Rao Da, Secretary-General of the National Passenger Vehicle Market Information Association, shared insights at the “National and Shanghai Automotive Market Information Conference & Symposium†last week. He highlighted that the passenger vehicle market in August remained in a low phase, with production and sales figures remaining largely consistent. Domestic car sales saw an 11-vehicle increase from the previous month, but the growth rate continued to decline.
According to data from the association, China produced 180,948 passenger vehicles and sold 183,792 units in August. Compared to July, this marked a slight 0.27% drop, but a 1.19% year-on-year increase. However, domestic car sales—accounting for roughly 90% of total sales—only rose by 11 units compared to July, with the year-on-year growth rate falling to just 0.11%.
Rao attributed the slow growth to a stable market environment, unchanged consumer behavior, and tighter credit policies from banks. Despite these challenges, he expressed cautious optimism about September, suggesting it could mark the beginning of a recovery. With the upcoming "Golden Week" holiday, he expects a seasonal upswing in demand. According to his projections, passenger car sales in September might exceed 200,000 units, with around 180,000 being domestically produced. However, he cautioned that a strong rebound is unlikely, as September 2023 saw over 190,000 sedans sold, meaning this year’s sales may see a 4%-5% decline compared to the same period.
Looking ahead, Rao estimates that the cumulative year-on-year growth for the domestic passenger car market could reach 10%-12%. Additionally, he noted that 80% of car companies may fail to meet their annual sales targets due to the impact of macroeconomic controls on the industry.
The effects of these controls have already been felt, with domestic car sales showing a declining trend since February. Industry insiders also pointed out that, combined with last year’s inventory of 197,400 units, only 300,000 units remain in the hands of manufacturers this year.
According to officials from the Shanghai Public Policy Research Office, the current round of macro-control has affected the automotive sector through measures such as restrictions on fixed asset investment, new industrial policies, crackdowns on overloaded vehicles, and the implementation of the “Road Traffic Safety Law.†Additionally, tightened bank credit and rising fuel prices have further strained the market.
As a result, dealers’ liquidity has been significantly compressed, with some facing a 30% to 75% reduction in available funds. Meanwhile, manufacturers have intensified pressure on distributors, leading to aggressive price cuts. For example, Shanghai Volkswagen dealers reduced prices by more than 10,000 yuan, while Beijing Hyundai offered a full-line 10% discount. Jeep also cut prices by 70,000 yuan to boost sales in a tough market.
Reporter: Lu Huimin
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