October 14, 2019 / 7:03 AM / 2 months ago

China auto sales fall in 'Golden September' as turnaround hopes fade

BEIJING/SHANGHAI (Reuters) - Auto sales in China fell for a 15th consecutive month in September, data from its biggest auto industry association showed, dampening hopes for a second-half turnaround in the world’s largest auto market.

FILE PHOTO: Imported vehicles are seen at a car dealership in Tianjin bonded zone, China January 2, 2019. REUTERS/Yilei Sun/File Photo

Total auto sales fell 5.2% from the same month a year earlier to 2.27 million vehicles, the China Association of Automobile Manufacturers (CAAM) said on Monday.

This followed declines of 6.9% in August and 4.3% in July. Car sales in 2018 declined from a year earlier, the first annual contraction since the 1990s against a backdrop of slowing economic growth and a crippling trade war with the United States.

September and October, known as “Golden September, Silver October” by China’s auto insiders, are regarded as the high season for sales, with customers traditionally returning to make purchases after the summer.

The association had previously said it expected sales in the second half to improve, but that overall annual sales would fall 5% year-on-year to 26.68 million vehicles in 2019.

“Sales have risen in the second half but they have not hit expectations and the pace has been slow,” said Chen Shihua, CAAM assistant secretary-general.

“Competition has become fiercer,” said senior CAAM official Xu Haidong, adding that independent Chinese brands, rather than joint venture ones, were bearing the brunt of the sales slide.

“It’s become the survival of the fittest.”

As recently as three years ago, automakers had enjoyed double-digit annual growth in China.

Fifteen cities and provinces, which account for more than 60% of car sales in China, implemented new vehicle emission standards earlier than the central government’s 2020 deadline, damaging sales of traditional-fuel vehicles in particular, according to CAAM, analysts, dealers and consumers.

Sales of new energy vehicles (NEV), which China has been a keen supporter of, have also been impacted by subsidy cuts, falling 34.2% in September following a 15.8% decline in August, CAAM said. NEV sales had jumped almost 62% last year as the broader auto market contracted.

NEVs include plug-in hybrids, battery-only electric vehicles and those powered by hydrogen fuel cells. CAAM has said it expects sales of new energy vehicles to increase this year, but at a slower pace to 1.5 million, down from a previous forecast of 1.6 million.

The impact of the subsidy cuts on the NEV sector was set to linger, Chen said. “I feel that there will be difficulties in reaching the target in the following three months,” he said.

Reporting by Beijing newsroom, Yilei Sun and Brenda Goh; Editing by Stephen Coates and Karishma Singh

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