A recent and significant slowing in China’s auto sales will not affect long-term growth potential, which remains robust for the next several years, a senior Chinese official said on Thursday as reported by Chinese media.
Why it matters: After a three decade-long boom, China’s auto sales are facing a prolonged slump. However, October sales figures show a slower rate of decline.
- Sales from Chinese major automakers posted a modest recovery in October: Zhejiang-based Geely sold 130,000 vehicles, growing 0.9% year on year after falling for six straight months.
- Chongqing-based Changan said Wednesday it sold more than 164,000 vehicles in October, narrowing the year-on-year decline to 1% from 8.6% in September.
Detail: There is still plenty of room for growth in Chinese auto sales, given the country’s relatively low level of car ownership per capita, said Luo Junjie, a deputy director of China’s Ministry of Industry and Information Technology (MIIT), on Thursday at this year’s China International Import Expo (CIIE) in Shanghai.
- Industry veterans agree. China’s auto market is far from being saturated, Xu Daquan, executive vice president of Bosch China told TechNode at an event last month. The German auto supplier expressed confidence that the market trajectory would continue upward for the next several years.
- In China, around 173 out of 1,000 people owned cars in 2018, lagging far behind other major automotive markets such as Germany with 589 and the US with 837, McKinsey & Co. said in a report.
- Beijing is drafting a new development plan for the new energy vehicle (NEV) market and the ministry last week closed a talk with foreign enterprises in China to gather opinions, Luo said.
- China will ramp up development efforts in electric vehicle, car connectivity, auto intelligence, and shared mobility in the next decade or so, he added.
Context: To introduce leading technologies and promote competition, Beijing is widening market access to overseas automakers with the removal of its foreign ownership restrictions. Limitations were first lifted for all-electric and plug-in hybrid vehicles in April 2018.
- The government will lift phase-out limits on gasoline-powered vehicles in commercial and passenger vehicle markets, Luo said, which are due to take effect in 2020 and 2022, respectively, according to state planning organ, the National Development and Reform Commission.