BEIJING • Car sales in China continued to decline in January after their first full-year slump in more than two decades, adding to pressure on automakers who bet heavily on the market amid waning demand for cars from the US to Europe.
Passenger vehicle wholesales fell 17.7% year-on-year, the biggest drop since the market began to contract in the middle of last year, while retail sales had their eighth consecutive monthly decline, industry groups reported yesterday.
“Downward pressure is still there,” Gu Yatao, a Beijing-based auto analyst with Roland Berger, said before the figures were released. “The government isn’t adopting stimulating policies to give the market a shot in the arm.”
The persisting slump leaves carmakers with few places to go for sales growth. The markets in Europe and North America are shrinking as the increasing availability of ride-hailing and car-sharing services makes it less necessary to own a car. Japan is sputtering too, while volumes in other smaller markets aren’t enough to offset the declines in the biggest sales regions.
Sales in China continue to be suppressed as the economy slows and trade negotiations with the US drag on. Consumers stayed away from showrooms even with discounts by dealerships ahead of the Chinese New Year Holiday.
The wholesale decline in January, to 2.02 million units, accelerated from a 15.8% slump in December, the China Association of Automobile Manufacturers (CAAM) said. For 2018, the drop was 4.1%, the first decrease since early 1990s.
Retail sales dropped 4% to 2.18 million units, China Passenger Car Association said.
The first half (1H) of 2019 will continue to see downward pressure, as a purchase-tax cut in effect in 2016 and 2017 prompted many consumers to purchase vehicles earlier than planned, and now have no need to buy, said John Zeng, MD of LMC Automotive Shanghai.
Geely Automobile Holdings Ltd targets sales of 1.51 million cars this year, an increase of just 0.7% from 2018. Volkswagen AG, the No 1 foreign manufacturer on the mainland, is expecting further growth for the company this year, but has predicted the overall Chinese market to shrink in 1H.
China’s car market will probably be little changed in 2019, CAAM predicts. — Bloomberg