Automakers hoping that China might bail them out of sluggish sales in the U.S. are going to be disappointed as sales in the world’s largest market fell 13.8% in February.
The drop is eight consecutive month that China, only just two years ago posting double-digit increases, has seen buyers keep their money in their wallets. Sales fell 16% in January and 13% in December. Overall, 1.48 million new vehicles were sold in China last month, according to the China Association of Automobile Manufacturers.
“The trend experienced last year has continued into this year, and the economic situation has also been weak. This has dragged down consumption,” CAAM’s Deputy Secretary General Shi Jianhua told reporters at a news briefing in Beijing.
He noted that many buyers were waiting for new incentives from the government before buying a new vehicle. The government is stepping up to the plate for the patient buyer in China.
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China plans bolster its economy with billions of dollars in tax cuts and infrastructure spending. The country’s economy is growing at its slowest rate in nearly 30 years. Much of the softness is tied to it’s ongoing trade war with the U.S.
However, it is looking for ways to draw new buyers into the market, including subsidies for rural areas where many have never purchased a car or may only be looking to get into a second car after purchasing years and years ago.
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Chen Shihua, CAAM’s assistant secretary general, said dealers are going to have pitch in by finding ways to shed excess inventory. One area that hasn’t suffered is the sale of new energy vehicles, i.e. electric cars, plug-in hybrids, etc.
Sales of NEVs rose 53.6% last month, the group said. That’s unlikely to fall too much as the government is planning new incentives for those vehicles in addition to the new one’s in existence. The government has also encouraged foreign EV makers, such as Tesla, to set up shop in China by easing restrictions on outside companies.
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In China, new vehicle sales in January and February are often affected by the Lunar New Year holiday, which took place in the first week of February, because consumers often delay purchases during that time, auto executives have note, Reuters reported. General Motors and Ford no longer report sales monthly in China; however, it’s expected sales for both automakers.