Car sales in China continued to decline in November, extending a historic slump and all but ensuring a second straight annual drop for the world’s biggest auto market.
Sales of sedans, sport utility vehicles, minivans and multipurpose vehicles fell 4.2% from a year earlier to 1.97 million units, the China Passenger Car Association (PCA) said, citing preliminary figures. The decline was the 17th in the past 18 months, with the only increase coming this June as dealers offered large discounts to clear inventory.
The Chinese market shrank last year for the first time in decades, leaving automakers with few growth regions as sales also wane in Europe and the US. The industry is suffering as trade tensions and tariffs raise costs, just as competition from ride-hailing and car-sharing services reduces the need for individual car ownership.
In China, a slowing economy has kept consumers away from showrooms, particularly in areas outside big cities where cheaper local brands are popular. That has prompted industry insiders to predict consolidation as weaker players get squeezed out by intensifying competition. Suzuki Motor Corp pulled out of China in 2018 and Peugeot maker PSA Group said last month it plans to sell its 50% stake in a joint venture making DS brand cars in China.
The biggest global automakers such as Japan’s Toyota Motor Corp and Germany’s BMW AG have weathered the Chinese downturn better, helped by demand for hybrid cars and premium vehicles. They are continuing to invest in China after pouring billions of dollars into setting up factories and sales networks in the country in recent decades.
Volkswagen AG and its Chinese partners will spend more than $4.4 billion next year to rev up electric-car production and add more SUVs, while Tesla Inc. is close to starting mass production at its new Shanghai plant, its first outside the US.
Wholesales of new energy vehicles cars, including electric vehicles, fell 42% last month to 79,000 units, PCA said. The Chinese government has poured billions of yuan into the NEV sector and reiterated last week that electric cars remain a priority as it wants to combat pollution and reduce reliance on imported oil. Still, sales of cars running on electric motors have been falling since July as regulators reduced subsidies.
BAIC BluePark New Energy Technology Co, China’s biggest maker of pure electric cars, forecast a 2019 loss in its earnings update. Warren Buffett-backed BYD Co in October reported an 89% decline in third-quarter earnings and warned profit could fall as much as 43% this year. Unprofitable NIO Inc, which is traded in New York, has struggled to assuage concerns that it’s running short on cash.
China hopes for good trade result with US
China hopes trade talks with the US can produce satisfactory results as soon as possible, according to a Ministry of Commerce official.
“We hope that the two sides will advance the negotiations and consultations in accordance with the principles of equality and mutual respect, take into account each other’s core concerns and achieve satisfactory results as soon as possible,“ Assistant Minister of Commerce Ren Hongbin told reporters in Beijing. Ren is not involved in the talks with the US and was speaking at a press conference about developing high-quality trade.
China and the US are engaged in talks for a preliminary deal in the trade dispute.