China Association of Automobile Manufacturers (CAAM) released the final output and sales data for the industry earlier this week (see First negative growth in 28 years: China auto sales down 13 percent in December, YTD sales fall 2.8 percent).
As expected, auto sales fell for the first time in nearly three decades, as CBU/CAR predicted long ago.
It therefore was a no-brainer as one of our Top 10 news events of 2018. It was unprecedented after so many consecutive years of continued growth. That is also why it was overdue. And it happened during one of the most transformative years for the industry on record, as our summary of the 10 news events shows.
With 2018 already behind it, the industry can look forward to 2019.
Will auto sales go up or down in the New Year? That is the question many in the industry are pondering.
CAAM has already given its projection: zero growth, while we at CBU/CAR are a bit more pessimistic: sales will continue to fall slightly, to below 28 million units, barring any “visible hand” from the government – measures to stimulate the market.
Patrick Koller, CEO of French supplier Faurecia, said at a press conference at this year’s CES in Las Vegas in early January that the Chinese auto market will continue to be in a downward trajectory in the first half of 2019 and whether sales would rebound in the second half would depend on a “big surprise.”
David (Daokui) Li, an economist and director of Tsinghua University’s Center for China in the World Economy (CCWE), boldly predicted at an industry event on January 17 that China’s GDP would grow by at least 6.3 percent, possibly closer to 6.5 percent, in 2019 and auto sales would grow by at least the same percentage. According to Li, “there will be many favorable policies” boosting industry growth.
Interestingly, the National Development and Reform Commission (NDRC) has already hinted at a new round of stimulus policies to boost automobile consumption. Ning Jizhe, NDRC’s deputy director, told Chinese media in an interview on January 7 that the Commission will “formulate and release measures to stabilize consumption of popular goods such as automobiles and home appliances.”
The Ministry of Industry & Information Technology (MIIT), China’s top industry regulator, is also optimistic about the auto sector in 2019. Xin Guobin, the Ministry’s deputy minister, said at a press conference in Beijing that no erratic fluctuations or major ups and downs would emerge in the New Year, as demand from third to fourth-tier cities will continue to grow and older car models will be replaced at a faster speed with new emissions standards set to kick-in.
The NDRC, Ministry of Commerce and the State Administration of Market Regulation reiterated in a teleconference on January 18 that policy support will be strengthened and measures will be adopted suiting local conditions to boost automobile consumption especially on green and smart vehicles.
The negative factor? Rumors have it that subsidies for new energy vehicles will fall by at least 50 percent in 2019. CAAM has nevertheless forecasted NEV sales of 1.6 million units, a rise of nearly 30 percent over last year’s 1.25 million units.
Things will get a little clearer after the Chinese New Year in mid-February.