The passenger car market in China could fall by 5% in 2020 but should return to strong levels in the medium term
- In 2019, the market for passenger cars (PC) produced and sold in China decreased by -9.6% compared to 2018, for a volume of 21.4 million units. The light utility vehicle (LUV) market experienced a slight decrease of -1.1% for a volume of 4.3 million units. The Chinese PC market therefore fell even more sharply in 2019 than in 2018, when the market had fallen by 4% compared to 2017.
- The downturn in the global economy with an effect on the Chinese economy and trade tensions with the United States are the main reasons cited to explain this decline. However, we should not put aside the fact that demand (which remains very strong for new vehicles) is also controlled by the government,which aim to regulate vehicle registrations in mega-cities (Shanghai, Beijing, Shenzhen, Wuhan…) in order to control its effects (traffic congestion, environment, public health).
- At a short term, for the year 2020, Inovev forecasts that the market will register a less marked fall in the market, with an order of magnitude of -5%. Trade tensions with the United States should ease and, despite an expected slowdown, the country's economic growth should remain strong, around 5.7% (source OECD), thanks to the growth of investments and a policy to support household consumption. This scenario was built before the emergence of the Coronavirus, which duration and effects still uncertain, cannot allow us to measure its impact on the automotive industry.
- In the medium term, the passenger car market in China should return to known levels during the 2015 - 2017 period. Indeed, with a motorisation rate of around 120 vehicles per 1,000 inhabitants (six times less than in Europe), the market potential remains strong. Without however reaching European, American or Japanese rates, the motorization rate in China could be at a level of between 300 and 350 vehicles per inhabitant in 2030, taking into account the growth scenarios of the Chinese economy, which should become the world's largest economy to date (source IMF). In addition, investments in road infrastructure as well as the establishment of a financialisation of car purchases (by the use of credits instead of cash payments) go in the direction of a support to the automobile market.
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