China’s vehicle sales fall 6% in 2018, the first in 20 years: industry group

By Zhang Hongpei Source:Global Times Published: 2019/1/9 22:14:00

 

Consumers check out cars during an exhibition in Changzhou, East China's Jiangsu Province, in August 2018. Photo: IC



Vehicle sales in China, the world's largest auto market, fell in 2018 for the first time in 20 years, industry group data showed, and analysts predicted the sales slowdown will continue for the next two years.

China's passenger vehicle sales declined by 6 percent in 2018, compared with the previous year, figures from the China Passenger Car Association (CPCA) showed on Wednesday.

In December, sales decreased 19 percent year-on-year, registering 2.26 million units, the CPCA said.

Cui Dongshu, secretary-general of the CPCA, told the Global Times Wednesday that the 6-percent decline was "normal" after continuous high-speed growth in the past few years.

When China cut the auto purchase tax from 10 percent to 5 percent four years ago, auto sales boomed. However, the tax rate was restored to 10 percent at the beginning of 2018, which curbed consumers' purchasing desire, Cui explained.

He estimated that this year there would be at most a 1 percent increase for passenger vehicle sales, based on the low level of 2018.

"Third- and fourth-tier cities are where auto sales have been coming from in recent years, but people in those places didn't have as much money to spend in 2018 as they did previously," said Xu Haidong, assistant secretary general at the China Association of Automobile Manufacturers (CAAM).

People working in local small and medium-sized enterprises in those cities are the first to feel difficulties when there's overall economic downward pressure. "It takes about two or three years for them to recover from sliding consumption levels amid layoffs," said Xu.

The CAAM has also released its forecast for the domestic auto market in 2019, and it predicted no growth for the first time in three decades. Total auto sales in 2019 will reach 28 million units, which would be the same as in 2018, it said in December.

Xu conceded that the sluggish sales trend will put domestic auto brands under more pressure, especially those producing low-end vehicles, which are usually marketed with an eye toward small cities and villages.

In this sense, it is inevitable for Chinese auto brands to make more efforts in product research and innovation, he said.

Ning Jizhe, deputy head of the National Development and Reform Commission, said China will roll out measures within this year to stimulate consumption of vehicles and home appliance, CCTV reported on Tuesday.

Amid sluggish overall auto sales, the new-energy vehicle (NEV) sector has become the industry's sales engine. During 2018, more than 1 million passenger NEVs were sold, up 88.5 percent year-on-year, according to the CPCA.

China is going all-out on green mobility by supporting NEV development. Both domestic and foreign companies are betting on the Chinese NEV market, even as some foreign automakers cut production of traditional internal-combustion cars in China.

US technology giant Tesla Inc began construction on its Gigafactory in Shanghai on Monday, where it will make the electric Model 3, which is bound to stimulate the domestic NEV sector, Xu noted.





Posted in: ECONOMY

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