China Auto Sales Expected to Be Weak, Yet Stable in 2019

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china auto - China Auto Sales Expected to Be Weak, Yet Stable in 2019

China’s automobile market is expected to see a faltering growth in sales in 2019, following a year in which sales stumbled for the first time since the 1900s.

The country’s auto sales — including both commercial and passenger vehicles — amounted to 28.1 million units in 2018, down 2.8%, the first fall in more than two decades, according to data released by the China Association of Automobile Manufacturers (CAAM). In breakdown,  22.35 million passenger vehicles were sold in 2018, down 5.8 percent from the previous year, the first downslide for the market registered in 28 years.

The deceleration of the world’s largest automobile market comes amid a slowing economic expansion and an ongoing trade row between China and the U.S. that has inhibited big-ticket item consumption of Chinese people and will probably continue to affect the market negatively this year.

Shi Jianhua, deputy secretary with CAAM, said 2018’s weak sales were partly due to the phasing out of purchase tax cut for smaller cars.

The government-backed association expected that car sales in the new year are likely to be flat with 2018.

The industry association, however, said China’s auto market still poses ample growth market as car ownership is still low in comparison to the average global level. “The demand is still there as young buyers continue to emerge,” the association added.

Additionally, faster expansion of new-energy vehicle sector with strong government support could probably give the market a lift. China’s sales of vehicles powered by pure electricity, hybrid and fuel-cell technologies jumped 62 percent to reach 1.26 million in 2018, the first time that sales exceeded 1 million.

See Also: New Energy Vehicles Outperform Other Segments

Commercial vehicles sales might increase marginally by one percent this year to reach 4.4 million units, while new-energy vehicles sales are expected to register a 33-percent fast growth to reach about 1.6 million, according to CAAM.

The China Passenger Car Association (CPCA) forecasts that passenger car sales will drop around 1% this year.

In face of the market sluggishness, the National Development and Reform Commission, China’s top economic regulator, said recently the government will roll out effective measures to encourage consumers to buy cars and other large goods.

China has previously managed to boost demand with fiscal incentives such as purchase tax reliefs and one-off subsidies.

The strongest incentive policies came in 2009, when it overtook the U.S. as the world’s largest auto market after vehicle sales soared 46 percent from 2008. That came mainly from support measures including lower purchase taxes, and a policy of offering subsidies to residents living in rural areas who desired to replace old vehicles.

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