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Workers on an assembly line for Audi Q3 cars at the FAW-Volkswagen Tianjin plant in Tianjin, China, on December 5, 2019. Photo: Reuters

Surging popularity of Nissan, Honda fails to halt 7.5 per cent slump in China’s car sales in 2019 as slowing economy deters buyers

  • Things are looking rosier for the year ahead as more motorists hit the roads and buy their first vehicle, according to the China Passenger Car Association, which forecasts a 1 per cent rise in sales
  • Last year’s drop came despite a big surge in sales of Japanese cars, prized by Chinese motorists for their perceived superior design and efficiency

China’s once-buoyant car market posted declining sales for a second consecutive year, falling well short of analysts’ expectations as an economic slowdown deterred consumers from splashing out on big-ticket items.

Sales of passenger cars, which include sedans, sport utility vehicles, minivans and multi-purpose vehicles, slumped to 21.04 million units in 2019, down 7.5 per cent from the previous year, according to figures from the China Passenger Car Association. Market watchers had forecast sales would stay flat last year.

The slump came despite a large increase in sales of Japanese cars, seen by many Chinese drivers as superior to their domestic rivals.

It followed a 5.8 per cent fall in 2018, which was the first time since 1992 that the world’s biggest car market had contracted.

Things are looking rosier for the year ahead as more motorists hit the roads and purchase their first vehicle, according to the China Passenger Car Association.

“For 2020, the market is expected to get off to a slow start as the downward momentum continues,” said Cui Dongshu, the organisation’s secretary general. “But sales will shoot up from the middle of 2020 amid the release of pent-up demand. After all, the number of licensed drivers is increasing and new drivers will eventually buy cars.”

China’s consumption upgrade props up shrinking car market

The association expects passenger car sales in 2020 to rise by 1 per cent from last year.

In December, a total of 2.17 million units were sold, down 3.6 per cent from the same month a year ago. That drop had narrowed from a 4.2 per cent slide in November.

The mainland’s car market, the world’s largest since 2009, began losing momentum in June 2018.

In the 19 months since then, the market has reported a sales decline in 18 of them.

It was only in June last year that sales rose 4.9 per cent from a year earlier, because of huge discounts offered by dealers to clear their inventories.

China’s car sales slump 4.2 per cent in November

China’s economic output expanded 6 per cent in the third quarter, marking the slowest pace since records began in 1992, amid a bruising trade war with the United States.

Japanese car brands such as Toyota, Nissan and Honda, which enjoy a combined 20 per cent of the Chinese market, bucked the downward trend. They saw big sales gains last year as they successfully lured Chinese drivers with their perceived superior design and fuel efficiency.

According to the latest data for January to November, Japanese cars reported a 9 per cent sales increase from a year earlier.

Dongfeng Nissan reported sales of 126,573 units for the first 11 months of 2019, up 13.9 per cent from a year earlier, while Dongfeng Honda sold 81,334 units, a jump of 17.9 per cent.

Beijing slashed subsidies on new-energy vehicles (NEVs) by up to 60 per cent in June, a move that put a huge dent in sales of pure electric and plug-in hybrid cars.

In November, NEV sales slumped 42 per cent to 78,000 units.

But analysts said environment-friendly cars would return to positive territory this year as new models roll off the assembly line in the coming months.

American electric car giant Tesla cut the price of its Model 3 cars produced at its first offshore plant in Shanghai last week, a move that is likely to attract thousands of budget-conscious Chinese motorists.

The price of a Model 3 with a standard-range battery pack has been lowered by 9 per cent to below 300,000 yuan (US$43,290) when a 25,000 yuan government subsidy is included.

Dealers said a Tesla car with a price tag of lower than 300,000 yuan would be very attractive to Chinese car buyers.

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This article appeared in the South China Morning Post print edition as: China car sales drop 7.5pc in second year of decline
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