Car Sales in China Have Stalled
The Great Chinese Car Crunch was almost over, two years of negative passenger car sales growth slowly turning around. But then, the outbreak. In February, showrooms sold 80% fewer cars!
The good news is that China is back on the mend, fewer cases of the sniffles being reported with every passing day. However, investors want to see Chinese local and central government jump-start supply and demand before buying back into hammered auto stocks. Tesla and Volkswagen still have a way to go before resuming January highs.
The Passenger Car Association’s (PCA) secretary-general, Cui Dongshu, believes sales reps could be sent deep into China’s rural heartland. Rebates for new car buyers are already being handed out in the southern city of Foshan, and a nationwide lift of regional purchase bans could also be a catalyst to lift sales and stock prices.
If car sales offer any insight into gross domestic product (GDP) growth, such help might come. GDP growth is usually a distinguished figure that China pushes to barter new deals, high as the country’s widening middle class and rapid urbanization make it a commercial hotspot for Western brands.
Those brands will be willing to play by President Xi’s rules, not challenging domestic names, for example, and not labelling Hong Kong and Taiwan as independent countries on packaging. However, this ‘United Front’ participation will only last for as long as growth prospects remain high.
These car sales figures up the ante for President Xi to act and defend his bargaining power. Will he?