China Car Slump Extends to a Year With Few Signs of Reprieve
China Car Slump Extends to a Year as Local Brands Suffer
(Bloomberg) -- China’s car sales declined for the 12th consecutive month, a historic slump that’s left manufacturers reeling as trade tensions and economic worries weigh on consumer sentiment.
The unprecedented slide has hit local brands particularly hard, though market leader Volkswagen AG has also seen its sales wane this year. While China this month unveiled a stimulus plan to help spur car demand, the policies don’t include any new spending from the central government and were met with doubts that they are enough to revive sales.
“It is a pretty difficult time for the auto industry,” Cui Dongshu, secretary general of PCA, told reporters in Beijing.
Sales by Chinese brands fell 26.5% last month, while deliveries of premium cars rose 9.4%, he said. The first week of June showed a “slight” increase in total sales from a year earlier after dealerships slashed prices to lure buyers, he said.
Demand Hurdles
Shoppers have stayed away from showrooms as economic woes and sputtering stock prices weighed on their purchasing power. Meanwhile, the rising popularity and availability of car-sharing and ride-hailing services is reducing the need for individuals to buy vehicles.
The market that global carmakers have relied on for growth since the 1990s now risks an extended decline, raising questions about the companies’ expansion plans in China. Global manufacturers have invested billions of dollars in the hope that the world’s biggest market will keep growing even as vehicle demand in Europe and North America wanes.
Sales of Volkswagen-branded cars have fallen 8% in China this year through April, according to LMC Automotive. General Motors Co.’s Buick and Chevrolet have also declined, while Mercedes-Benz, BMW, Honda and Toyota have advanced, according to the researcher.
Local brands Baojun, Dongfeng and Trumpchi are among those hardest hit, with their sales declining 40% or more over that span, according to LMC.
Shares of German carmakers fell from intraday highs. Volkswagen was up 1.8% at 11:11 a.m. in Frankfurt after rising as much as 2.3%, while BMW was up 1.9%.
To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net
To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Ville Heiskanen, Angus Whitley
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With assistance from Bloomberg