China’s passenger vehicle sales has been through 6 month of yoy decline (Jun – November) and will post the first yoy annual decline in 2018, after 26 years of boom
Two sources: CAAM and CPCA, passenger car sales down 16-18% yoy in November.
There are two factors to consider here:
- Long-term: the market is reaching maturity.
a. Although there may be another few years before China finds its stable level of car ownership, it has become a fairly high level of – an average Chinese household has around 0.58 cars. (China’s household number has been estimated to be ~455 mn and China has ~310 mn automobiles by the end of 2017, assuming 6/7 of which are passenger cars)
b. The second half of China’s car ownership boom is at the beginning of shared vehicles & an era of transportation-as-a-service. Therefore, China may never reach a stable level of ownership as high as major industrial countries’.
c. China’s cities are more condensed. Population is so centralized that high car ownership rate in cities may not be possible
c. an average US household has 1.968 cars - Short-term: consumer confidence & tariffs
a. The tariff was proposed to be decreased from 25% to 15% in May, but due to trade war the tariff for US produced cars were raised to 40% since July.
b. Consumer confidence is damaged while financing may also be limited
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