China automobile gross sales hit reverse for first time since 1990s, Auto Information, Automobilnews
By Yilei Solar and Brenda GohBEIJING/SHANGHAI – Automotive makers in China will face extra fierce competitors this yr, after a tricky 2018 when the world’s largest auto market contracted for the primary time in additional than 20 years, the nation’s prime auto business affiliation mentioned on Monday.
Corporations resembling homegrown Geely and Britain’s largest automaker Jaguar Land Rover have already in current days flagged warning about China gross sales in 2019, hit additionally by Beijing’s commerce warfare with america.
China automobile gross sales fell 13 p.c in December, the sixth straight month of declines, bringing annual gross sales to 28.1 million, down 2.eight p.c from a yr earlier, China’s Affiliation of Car Producers (CAAM) mentioned.
This was in opposition to a 3-percent annual progress forecast set firstly of 2018 and is the primary time China’s auto market has contracted for the reason that 1990s.China’s automobile market “nonetheless faces comparatively giant pressures within the short-term”, senior CAAM official Shi Jianhua mentioned at a briefing, attributing the weak 2018 gross sales to the phasing out of buy tax cuts on smaller automobiles and the Sino-U.S. commerce warfare.
CAAM expects the weak spot to persist and has forecast flat gross sales of 28.1 million autos for 2019, whereas different authorities and business our bodies see a 0-2 p.c progress.
WINNERS & LOSERS
Ford was the worst performer amongst world automobile makers in China final yr, with its gross sales shrinking 37 p.c.
Geely, China’s most profitable carmaker, offered 20 p.c extra automobiles in 2018, however this was sharply decrease than a 63 p.c progress in 2017. It’s forecasting flat gross sales this yr.
Japan’s Toyota Motor, nevertheless, bucked the development, with a 14.Three p.c rise in gross sales in China, versus 6 p.c progress in 2017, helped by higher demand for its luxurious model Lexus and improved advertising and marketing efforts.
The grim numbers add to worries for traders, already spooked by indicators of a broader drop in demand from the world’s No.2 financial system, particularly after Apple’s uncommon income warning citing weak iPhone gross sales within the nation.
Analysts are, nevertheless, relying on measures promised by China to buoy spending in addition to rising demand for brand new power autos (NEVs) to deliver some aid.
NEV gross sales jumped 61.7 p.c in 2018 to 1.Three million models, CAAM mentioned. It sees NEV gross sales hitting 1.6 million this yr.
China’s state planner has mentioned it should introduce insurance policies to carry home spending on gadgets resembling autos, with out offering specifics. Beijing has additionally made adjustments to the revenue tax threshold to hike incomes and private spending energy.
This might assist resolve the business’s present problems with unsold stock, drive gross sales progress and supply aid to the financial pressures China is dealing with, mentioned Patrick Yuan, Hong Kong-based analyst at Jefferies.
“With that, automobile gross sales progress might get better to as excessive as 7 p.c” this yr, he mentioned.
In response to Alan Kang, an LMC Automotive analyst, demand might additionally draw assist as customers cease placing their shopping for selections on maintain in hopes Beijing will reintroduce buy tax cuts on smaller automobiles.
As their hopes for tax cuts “evaporate in 2019”, these customers will trickle again in, he added.
Nevertheless, some analysts struck a sombre observe amid forecasts China’s financial system would gradual additional this yr. Information this month is anticipated to indicate the financial system grew round 6.6 p.c in 2018 – the weakest since 1990. Coverage sources have mentioned Beijing is planning to set a goal of 6-6.5 p.c for 2019.
“We should always discover the massive uncertainties amongst macro financial system and commerce tensions, which hit the auto market in China final yr and will occur once more this yr,” mentioned Yale Zhang, head of consultancy AutoForesight.