For decades, there was just one way for China’s car market: up. Once the trend abruptly reversed 10 months ago, the free fall in the world’s largest market has shown no signs of easing.
Retail sales of sedans, sport utility vehicles, minivans and multipurpose vehicles continued their plunge in March, dropping 12 percent to 1.78 million units, the China Passenger Car Association said Tuesday.
That follows an 18.5 percent drop in February and 4 percent decline in January.
A slowing economy and trade tensions with the U.S. are weighing on consumer sentiment among China’s 1.4 billion people, and changes in tax policies and import tariffs started to dampen car demand last year. Cars was the only consumer-product category in China that shrank in the first two months of 2019, said Cui Dongshu, secretary general of the auto group.
“There are only 200 million private vehicles in China, leaving huge room for growth,” he said ahead of the report. “Policies should be put in place to spur vehicle consumption in 2019.”
Car sales may recover in April, helped by the country’s planned tax reductions, he said at a briefing in Beijing on Tuesday. He stopped short of predicting a year-on-year gain. PCA raised its forecast for 2019 sales of new-energy vehicles — battery, plug-in hybrid, and fuel-cell cars — to 1.7 million from 1.6 million.
The persisting slump threatens to leave global carmakers from Ford and Toyota to local players such as SAIC Motor Corp. with few places to go for sales growth.
The markets in Europe and North America are slowing as the increasing availability of ride-hailing and car-sharing services makes it less necessary to own a car. Japan is sputtering too, while volumes in other smaller markets aren’t enough to offset the declines in the biggest sales regions.
Chen Hong, chairman of SAIC Motor, China’s biggest automaker, said in an internal meeting this month that 2019 will bring severe challenges.
The company needs to accelerate innovation and strive toward higher quality, he said, according to a statement posted on its workers union’s official WeChat account.
The company’s total sales fell 17 percent in the first two months of the year.
Ford, whose China venture recorded a 54 percent sales plunge last year, said last week it is introducing more than 30 vehicles with designs and features targeted at Chinese consumers over the next three years to help sharpen its focus on the market.