New declines in the Chinese market in October and November 2018
- The Chinese automotive market (PC + LCV) continued to decline in October and November 2018, after declines in July, August and September 2018. The potential of the Chinese market to increase becomes questionable in the coming years because the decreases recorded in recent months are becoming increasingly important (-11.6% in September, -12.0% in October, -12.5% in November) and the Chinese market may evened the year with negative growth year on year (-2.0% on the cumulative 11 months 2018 and even -3.0% for passenger cars), which has not happened for two decades. In addition, the month of November was the sixth month of decline in vehicle sales in China for the whole year, and December ‘s prospects look poor.
- The high rate of equipment in major Chinese cities and the new market orientation towards cleaner vehicles, with a growing presence of electric powered models (+ 57.8% of sales in November 2018 compared to November 2017, to 129,000 units) could explain this reversal of the Chinese market.
- We must also look at the economic activity of the country which has been slowed by the trade dispute between China and the United States (the lowest growth rate recorded since 2009), and the automotive market has necessarily suffered from the consequences. If the Chinese government decides to alleviate this situation, they could use tax levers to revive the market, by reducing the tax rate on the purchase of new vehicles from 10% to 5%, but it would probably be difficult to repeat this operation in the future.
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