Passenger vehicle sales edge up in 2017

Passenger vehicles sales are expected to regain some of the lost momentum this year in China, after witnessing a decade-low growth rate during 2017.

Total number of passenger vehicles sold in the country rose to 24.2 million units in 2017 with an annual growth rate of 1.5 percent, while the total production volume grew 2.8 percent year-on-year to 24.8 million units.

“Many carmakers had no impulse to push for bigger sales in the last quarter, since they had already lowered their expectations in the second half after retail sales fell in the first quarter of 2017,” said Cui Dongshu, secretary-general of the China Passenger Car Association.

“The Chinese passenger car industry experienced its worst month last December,” he said.

Deliveries of new passenger vehicles, including sedans, sport utility vehicles, multi-purpose vehicles, and mini-vans, totaled 2.8 million units in December, up 0.6 percent from the same period in 2016, according to association data.

Cui and four industrial experts interviewed by China Daily shared the common view that the slowdown in 2017 was, to some extent, due to the rollback of the tax incentives, which had propelled a sales surge in 2016.

The purchase tax was halved to 5 percent of the car prices on vehicles powered by an engine of 1.6-liter or smaller, from Oct 1, 2015, to boost automobile market expansion. From Jan 1, 2017, the purchase was raised to 7.5 percent and the incentives stopped completely at the end of 2017.

Xu Gang, Shanghai-based partner of consultancy firm BCG and a managing director of BCG’s Automotive Practice, said the new passenger car market in the country is heading toward saturation.

“Customers are getting more and more rational. Brand recognition is the key as new purchases are largely due to customers opting for better cars,” he said.

The continued future growth also depends on existing customers making their next purchase, according to a Boston Consulting Group report.

According to Xu, the automotive market is expected to see an annual growth rate of around 3 to 4 percent this year, or at least 2 percent in a less optimistic scenario. The association for its part has predicted an annual growth rate of 4 percent.