China's auto sales fell 8% in 2019 and the slump is entering its third year


The country's car market shrank for the second year in a row last year, as the Chinese association of car manufacturers announced on Monday.

The national car Industry According to body, total car sales fell by 8.2% to just under 25.8 million in 2019, after falling by almost 3% in the first decrease since the 1990s in 2018. Auto sales in China in December declined 0.1%, a decrease of 18 consecutive months.

The sales crisis was exacerbated last year by weak economic growth, the trade war with the United States and the stringent new emissions standards introduced in the summer. The reluctance of consumers to buy large tickets in an unsafe environment was partly to blame, but a government campaign against fatal environmental pollution also had an effect.
Things are looking a little better next year, but sales are still expected to decrease 2%, the industry group predicted last month. Analysts and automakers are preparing for more pain.

2020 will be crucial for China’s auto market as automakers deal with lower subsidies [or] "Grants, tightened emissions regulations, and disruptions due to technology launches," analysts from brokerage firm Jefferies wrote in a report last week.

The slump hits global car manufacturers particularly hard.

ford (F) On Monday, the company announced that sales in China had dropped 26% to 567,854 units last year and warned of difficult times.

"Pressure from the external environment and the downward trend in industry volume will continue in 2020," said Anning Chen, President and CEO of Ford Greater China, in a press release.

Compete GM (GM) Last week it was reported that 3.09 million cars were sold in China last year, a 15% decrease from 2018. As with Ford, the outlook for the new year was bearish.

"We expect the market downturn to continue in 2020 and anticipate continued headwinds in our China business," said Matt Tsien, GM China's executive vice president and president, in a statement.

China has cut subsidies for electric cars. That could backfire

Sales of new vehicles, which include electric and plug-in hybrid cars, also fell last year by 4% to 1.21 million.

China wants new energy vehicles to account for at least a fifth of the country's car sales by 2025. However, demand was limited by the slowdown in the economy and Beijing's decision to cut subsidies for the vehicles in order to dismantle the country's overcrowded field of electric vehicle manufacturers.

Several prominent players in new energy vehicles felt the pressure. BYD (BYDDF)The Chinese electric vehicle manufacturer saw its net profit decline 89% in the third quarter. The company, supported by Warren Buffett, said in October that its sales did not meet expectations due to, among other things, the "substantial reduction" in subsidies.
Electric car manufacturers fought in December Nio (NIO) After the decline in 2008 in the second half of 2019, the industry suffered from a "significant slowdown". [electric vehicle] Subsidies in China. "The company, which was once China's answer to Tesla, continues to face major challenges, including a massive money crisis and an oversaturated market.
Despite the Headwind Tesla (TSLA) focuses on China's electric car market Last year, the company opened a new plant in Shanghai to expand its business, pump out more cars and better address Chinese customers.
Tesla started delivering Model 3s made in Shanghai to the Chinese public last week. CEO Elon Musk was on hand to give the keys to new owners and to celebrate the event with a spontaneous dance on stage.

– Laura He and Michelle Toh contributed to this report.