Auto sales in China falls 8.2% in 2019, forecast 2% decline in 2020 - GulfToday

China auto sales fall 8.2 per cent in 2019, further decline feared

Car-sales-750

Cars are displayed at the Shanghai Auto Show in Shanghai, China. Agence France-Presse

Auto sales in China fell 8.2 per cent in 2019, data from the country’s biggest auto industry association showed on Monday. Total auto sales in the world’s biggest auto market fell 0.1 per cent in December from the same month a year earlier, the China Association of Automobile Manufacturers (CAAM) said.

Sales have now dropped for 18 months in a row.

Automakers in China need to get used to a new normal of “low speed growth” in the world’s largest car market, the country’s top auto body said on Monday, as it reiterated predictions that sales will likely shrink for the third consecutive year in 2020.

The China Association of Automobile Manufacturers (CAAM) expects a 2 per cent fall in vehicle sales. That would compare with an 8.2 per cent drop last year, when sales were pressured by new emission standards in a shrinking economy also contending with tit-for-tat import tariffs with the United States.

CAAM, affirming its forecast announced last month, also said auto sales declined for the 18th consecutive month in December. Annual sales started falling in 2018, by 2.8 per cent, halting a growth march that had started in the 1990s.

Industry watchers, though, are hoping a sales recovery in lower-tier cities, and an easing of trade tensions between China and the United States, can help ease the decline.

“We have moved away from the high-speed development stage. We have to accept the reality of low-speed development,” Shi Jianhua, a senior official at CAAM, told a news briefing.

“We had high-speed growth for a consecutive 28 years, which was really not bad, so I hope everyone can calmly look at the market.”

Sales of new energy vehicles (NEV) sank 27.4 per cent in December, resulting in an overall 4 per cent decline to 1.24 million units in 2019. China’s NEV sales jumped 62 per cent in 2018 but a subsidy cut hurt sales last year.

When asked if the industry could sell 2 million NEVs this year, a target originally set by China’s industry ministry in 2017, CAAM’s assistant secretary general, Xu Haidong, said this was “not possible”.

NEV sales for 2020 would likely “stay at the same level or slightly increase” versus last year, Xu said. Global automakers have been cautious with their predictions after cutting production, shutting factories and firing staff last year. Executives at automakers such as Geely and Ford Motor Co partner Chongqing Changan Automobile Co Ltd have said they expect fiercer competition to weed out weaker players.

On Monday, Ford said its China auto sales slumped more than a quarter in 2019 for a third year of decline. The latest fall, however, was slower than the 37 per cent weathered in 2018, and the automaker said it saw its market share stabilise in the high-to-premium segment.

It remained cautious about 2020, 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,” Matt Tsien, president of GM China, said last week as the US automaker reported a 15 per cent drop in 2019 China sales.

Volkswagen AG, whose sport-utility vehicles helped it report a smaller 1.1 per cent year-on-year fall in sales in the first 11 months of 2019, 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 China-made Model 3 sedans from its $2 billion Shanghai plant this month. Ford Motor Co’s China vehicle sales fell for a third consecutive year, by 26.1 per cent, as it battles a prolonged overall sales decline in its second-biggest market that has hit demand for its mass-market Ford brand and sports utility vehicles.

The US automaker delivered 146,473 vehicles in China in the fourth quarter, down 14.7 per cent year-on-year, Ford said in a statement. In total, it sold 567,854 vehicles over 2019.

Ford has been trying to revive sales in China after its business began slumping in late 2017. Sales sank 37 per cent in 2018, after a 6 per cent decline in 2017.

Anning Chen, president and chief executive of Ford Greater China, said that while 2019 was a “challenging” year for the automaker, it saw its market share in the high-to-premium segment stabilise and its sales decline in the value segment start to narrow in the second-half of the year.

“The pressure from the external environment and downward trend of the industry volume will continue in 2020, and we will put more efforts into strengthening our product lineup with more customer-centric products and customer experiences to mitigate the external pressure and improve dealers’ profitability.”

Reuters