Sales in China, the world’s largest car mar­ket, fell for the first time in 20 years.


BEI­JING/SHANG­HAI: Car­mak­ers in China will face more fierce com­pe­ti­tion this year, after a tough 2018 when the world’s big­gest auto mar­ket con­tracted for the first time in more than two decades, the coun­try’s top auto in­dus­try as­so­ci­a­tion said on Mon­day. Com­pa­nies such as home­grown Geely and Bri­tain’s big­gest au­tomaker Jaguar Land Rover have al­ready in re­cent days flagged cau­tion about China sales in 2019, hit also by Bei­jing’s trade war with the United States. China car sales fell 13% in De­cem­ber, the sixth straight month of de­clines, bring­ing an­nual sales to 28.1 mil­lion, down 2.8% from a year ear­lier, China’s As­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers (CAAM) said. That was against a 3% an­nual growth fore­cast set at the start of 2018 and is the first time China’s auto mar­ket has con­tracted since the 1990s. “China’s car mar­ket still faces rel­a­tively large pres­sures in the short term,” se­nior CAAM of­fi­cial Shi Jian­hua said at a brief­ing, at­tribut­ing the weak 2018 sales to the phas­ing out of pur­chase tax cuts on smaller cars and the Sino-US trade war. CAAM ex­pects the weak­ness to per­sist and has fore­cast flat sales of 28.1 mil­lion ve­hi­cles for 2019, while other gov­ern­ment and in­dus­try bod­ies see a 0-2% growth. Ford was the worst per­former among global car­mak­ers in China last year, with its sales shrink­ing 37%. Geely, China’s most suc­cess­ful car­maker, sold 20% more cars in 2018, but this was sharply lower than a 63% growth in 2017. It is fore­cast­ing flat sales this year. Toy­ota, how­ever, bucked the trend, with a 14.3% rise in sales in China, ver­sus 6% 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, es­pe­cially after Ap­ple’s rare rev­enue warn­ing cit­ing weak iPhone sales in the coun­try. An­a­lysts are, how­ever, count­ing on mea­sures promised by China to buoy spend­ing as well as ris­ing de­mand for new en­ergy ve­hi­cles (NEVs) to bring some re­lief. NEV sales jumped 61.7% in 2018 to 1.3 mil­lion units, CAAM said. It sees NEV sales hit­ting 1.6 mil­lion this year. China’s state plan­ner has said it will in­tro­duce poli­cies to lift do­mes­tic spend­ing on items such as au­tos, without pro­vid­ing specifics. Bei­jing has also made changes to the in­come tax thresh­old to hike in­comes and per­sonal spend­ing power. This could help re­solve the in­dus­try’s cur­rent is­sues of un­sold in­ven­tory, drive sales growth and pro­vide re­lief to the eco­nomic pres­sures China is fac­ing, said Patrick Yuan, Hong Kong-based an­a­lyst at Jef­feries. “With that, car sales growth could re­cover to as high as 7% this year,’’ he said. Ac­cord­ing to Alan Kang, an LMC Au­to­mo­tive an­a­lyst, de­mand could also draw sup­port as con­sumers stop putting their buy­ing de­ci­sions on hold in hopes Bei­jing will rein­tro­duce pur­chase tax cuts on smaller cars. “As their hopes for tax cuts evap­o­rate in 2019, these con­sumers will trickle back in,’’ he added. How­ever, some an­a­lysts struck a som­bre note amid fore­casts China’s econ­omy would slow fur­ther this year. Data this month is ex­pected to show the econ­omy grew around 6.6% in 2018 — the weak­est since 1990. “We should no­tice the big un­cer­tain­ties among macro econ­omy and trade ten­sions, which hit the auto mar­ket in China last year and may hap­pen again this year,” said Yale Zhang, head of con­sul­tancy Au­toFore­sight.

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