Carmakers optimistic on market potential despite slowdown
Premium segment set to maintain momentum, while overall passenger vehicle sales slide
Despite the rising odds that China’s automotive market may see its first annual fall in more than two decades, carmakers at the ongoing Guangzhou auto show are announcing massive product and investment plans in the country, a sign of their confidence in its long-term growth potential.
Vehicle deliveries in China from January to October totaled 22.87 million, a 0.1 percent dip year-on-year, after sales dropped for four months in a row since July. Sales of passenger cars, which accounted for the absolute majority of vehicles, fell 1 percent in the same period to 19.3 million vehicles.
Analysts have predicted a whole-year sales fall for the Chinese market. Lang Xuehong, deputy secretary-general of the China Association of Automobile Dealers, warned at a recent forum that the fall could reach 5 percent compared with 2017, and the market could see a recession that will last for at least three years.
Many carmakers, although forecasting overall sales will be flat in 2019 as well, said the situation is temporary and they are therefore strengthening their presence in the country.
“We don’t think it (the market) will go again down next year, although of course nobody precisely knows. I personally don’t think the current situation will last as long as three years,” said Jochem Heizmann, president and CEO of Volkswagen AG’s China operations, on Thursday.
The German automotive group, which is the best-selling carmaker in China, delivered 3.04 million vehicles from January to September, up 5 percent year-on-year.
Heizmann said that in 2019 alone, it will invest at least 4 billion euros ($4.57 billion) in China in fields ranging from e-mobility to connectivity. By 2020 it will introduce 30 new energy vehicle models into the country, with 50 percent of them being locally produced.
In terms of gasoline models, Stephan Woellenstein, CEO of Volkswagen Brand China, said the number of its SUVs, which has doubled to six this year, will double again by 2020. He said he believes SUVs’ market share will grow and even exceed 50 percent in four to five years.
General Motors, also one of the most popular carmakers in China, is witnessing a sales slip, with deliveries in the first three quarters falling 2.5 percent to 2.68 million. The United States carmaker said it is building market resilience through an improved product mix, with a focus on SUVs, MPVs and vehicles under its luxury arm, Cadillac.
At the Guangzhou auto show, its Chinese joint venture SAIC GM is showcasing a total of 38 models, under its Buick, Chevrolet and Cadillac brands.
“We are not concerned about the long-term prospects for the industry, which will continue to be very strong,” GM China President and CEO Matt Tsien told China Daily in October.
French carmaker Renault is set to introduce numerous models into China in 2019, including two new ones as well as some face-lifts, through its joint venture Dongfeng Renault.
A total of nine models, including three new energy vehicles, will hit the market by 2022, said Hong Hao, vice-president of Dongfeng Renault, on Friday.
“China’s car market is hitting a bottleneck, but it remains the largest worldwide, and the demand remains. The market is very resilient: The longer it is contained, the higher the outbreak will be later,” said Hong.
The premium vehicle segment is likely to see continued growth despite the downturn of the overall market, according to carmakers.
German premium carmaker Porsche said on Sunday that it is “cautiously optimistic” about its performance in China, although the passenger vehicle market is facing uncertainties.
Jens Puttfarcken, president and CEO of Porsche China, said 2018 will be a new record year for the company. Its sales in the country totaled 63,254 vehicles in the first 10 months this year, up 4 percent up year-on-year.
“Consumption upgrade and supply-side reform have fundamental impacts on all industries. Under such circumstances, the auto market is undergoing adjustments, but it is good for the sustainable development of the industry in the long run,” said Puttfarcken.
Sean Green, senior vicepresident of sales and marketing at BMW’s Chinese joint venture BMW Brilliance, expects the premium vehicle segment to grow at 8 percent to 10 percent in 2019.
“We don’t expect any growth in terms of the base segment, but on the premium side, we do expect some growth, and that’s because people want to upgrade. When you get more restrictive cities in terms of license registration, people want to upgrade to premium cars, and we will benefit from that,” he told China Daily on Friday.
Polestar, a performance electrification brand under Volvo, is optimistic about the Chinese market’s growth potential as well.
“I have confidence in the Chinese market. Of course, the economy has waves. And I think that is a natural element of a mature economy. There will be elements of slow-down and acceleration again,” said CEO Thomas Ingenlath on Friday.
I have confidence in the Chinese market.”
Thomas Ingenlath, CEO of Polestar, a performance electrification brand under Volvo
Contact the writers at lifusheng@chinadaily.com.cn