China's auto market outlook bleak as sales continue to fall

Industry association points finger at latest emissions regulations, economic slowdown

The world's biggest auto market is likely to fall 2 percent in terms of sales next year, which will mark a third straight year of decline, according to the leading industry association in China.

The sales are estimated to fall to 25.31 million vehicles next year as a result of the slowing economy and trade tensions between China and the United States, the China Association of Automobile Manufacturers said last week.

The impact of changing State V emissions standards to State VI, which comes a year earlier than the national plan, is beyond imagination, said Xu Haidong, an assistant to the CAAM's secretary-general.

Car manufacturer and dealer positivity are being severely affected by the adoption of the stricter standards in some 18 main provinces and municipalities, he added.

He said that in the next three years, growth in China's vehicle demand will slow down.

The consumption capacity of cities below the third-tier will show a downward trend, which will particularly affect the low-end SUV market.

China's auto sales will continue to show negative growth or remain flat in the next two years, but is expected to see growth from 2022 onwards and perhaps a 4 percent increase from 2023-25, Xu added.

The association expects sales this year to fall 8 percent compared with 2018, which itself saw a 2.8 percent dip, marking the first fall in the country's vehicle market since the 1990s.

Latest statistics from the CAAM show that China's auto sales fell for the 17th consecutive month in November and sank 3.6 percent from a year ago to 2.46 million vehicles, putting the market on track to shrink for a second year.

Total sales were 23.11 million vehicles in the first 11 months, falling 9.1 percent year-on-year.