Auto Industry Cautious as China Starts 2020 With Forecast of a 2% Sales Decline

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BEIJING/SHANGHAI—Automakers in China need to get used to a new normal of “low speed growth” in the world’s largest car market, the country’s top auto body said on Jan. 13, as it reiterated predictions that sales will likely shrink for the third consecutive year in 2020.

The China Association of Automobile Manufacturers (CAAM) expects a 2 percent fall in vehicle sales. That would compare with an 8.2 percent drop last year, when sales were pressured by new emission standards in a shrinking economy also contending with tit-for-tat import tariffs with the United States.

CAAM, affirming its forecast announced last month, also said auto sales declined for the 18th consecutive month in December. Annual sales started falling in 2018, by 2.8 percent, halting a growth march that had started in the 1990s.

Industry watchers, though, are hoping a sales recovery in lower-tier cities, and an easing of trade tensions between China and the United States, can help ease the decline.

“We have moved away from the high-speed development stage. We have to accept the reality of low-speed development,” Shi Jianhua, a senior official at CAAM, told a news briefing.

“We had high-speed growth for a consecutive 28 years, which was really not bad, so I hope everyone can calmly look at the market.”

Sales of new energy vehicles (NEV) sank 27.4 percent in December, resulting in an overall 4 percent decline to 1.24 million units in 2019. China’s NEV sales jumped 62 percent in 2018 but a subsidy cut hurt sales last year.

When asked if the industry could sell 2 million NEVs this year, a target originally set by China’s industry ministry in 2017, CAAM’s assistant secretary general, Xu Haidong, said this was “not possible.”

NEV sales for 2020 would likely “stay at the same level or slightly increase” versus last year, Xu said.

Cautious

Global automakers have been cautious with their predictions after cutting production, shutting factories and firing staff last year.

Executives at automakers such as Geely and Ford Motor partner Chongqing Changan Automobile have said they expect fiercer competition…

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