China reported the worst-ever monthly sales drop in the world’s largest vehicle market on Wednesday، exacerbating concerns over the country’s economic slowdown and growing impact of an ongoing trade war with the United States، Reuters reported. Sales tumbled 16.4% in May from the same month a year prior، the China Association of Automobile Manufacturers (CAAM) said. That marked the 11th consecutive month of decline and followed falls of 14.6% in April and 5.2% in March.
Xu Haidong، CAAM’s assistant secretary general، said one key reason for the drop was provinces implementing “China VI” vehicle emission standards earlier than the central government’s 2020 deadline، stoking uncertainty among manufacturers.
(GRAPHIC: China car sales fall further - tmsnrt.rs2WGKWh5)
“We gave the manufacturers too little time to prepare،” he said، adding that the industry’s supply chain was finding it difficult to keep up with market changes.
Automotive sales in China contracted for the first time last year since the 1990s as a slowing economy and tit-for-tat import tariffs between Beijing and Washington affected consumer sentiment.
Industry executives have said they believe the market will return to growth in the second half of this year due to government support. On Wednesday، Xu said May demand also suffered from a decline in purchasing power in the low-to-middle income groups as well as expectations of government stimulus to encourage purchases.
Earlier in June، the government announced measures to revive sales، including stopping local authorities from imposing new restrictions on purchases and eliminating restrictions on NEVs.
Contrary to market expectations، the measures did not include the relaxation of controls over the issuance of licenses for petrol-powered cars in major cities.
Xu also noted that the measures did not include subsidies، but said it was unrealistic to continue expecting such support.
“This is a perfectly competitive industry and doesn’t need the government to intervene day in and out،” said Shi Jianhua، a senior CAAM official.