Global Automakers Remain Cautious, Pessimistic As China Forecasts 2% Sales Drop For 2020

The mood in the Chinese auto market is one of pessimism

And the global auto recession, being led by the world's largest market in China, doesn't look as though it'll be turning around anytime soon. That's because China is forecasting a 2% sales decline for 2020, as we first noted just hours ago when we pointed out the country's nasty 7.5% sales decline for December. 

Sales dropped 8.2% in 2019 due to a slowing economy, but also U.S. import tariffs and new emissions standards, according to Reuters.

The CAAM's pessimistic outlook for 2020 is starting the entire global industry off on a cautious note. A decline in 2020 would mark the third year that sales have fallen, as they also declined 2.8% in 2018. This followed continual growth that had begun all the way back in the 1990s. 

Industry analysts are banking on a sales recovery in small towns and easing trade war tensions to act as tailwinds in China this year. Shi Jianhua, a senior official at CAAM, said: “We have moved away from the high-speed development stage. We have to accept the reality of low-speed development. We had high-speed growth for a consecutive 28 years, which was really not bad, so I hope everyone can calmly look at the market.”

NEV sales were down 27.4% in December, which helped fuel an overall annual decline to 1.24 million units in 2019. 

To make matters worse, Beijing slashed subsidies on EVs and NEVs this year - as we noted in the beginning of December - causing a huge dent in sales of plug-in vehicles. NEV sales also plunged 42% in November. 

CAAM’s assistant secretary general, Xu Haidong said it was "not possible" for the country to sell the 2 million NEVs it targeted for 2020 back in 2017. 

Since cutting production and shuttering factories last year, many auto manufacturers are cautious heading into 2020. Geely and Ford, for instance, have both said they expect fiercer competition to weed out weaker companies. 

Ford said its China auto sales were down more than 25% for 2019, marking a third year of declines. Along with GM, who reported a 15% drop in 2019 China sales, it remained cautious on 2020. 

Matt Tsien, president of GM China said: “We expect the market downturn to continue in 2020, and anticipate ongoing headwinds in our China business.”