Annual auto sales fall for first time since 1990s
China’s auto sales fell last year for the first time in more than two decades, dropping 2.8 percent to 28.1 million — hit by macroeconomic factors, the Sino-US trade war and weak consumer confidence — the country’s top industry association said yesterday.
The fall was in sharp contrast of a 3 percent increase made at the start of last year.
“China’s auto industry was under great pressure in 2018," the China Association of Automobile Manufacturers said in a statement.
The association also forecast 2019 sales flat at 28 million. Annual sales rose 3 percent to 28.88 million in 2017 and in 2016 surged 13.7 percent to 28.03 million.
Despite a weak performance in the overall auto market sales of new-energy vehicles are booming, boosted by government policies to make China a world leader in NEVs.
NEV sales last surged 61.7 percent year on year to 1.26 million vehicles as production jumped 59.9 percent year on year to 1.27 million .
Electric vehicles accounted for around 78 percent of NEV sales, rising 50.8 percent year on year to 984,000 units.
Sales of plug-in hybrids powered up 118 percent to 271,000 .
Sales of fuel-cell vehicles totaled 1,527 units last year.
China's auto industry powered ahead from 2001 to 2010, growing an average annual 24 percent, according to a report by the auto association.
From 2011 to 2018, the average annual growth rate was 5.7 percent.
Analysts say the market will see minimal growth this year on weak market sentiment and the industry is expected to enter a period of slow growth based on the experience of 2018.
The overall downturn in the auto market will definitely bring a reduction in the budget of auto companies.
Car dealers also had a hard time last year and the situation is likely to continue in the coming months.
Paul Gong, China auto analyst at UBS Investment Research, said during an interview with Shanghai Daily that Chinese automakers are forecasting conservative sales targets for 2019 in a challenging market.
Gong added that some factories are likely to close this winter and some car dealerships in second-tier and third-tier cities may close after the Spring Festival.
Zhang Xiaofeng, an independent market analyst, said:
"In the second half of 2018, many car dealers had a hard time and their business is not as good as before.
"Some car brands and dealers plan to reduce their expenses in 2019, as their income from selling cars is expected to decrease."
In order to boost car sales this year, Ning Jizhe, vice chairman of National Development and Reform Commission, said that the government plans to draft relevant policies to stimulate car purchases in rural areas.
In December, auto sales fell for the sixth month in a row, down 13 percent from a year earlier to 2.66 million units, while production dropped 18.4 percent to 2.48 million units, data from the association showed.
Sales of passenger cars accounted for about 84.4 percent of total vehicle sales.
China sold 23.71 million passenger cars in 2018, down 4.1 percent from 2017.
Commercial vehicles took up the remaining 15.6 percent of total vehicle sales, with 4.37 million units sold last year.
In 2018, sales of sports-utility vehicles fell 2.5 percent from a year earlier to 9.99 million units.
Sedan sales declined 2.7 percent to 11.52 million units. Multi-purpose vehicle sales dropped 16.2 percent to 1.73 million vehicles.
Geely, China’s most successful carmaker, sold 20 percent more cars in 2018, but this was sharply lower than a 63 percent growth in 2017. It is forecasting flat sales this year.
Japan’s Toyota Motor, however, bucked the trend, with a 14.3 percent rise in sales in China, versus 6 percent growth in 2017, helped by better demand for its luxury brand Lexus and improved marketing efforts.
The bleak numbers add to worries for investors, already spooked by signs of a broader drop in demand from the world’s No. 2 economy.
