New Car Sales In China Fell 5.8% In 2018

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Sales of new cars in China fell 5.8% in 2018, the first time in 20 years that nation has not seen growth in auto sales from one year to the next. The Chinese Passenger Car Association says 22.35 million new cars were sold in China last year. That constitutes the first decrease in annual sales in China since 1992, reports The Guardian.

China car sales

The causes are many and varied. New car sales have been growing at a rate of 7% to 10% a year for a decade or more. Many Chinese cities are densely populated and suffer from formidable congestion. In some cities, new car buyers must wait a year or more before they can register it if it is a car with a gasoline or diesel engine. Electric cars are granted registrations immediately, but the supply of electric cars — while growing rapidly — falls far short of total demand. Market saturation could be one factor.

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Perhaps the biggest factor is the ongoing trade dispute between China and the United States, which has imposed tariffs of up to 25% on $50 billion worth of Chinese made goods. Uncertainty about the economic future has had a negative effect on economic activity in China, constraining consumers’ desire to spend money for new cars and other products.

The Chinese economy began slowing down early in 2018 after years of steady growth, but the real pain didn’t kick in until later in the year when US tariffs really began to bite. The International Monetary Fund downgraded its forecast for global GDP growth for 2018 and 2019 as a result of the trade war between the two countries. It now estimates that the Chinese economy will grow at a 6.2% rate in 2019, down from 6.6% last year.

Most countries would be thrilled with a growth rate of more than 6%, but when the rate has been closer to 10% for many years, any decrease gives the national economy a bad case of the jitters. The slowdown is having an effect throughout the auto manufacturing world, with Jaguar Land Rover idling one of its production facilities in the UK due to falling Chinese sales. China is the world’s largest new car market. When it sneezes, the rest of the manufacturing world gets a cold.

Trade negotiators for the two countries are expressing some modest optimism this week as the tariff war drags on, but Joshua Mahony, a senior market analyst at the financial trading platform IG, tells The Guardian, “There is still substantial time left in these negotiations. However, for those hoping to see something tangible this week there could be some disappointment that things are not moving at a faster pace.”


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Steve Hanley

Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. He is proud to be "woke" and doesn't really give a damn why the glass broke. He believes passionately in what Socrates said 3000 years ago: "The secret to change is to focus all of your energy not on fighting the old but on building the new." You can follow him on Substack and LinkedIn but not on Fakebook or any social media platforms controlled by narcissistic yahoos.

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