China’s 1st vehicle sales dip in 3 decades stirs stimulus talk

BEIJING • China vehicle sales fell for the first time in 28 years, raising the prospect of a government-led stimulus to revive demand in the world’s biggest auto market as consumers from Europe to US balk at buying new cars.

Deliveries of passenger vehicles to dealers fell 4.1% to 23.7 million units last year, the China Association of Automobile Manufacturers (CAAM)said yesterday. It forecast little growth in 2019. Last week, data from the China Passenger Car Association revealed a 6% drop in retail sales.

Shares of local carmakers dropped in Hong Kong.

Rising prices, political upheavals and new services such as car-sharing are eating into auto demand in countries such as the UK and the US. The world’s second-biggest market has seen buyers preferring spacious SUVs, sparking a collapse in demand for traditional sedans.

Deliveries in Germany fell 7.6% in December, indicating broader troubles in a market expected to contract in 2019, according to Evercore ISI.

For China, economists see growth slowing to 6.2% this year from 6.6% in 2018, as an unresolved trade war with the US dents consumer confidence and dims the outlook.

Total automobiles sold to dealers, including commercial vehicles, declined 2.8% to 28.1 million units, according to CAAM. New-energy vehicles recorded a 62% gain with 1.26 million in sales.

Feeling the pulse of the market after the tariff war with the US damped domestic demand, an official at China’s National Development Reform Commission (NDRC) said last week Beijing will roll out measures to boost sales of cars and household appliances.

“There’s still potential to support residents’ reasonable consumption,” NDRC vice chairman Ning Jizhe told state broadcaster CCTV. The government plans to draft relevant policies to stimulate purchases in rural areas, he said.

Goldman Sachs Group Inc isn’t optimistic about 2019. Sales volume is likely to drop 7% this year, it predicts, while Cui Dongshu, secretary general of the China Passenger Car Association, expects a 1.2% rise. Volkswagen AG’s China chief Jochem Heizmann said industry sales will fall in the first half of this year, while General Motors Co expects close to 27 million units, in line with last year.

BYD Co slumped 6.6% yesterday in Hong Kong, the most in more than nine months. Geely Automobile Holdings Ltd declined 3.1%, while Guangzhou Automobile Group Co slipped 2.3% and BAIC Motor Corp fell 1.3%. — Bloomberg