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Little to cheer as car market closer to negative territory
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CHINA’S car market continued its year-on-year slump for the third straight month, dragging the accumulative sales close to negative territory, the China Association of Automobile Manufacturers said yesterday.
Despite a 10.7 percent rebound from July, China’s sales figure for August — 1.66 million units — was still down 3 percent on an annual basis. A slowing momentum since May has offset the rise in the combined deliveries earlier this year, which now stands at 15 million units — same as last year.
That is a far cry from the 7 percent growth expected by the association at the beginning of the year, but it is not even close to the 3 percent target it revised in July as a downward correction.
“Unless a strong turnaround is logged in the second half of the year, 2015 is likely to be a downbeat year for automakers and dealers since the market recovered from the 2008 global recession,” said Lian Hoon Lim, managing director of consulting firm AlixPartners.
The recession could postpone purchases, but not suppress them for good.
Faith in China’s economic development could also spill over to cyclical industry like car retail, which is entering a steady and slow growth era, he added.
The SUV segment is the only silver lining that all carmakers are desperate to chase. Bucking the market downturn, it expanded 44.5 percent in the past eight months on an annual basis. Riding the SUV craze, domestic carmakers are recapturing lost market share with cost-effective offers, possibly the first signs of a reversal after last four years of downturn.
The fastest riser is JAC, which reported its highest year-on-year sales increase on record, 68.7 percent in August, as its SUV deliveries shot up more than four times.
Chang’an Automobile reversed its sales decrease in July following demand for SUVs CS35 and CS75. It nearly doubled in August on an annual basis. The SUV portfolio accounts for 40 percent of its passenger car sales. But the bright spot for domestic carmakers could one day become a weak spot, claims Gong Bing, vice president of Chang’an Automobile.
Gong expects China’s SUV boom to moderate its growth from the current 50 percent to 10 percent in 2018 as SUV sales volume approaches its saturation point.
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