China Vehicle Sales to Fall for Third Year in 2020, Industry Group Says
(Bloomberg) -- China’s vehicle sales will decline for a third straight year in 2020, an industry body predicted, bringing more pain to global carmakers awaiting an end to the historic slump in the world’s biggest market.
Sales will fall 2% to 25.3 million units in 2020, the China Association of Automobile Manufacturers predicted Thursday. That follows a drop of about 3% last year -- the first decline in decades -- and about 8% this year.
“There are still no signs of recovery,” Luo Lei, a deputy secretary general of CAAM, said at the group’s event in Changsha, China.
China’s heft means any recovery in the global car market is also in doubt, given Europe and the U.S. are sputtering too. The industry is suffering worldwide as trade tensions and tariffs raise costs, just as competition from ride-hailing services reduces the need for individual car ownership.
After years of growth, global vehicle sales fell last year and are set to decline again in 2019, according to researcher LMC Automotive. The market will grow less than 1% to 92.1 million vehicles next year, the research firm currently predicts.
While the pace of the decline in China is slowing, the market is still far from recovery as a cooling economy keeps buyers away from showrooms. Market leader Volkswagen AG and rivals such as Honda Motor Co., Daimler AG and BMW AG have continued to invest in the country of 1.4 billion people throughout the slowdown in the hopes that demand will pick up.
Global carmakers have relied on China for growth for decades as more mature markets slowed down. China’s annual vehicle sales soared to more than 28 million from 1.58 million in 1998.
Last year’s sales decline in China was the first since 1990. This year’s intensifying slump came as a surprise to CAAM -- a year ago, the industry group had predicted that the market would be little changed in 2019.
German and Japanese car brands have weathered the slowdown better than local and American ones, gaining a combined 5.5 percentage points of market share in China in the first 11 months of the year.
Yet the German brands too have had to adapt to a diminishing market. Daimler, Germany’s second-largest automaker after VW, outlined plans in November to cut more than 10,000 jobs worldwide to trim labor costs. VW’s Audi division, the group’s largest profit contributor, said earlier the same month it planned to cull as many as 9,500 jobs.
©2019 Bloomberg L.P.