Progress in the United States/China trade war seems to be happening at just the right time. The automobile industry in China has been crippled, partly as a result of this trade war, and the outlook for the rest of 2018 and the beginning of 2019 is not promising. The collapse has been historic and according to new data, continued through November.
Data that has come out for November has been a continuation of the ugly trends that we saw in October. For instance, passenger vehicle wholesales were down 16.1% on the year, according to the China Association of Automobile Manufacturers. This data includes sedans, SUVs and crossover utility vehicles. November vehicle wholesales were also down well into the double digits, dropping 13.9% to 2.55 million units year-over-year.
Total retail passenger vehicles fell 18% on the year and SUV sales fell 20.6% year-over-year to 854,289 units, according to the Passenger Car Association.
In fact, CICC said that the country's full year production and sales could drop more than 5% year-over-year for 2018.
They also predicted that inventory levels at dealerships across the country will likely continue to rise. The sales data for November suggested "much weaker demand in lower end segments and fears [of] competition in the SUV market" according to the CICC note. They concluded that a turnaround for the sector is only likely after Spring Festival, which occurs in the beginning of February. CICC found that domestic brands are becoming more competitive in new energy vehicles and SUV’s, while Japanese carmakers still have the advantage in sedans.
We have been reporting on the anemic numbers coming out of China for the last several months. We noted back in early November that passenger vehicle sales were on course for their first yearly decline in nearly three decades.
And about a month ago, we noted that China was mentioned very cautiously by automakers, many of whom were offering 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 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.
But on Tuesday morning it was reported that China is moving to cut its trade-war tariffs on US autos.
Bloomberg said China is planning to cut tariffs on US-made cars to 15% from the current 40% has been submitted to China’s Cabinet to be reviewed in the coming days. China boosted tariffs on US-made cars to 40% as part of a raft of retaliatory measures against the US imposed over the summer. To be sure, nothing is set in stone just yet. The decision is being reviewed, and could still change.