Snapshot of China Automotive Industry Outlook July 2019
The Snapshot of China Automotive Industry Outlook July 2019 is a report by CGN Management Consulting (Shanghai), that provides valuable insight into trends in the Chinese automotive industry. The report identifies relevant factors affecting the industry, important growth areas, and the impacts of these elements going forward.
CGN has identified the following trends:
- June 2019 sales are up by about 5%, but half yearly YOY volume is still down nearly 10%.
- A main reason for the spike in sales is the heavy price discounting by the dealers to clear vehicle stocks for the July 1st implementation of the China VI National Emission Standard.
CGN also provided interesting insight into the electric vehicle market. Electric vehicles June sales volume clocked 134k units, 38% more than May and a 86% year-on-year increase. However the various local and national government subsidy and incentive plans for EV purchase ended in June. This paired with lingering product quality issues means that EV sales are projected to face an uphill challenge going forward.
Some relevant factors affecting the Chinese automotive industry as identified by CGN include:
- Chinese economy growth is slowing to 6.2%.
- Regulated vehicle ownership in cities.
- Stringent housing ownership & sales has reduced dispensable income.
- Improved public transport and infrastructure.
Based on aforementioned trends and factors, here are some notable growth areas:
- 3rd and 4th tier cities are experiencing faster growth.
- Despite the decline in sales, most Japanese vehicle brands are enjoying healthy growth - This can be mainly attributed to the fact that Japanese made vehicles are economical, reliable, and have new or model upgrades.
- Luxury cars also holding up, indicating that higher income consumers are not aversely affected by the economic slow down.
Going forward, here are some important takeaways:
- The 2019 vehicle sales is not likely to reach last year figure of 28 millionunits. This will be the second consecutive YOY decline after 2018.
- The China automotive market is gradually shifting towards a service oriented model with players focusing extensively on customer experience and consumer data.
- Given the ratio of vehicle to per thousand population in China is comparably lower than other countries including the US, Japan & South Korea, there is still significant growth room for China.
- Going forward, there will be many transformations and evolutions of the industry. Business disruption will be the new normal. Manufacturers need to adapt to this changes and market forces.
To read to full report by CGN, please click the download link below!
