China’s auto market could decline by about 8% this year

Auto sales in China may slip to 26 million this year, a fall of around 8%, a senior industry executive cautioned, as the world’s largest auto market braces for a second year of contraction amid declining economic growth and tougher vehicle emissions standards.

The recent prediction, by Fu Bingfeng, executive vice chairman of the China Association of Automobile Manufacturers (CAAM), is less than the group’s previous forecast for a 5% fall, issued in July.

Amid gathering gloom over the international auto industry’s biggest development story of the last 20 years, automakers including General Motors, Ford and Peugeot SA have all reported double-digit percentage sales reduction. Some smaller companies have even started to close capacity and seek consolidation.

“For this year, we now anticipate to see if we can hold on to (sales of) 26 million vehicles,” Fu informed Reuters, talking on the sidelines of a Singapore forum led by China Center for International Economic Exchange late on Wednesday.

Fu stated sales declines should be observed as part of the industry’s transformation towards higher production standards, lower-emission vehicles and new energy vehicles (NEVs), including the association was still ultimately hopeful about the future prospects of the market.

Around 28 million cars were sold in China last year, dropped 3% from a year previously, the first sales drop since 1990s. Monthly sales dropped in September to mark the 15th consecutive month of reduction.

A spokesman for CAAM in Beijing verified on Thursday the industry group expects an 8% decline in sales from the previous year, without disclosing further details.

Fu said China yearly auto sales were ultimately still on track to hit 30 million by 2023 with further headroom, he stated.

“40 million units a year cannot be the rooftop of China’s car market,” Fu stated.

Still, amid the current sales slump down, Japan’s Suzuki Motor became the first big foreign automaker to shut up shop in the nation.

The sales slump has even extended to the NEV sector, because of subsidy cuts. NEV sales slipped 34% in September year-on-year after a 16% reduction in August.

“The development of new energy vehicles is still at an early stage, so talking about its growth now is not very meaningful,” Fu stated.