The automotive market, which had been growing rapidly for several years, experienced a sharp decline in production and sales starting in March this year. This downturn persisted for four consecutive months, prompting experts to analyze the situation. They believe the market is entering an adjustment phase, driven by several factors: the rapid expansion of domestic auto production, ongoing price declines, expected reductions in import tariffs, and government economic cooling measures. Despite the recent slowdown, officials from the Ministry of Commerce, the State Council's Development Research Center, and the China Association of Automobile Manufacturers have expressed optimism. They suggest that with macro-control policies stabilizing in the second half of the year, along with stable holiday demand and car prices, the auto market will continue to grow steadily throughout 2024.
Looking at supply, the domestic auto market relies on three main sources: domestic output, imports, and last year’s inventory. According to Dr. Qing Wang from the State Council’s Development Research Center, the first-half passenger car supply reached about 2 million units, while demand was only 1.763 million, creating a supply-demand gap of roughly 240,000 units. When considering hidden dealership inventories, the gap could be even larger. In Q1, the gap was around 90,000 units, but by Q2, it increased to 150,000—showing a worsening oversupply situation.
Despite some manufacturers cutting production in June, the average monthly growth in passenger car production from January to June still stood at 33.2%, significantly higher than the same period last year. However, the year-on-year growth in sales has been slowing, averaging 28.2% per month. This imbalance between production and sales is expected to worsen in the second half of the year.
Experts note that the current drop in sales is more about a slowdown in growth rather than an actual decline. While car sales in the first half of the year still showed strong growth, the rate of increase has slowed. The key factors behind the market slowdown include a sharp drop in vehicle prices in May, which increased consumer caution and reinforced expectations of further price cuts. This has created a cycle where consumers delay purchases, leading to more promotions and continued downward pressure on prices.
Additionally, consumers anticipate lower import tariffs and quotas in early next year, which may drive down imported car prices and put more pressure on domestic models. Price cuts by manufacturers in the first half of the year have also influenced consumer behavior. Furthermore, the long-term high prices followed by sudden drops in 2003 and early this year have led to a short-term surge in demand, now followed by a normal decline.
Other factors include rising auto consumption costs and tighter loan conditions, which have constrained demand. Moreover, price reductions have begun to affect higher-priced models, signaling a shift in competition. By June, price cuts were extending to vehicles over 300,000 yuan, indicating a broader market response.
Dr. Wang Qing notes that although sales dropped in March, the overall transaction volume hasn’t declined significantly. He expects a recovery in the second half of the year, with passenger car production growth reaching 30-35% annually, and sedan production increasing by 35%. Total passenger car production is projected to reach 4.1–4.2 million units, surpassing last year’s figures.
While price reductions are expected to continue, they are likely to be moderate, around 3% in the second quarter. However, intense competition, higher profit margins for domestic brands, and increasing inventory pressures will keep downward pressure on prices. The new "Automobile Industry Development Policy" may also encourage mergers and price cuts to gain market share.
Market analysts predict a rebound in the second half of the year, with passenger car sales expected to grow by 30% annually. Total passenger car sales could reach 3.9–4.05 million units, with sedans accounting for 2.55–2.65 million. Experts like Xu Changming from the National Information Center believe that despite the current slowdown, long-term demand remains strong due to sustained economic growth and rising household purchasing power.
Looking ahead, total car demand in 2005 is expected to hit 5.9 million units, making China the world’s second-largest car market. By 2010, demand could reach 8.7 million units.
Optical Store Displays/Furniture
opticians store displays, opticians store cabinets, opticians shop displays, opticians shop furniture, optics shop displays
Optical Shop Solution Provider , https://www.cwjdisplay.com