Feb 18, 2019 (China Knowledge) - Auto sales in China continued to fall in the first month of this year after the first full-year slump in sales last year following more than two decades of growth.
Wholesale passenger vehicle sales fell by 17.7% YoY to 2.02 million units last month to make seven straight months of monthly declines for the world’s largest auto market. The decline follows a 15.8% fall in sales during the month of December and an overall 4.1% decline for the whole year.
Downward pressure in the market still remains as the Chinese government has yet to introduce and policies to stimulate growth in the market.
With the slump in China, pressure on automakers who were banking to China for profit growth has increased and many manufacturers have few places left to turn to for sales growth as demand in other major markets also start to decline.
In Europe and North America, sales have declined as the increasing availability of ride-hailing and car-sharing services make it less pertinent for individuals to own a car. Similarly, demand from Japan has also reduced with increases in other smaller market not significant enough to offset the decline in these major markets.
The first half of 2019 will likely continue to see depressed car sales figures in China as purchase tax cuts introduced in 2016 and 2017 prompted many buyers to make their purchases earlier than planned and have no need to buy now.
Car manufacturers that have made heavy investments into production facilities in China are now uncertain if the period of growth will still return and are more cautious with their annual sales targets in light of headwinds locally and abroad.
Carmakers are now turning towards the new energy vehicle market in China which is still in its growth stage and are gaining popularity. The country has also introduced rules to promote the sale and production of greener cars, with manufacturers having to face penalties for not meeting quotas for zero-and low-emission cars, or having to buy credits from other companies that have met and exceeded their quotas.
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