China was supposed to be the saving grace of the global auto market, constantly touted as an area of opportunity by all of the world's major manufacturers. Instead, China's October auto sales numbers are carrying the torch forward for what is becoming a significant global slowdown for the industry. Automobile sales were down 12% in October, to 2.38 million, according to the Wall Street Journal. After posting this awful comp for October, 2018 turned negative for Chinese automobile sales overall.

Passenger car sales fell 13% in the month to 2.05 million, down 8% for the third quarter. Passenger car sales were off 1% for the first 10 months of the year, which marks the first time that they have seen a yearly decline in almost 3 decades. Sales of commercial vehicles were down 3% last month to 333,000, but they are still up 5.5% for the year.

Also of note were electric vehicles: they were the sole area of growth last month, posting a gain of 51%. For the first 10 months of the year, sales were up 76% to 860,000 fueled by government subsidies and favorable policies.

This 12% drop for China follows sales being down 12% in September and 4% in both July and August. It's the steepest drop since a 26.4% drop back in 2012, which also marked the fourth consecutive month of declines at the time.

Yao Jie, vice secretary general of The China Association of Automobile Manufacturers commented at a press conference in Beijing: “Maintaining positive growth to the end of the year won’t be easy. There could be negative growth.”

And unlike many other slowdowns, the Chinese government doesn’t seem to want to intervene and stimulate the market yet. In the past, they have done so with tax cuts. Some analysts still believe that this is possible, even despite the ongoing trade war with United States, but the Chinese manufacturers association doesn’t necessarily think that a tax cut is the answer.

Shi Jianhua, the association’s deputy secretary-general, told the Wall Street Journal, "We do not advocate short-term stimulus measures. We support long-term policies that can help the industry to grow at a slow and steady pace."

China has now conceded that 2018 vehicle sales, in total, will fall short of the 28.8 million that were sold last year.

Weighing further on the inability to purchase vehicles is the fact that falling stock prices in Shanghai are leaving citizens with less disposable income.

China could wind up being a huge (and somewhat unexpected) contributor to a major global pull back in the automotive sector because it has widely been seen over the last decade as an opportunistic spot for growth by auto makers. For instance, companies like Tesla (of course) have recently cited China as a way to gain a bigger slice of the global auto market. Auto sales in the United States and Europe have already started to plateau or fall, but China was widely seen as a remaining area for opportunity. Obviously, that changes now.

Just weeks ago, we noted that China was a significant pressure mentioned by automakers, many of whom were offering up pessimistic forecasts for the remainder of this year. Renault recently blamed its poor numbers on a global slowdown in sales in places like China and Europe, as well as on new emissions standards. Volkswagen also recently cut its sales forecast for China, citing a slowdown in the country as well as the looming trade war with the United States. 

China's slowdown has also hit names like General Motors which last month reported a 15% drop in China deliveries for the three months ended Sept. 30, the first quarterly report since the trade tensions with the U.S. began escalating in July.

Last month we noted a marked slowdown in the Chinese auto market for September. Bloomberg Intelligence analyst Steve Man said at the time that the slump may be the biggest that auto manufacturers have ever experienced in China. Similar to the US, weaker brands may be hit disproportionately, and the companies will need to cut prices to drum up sales, Man said. Some carmakers may also be forced to shutter factories to reduce inventories and lower costs.