New consumption policies to be released by the Chinese government may help turn the tide in the country's sluggish car market, said a report of China Securities Journal on Thursday.
Stimulus measures will be released to encourage the purchase of products like cars and home appliances, according to Ning Jizhe, deputy head of the National Development and Reform Commission (NDRC), China’s economic planner, in a televised interview on Tuesday.
Annual car sales in China is now close to 30 million vehicles, and there is still more potential at the market, he said.
Ning’s remarks came as China’s car market began to show signs of reaching a plateau.
Auto sales in this country dropped by 13.9 percent from a year earlier in November 2018 and declined by 1.7 percent year-on-year in the first 11 months, according to data from the China Association of Automobile Manufacturers (CAAM).
Shi Jianhua, deputy secretary general of the CAAM, predicts a possible three percent decrease in auto sales at home in 2018.
In 2018, the number of cars sold will be down by 4.2 percent in second-tier cities, 8.2 percent in third-tiers cities, 3.8 percent in fourth-tier cities and 6.6 percent in fifth-tier cities, according to an estimate of CITIC Securities Company Limited.
Despite the slump in these cities, demand remains strong, said Wang Liusheng, an analyst with China Merchants Securities Co., Ltd.
The upcoming consumption policies would be good news to domestic manufacturers at the middle and lower end of the market, and may generate positive growth in auto sales this year, he said.
Tremendous potential exists in the long term at China’s car industry, and Chinese brands have great opportunities to explore in certain segments of the market.
Statistic show that the number of cars per 1,000 people in China stands at 160, the same level in the U.S. back in the 1930s and in Japan in the 1970s.
New energy vehicles (NEVs), which account for only three percent of passenger cars at home, may take a share of 30 percent in the future, according to a forecast by CITIC Securities Company Limited.