China’s once rapidly growing new car market has slowed sharply in the past few months and sales are now falling as the sluggishness in the world’s second-biggest economy undermines demand in the sector hard.
Figures out on Friday show automobile sales fell 11.6% in September from a year earlier, China’s car industry association said – it was the third straight month of falling in the world’s largest auto market.
The sales drop to 2.39 million vehicles, follows a 3.8% fall in August, a 4.0% drop in July and have more than offset the 4% rise in June.
The China Association of Automobile Manufacturers (CAAM) said that overall sales for the first nine months of the year totaled 20.49 million vehicles, still up 1.5% from the first three quarters of 2017.
That is half the 3% sector growth the Association had forecast for 2018 and if the decline continues in the final quarter, it is likely total sales will dip below the 29 million in 2017 (against 17 million in the US and around 1.1 million in Australia). If the fall happens it will be the first year on year decline since 1990).
The slowdown is bad news for international car makers who are looking to China to booth overall growth (and profits) – especially US companies like GM and Ford which are trapped on both sides of the trade war.
GM said earlier this month that its September sales were down a sharp 14.9% from a year earlier. German carmaker Volkswagen AG said earlier this week that China sales fell 10.5% last month.
In the face of weakening demand, the trade war with Trump and rising pressure to open its markets to foreign investors, BMW last week revealed it was going to use a regulation change and take control of its local joint venture.
The Chinese government has eased the rule that prevented foreign car markets from controlling their Chinese joint ventures.
BMW said it would take control of its main China venture in a $US4.2 billion deal.
Foreign car companies in trouble in China include Peugeot, Hyundai Motor and its Kia Motors brand, Ford and Honda. Their fortunes are not being helped by an estimate that one-third of the near 43 million units a year capacity is idle.
Analysts say rule change and weakening market could see more consolidation among foreign car groups and local partners. Giants like Toyota are pushing ahead and it plans to boost its car making by 20%, or 240,000units a share from the current 1.16 million units a year.
