LONDON—A new report from IHS Markit has outlined how the global data research company is expecting light vehicle sales in China to decline by 6 percent this year compared to last year.
That sales decline is reflected in annual figures. Over the period from July 2018–June 2019, total national vehicle sales reached 25 million units, a decline of marginally more than 10 percent year-on-year. The drop in sales in 2018 marked the first overall annual decline in China national sales this century.
Although electric vehicle sales in China remain "a bright spot," IHS said the numbers are not sufficient to off-set the general sales decline.
Factors contributing to the sales slowdown include a clamp down on loan availability, dealer destocking, and the transition to Euro 6 compliant vehicles. Changes in the tax code covering vehicles with smaller engines are thought to have impacted customer purchase decisions, which also may be part of the resulting market slowdown.
Even the proliferation of ride-hailing services is highlighted as having an effect on vehicle buying, to the tune of an estimated 300,000 lost vehicle sales.
Car makers had been using the China market to shore up declining sales in other global regions. Should the decline in China LV sales be more protracted, it will require a reassessment of related strategies, including the amount of direct investment in local China vehicle production.
"Recent sales trends point to a decoupling of car sales and economic growth in China. This is a fundamental shift, since the two have been strongly correlated up to this point," said Nigel Griffiths, chief automotive strategist at IHS Markit.