團) and Ford Motor Co partner Chongqing Changan Automobile Co Ltd (重慶長安汽車) have said they expect fiercer competition to weed out weaker players.
Ford yesterday said that its China auto sales slumped more than one-quarter last year for its third year of decline.
However, the latest fall was slower than the 37 percent weathered in 2018, and the automaker said that it saw its market share stabilize in the high-to-premium segment.
It remained cautious about this year, echoing bearish comments on China’s market from General Motors Co.
“We expect the market downturn to continue in 2020, and anticipate ongoing headwinds in our China business,” GM China president Matt Tsien said last week as the US automaker reported a 15 percent drop in China sales for last year.
Volkswagen AG, whose sport-utility vehicles helped it report a smaller 1.1 percent year-on-year fall in sales in the first 11 months of last year, has said it expects China’s market to grow at a relatively slow pace for the next five years.
The bright spots have been Japan’s Toyota Motor Corp and Honda Motor Co Ltd, as well as US electric-vehicle maker Tesla Inc, which started delivering Model 3 sedans from its US$2 billion Shanghai plant this month.
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