Sales decline accelerated in April, hard to achieve the 2019 sales target

Recently, CPCA released the latest market sales statistics. In April, the retail sales of narrow passenger cars reached 1.508 million units, a year-on-year increase of -16.9%, which was only higher than the -19.0% at the end of 2018. With regard to the uncertainties brought about by the current market environment and policies, the goal of achieving the same level of sales in the previous year in 2019 may be difficult to achieve.

From the perspective of various market segments, MPV, sedan, SUV and other market segments are still experiencing double-digit declines. Secondly, the growth of new energy market is also slowing down. In April, sales of new energy passenger vehicles were 86,000. It was up 24.6% year-on-year and down 18.9% from the previous month. It can be seen that consumer demand in the automotive market continues to be lowering.

Geely, the leader of the independent automakers: its sales declined 23.7% in April. The retail volume is less than 100,000 units. The sales of several new models are generally average, and the sales of other models have declined to varying degrees. The sales of various flagship models are almost half down. Geely's market performance has fallen sharply. Apart from the factors affected by the overall environment of the market, the long-standing quality problems have further magnified it. On the car quality website, you can see a lot of complaints about products such as Borui, Bo Yue, LYNK & CO 01, etc. Most of them focus on the core components such as gearbox and engine noise.

Another former one of leaders in independent automakers, Changan Automobile, which was ranked sixth in the top-selling list in March, fell out of the list for the first time, and sales fell significantly. According to the sales data released by the listed company, Changan Co., Ltd. produced 147,200 units, down 26.21% year-on-year; sales volume reached 121,200 units, down 35.05% year-on-year. Among them, Changan’s own independent brand sales volume was 46,080 vehicles, down 38% year-on-year. When the transition period meets the market downturn, it is not going to be easy for Changan.

In the same market context, Japanese companies performed well. The sales growth of Toyota, Honda and its joint ventures in China was very strong. Dongfeng Nissan's sales declined in April, but the 5.8% decline still outperformed the trend. Especially in today's market environment where price cuts are strong, the price cuts of Japanese models are far less than those of competitors.

Hard to achieve the sales target of 2019

After the Spring Festival, in order to stimulate the growth of consumer demand in the automotive market, the first is to release a positive signal of the car to the countryside policy. Since then, the state has introduced favorable policies such as tax reduction and fee reduction to promote consumption. However, from the market performance from January to April, the effect is not obvious.

In addition, there are some unfavorable external factors, such as: the implementation of the National Sixth Standard is a little slower. So far, there are still no clear documents for implementing the policy in some regions; the new energy subsidies have been repressed and the automakers had more pressure; The XIAN dealership service fee incident has brought the industry to the test; the integration of many events and complex factors affects the relationship between the upstream and downstream interest chains, disrupting the order of the entire automobile market, consumers are hesitating about purchase, the confidence of dealers is frustrated. The recovery is pretty hard.

According to the survey, the automobile dealer inventory warning index for April was 61.0%, up 5.7 percentage points from the previous month and up 6.47 percentage points year-on-year. The inventory warning index was above the warning line for 16 consecutive months. From the brand division, the independent brands’ inventory index was the highest, reaching 69.2%; luxury brands were affected by the “rights protection incident”, and the inventory index rose the most, reaching 59.7%.

In addition, a draft for the further expansion of the implementation plan for the 2019-2020 development of circular economy for automobiles, home appliances and electronic products to promote the development of circular economy, prepared by the National Development and Reform Commission, was circulated on the Internet. The consultation draft proposed to remove the obstacles to the consumption upgrade system of passenger cars. The National Development and Reform Commission did not directly deny the proposal, but mentioned: "All policies must be repeatedly demonstrated and fully consulted."

The plan circulating on the Internet proposes to remove the obstacles to the consumption upgrade system of passenger cars. It is strictly forbidden to introduce new restrictions on automobile purchases in various places. The places where automobile purchases restrictions have been implemented should speed up the transition from restricted purchase to guided usage; cancel the restrictions on car purchase for no-car families, and the application for the update of small passenger cars should not be limited.

In summary, the market is still not optimistic in 2019. As a rumor last year, 2018 is the most difficult year for the Chinese auto market and the best year for the next decade. At the beginning of the year, the China Automobile Association predicted that the performance of China's auto market in 2019 will be basically the same as that in 2018, but in the past one-third of 2019, the auto market from January to April fell by 11.9% year-on-year. The market decline is still going on, it’s pretty hard to achieve the sales target of 2019.