China’s new vehicle sales in 2020 projected to drop 2%, CAAM

China's auto sales in 2020 are forecasted to slide 2% year on year to around 25.31 million units, Xu Haidong, an assistant to the secretary-general of the China Association of Automobile Manufacturers (CAAM), said on December 12 as a representative of the association.

For the year of 2019, the CAAM said the annual sales were likely to fall 8% over a year ago. The prolonged sales downturn not only harmed companies' incomes, but weighted on their profitability. For the first ten months, the revenue of the whole auto industry dropped 3.16%, while the mass of profit even declined 14.29%.  

According to Mr. Xu, the performance of next year's auto market will be affected by three key factors. Firstly, China's 2020 GDP will still maintain a relatively high growth rate, but somewhat slower than that of previous years. The country's GDP advanced 6.0% year on year in the third quarter of 2019, slowing from 6.2% and 6.4% expansion for the second and first quarters. The yearly GDP may be lower than the expected 6.3%. In 2020, the growth rate is likely to further shrink as the sign of a mighty rising tendency has not appeared yet.

Besides, under the downward pressure on the economy, the employment and earnings for the disadvantage people would be hurt. Starting 2018, the growth in per capita income and expenditure has apparently slowed down, making people more scrupulous over consumption due to their lack of confidence in future income.  

In 2018, the per capita disposable income of national residents was RMB 28,228, an increase of 8.7% over the previous year or a real growth of 6.5% after deducting price factors, according to the National Bureau of Statistics. However, the growth in per capita disposable income of low- and middle-income groups dropped to 4% in 2018 from 11.8% in 2014, which would inevitably affect the auto sales growth with China's indigenous brands bearing the brunt first.

In addition, the continuous Sino-U.S. trade friction would have effect on the export and investments about complete vehicles and auto parts. New vehicle sales might be decreased by 1% to 2% due to this reason, according to Chen Shihua, deputy secretary-general of the CAAM.

Other factors that would impinge on 2020's auto market include the income instability caused by entrepreneurship of returned migrant workers, the collapse of P2P (peer-to-peer) lending platforms, the cut of production capacity, the action plan of “winning the battle for a blue sky” and the rebuilding of rundown urban areas.