The decline in China’s retail auto sales moderated slightly in October to 5.7% year on year for a total of 1.84 million units, extending a slump that has continued for the past year and a half, according to the latest figures from China Passenger Car Association (CPCA).
Why it matters: The latest figures indicate the market has yet to turn the corner despite a historically peak season for China’s auto industry known as “Golden September, Silver October.”
- Cui Dongshu, secretary general of CPCA on Friday said the market is showing few signs of recovery from a slowdown likely to last until the end of the first quarter of 2020, as Chinese consumers increase spending on basic goods, driven by a surge in pork prices.
Details: The pace of decline in China’s auto retail sales moderated slightly in October with a 5.7% year on year decline compared with 6.5% in September and 9.9% in August, according to an CPCA report released Friday.
- Although sales of new energy vehicles rose 1% sequentially to 66,000 units, on an annual basis the decline was much sharper, falling 45.4% compared with 33.4% year on year in September and 15.5% in August, as the impact of government subsidy reductions take hold.
- Conventional hybrids were a bright spot, with sales up 38% year on year to upwards of 28,000 units last month, increasing for the second month in a row.
- CPCA projected new energy vehicle sales in 2020 will reach 1.6 million units, a modest 1% year on year increase. To achieve that figure will require hard work both from policymakers and the industry, the association said.
- Competition within the EV industry is also expected to increase next year, as global automakers are ramping up their presence in China. Tesla, with its wholly owned Shanghai Gigafactory, will play a particularly key role in China’s EV industry development.
- Thanks to tariff waivers and likely cost savings from manufacturing efficiencies, CPCA expects that there will be wide margin to decrease the Model 3’s sticker price, currently RMB 355,800 (around $50,840). A lower price will boost sales and even foster competition within the industry. “A basic model of Model 3 in the US is about RMB 240,000,” Cui said, who said that the Model 3 price range will be no more than RMB 300,000 in the near future.