Almost a decade ago, China surpassed the US to become the world’s biggest car market. Since then, China’s auto sales have been growing—though that could come to a halt this year, in what would be the first contraction in annual auto sales in the country since 1990.
Car sales in China in November fell nearly 14% (link in Chinese) from a year earlier, the fifth straight monthly decline, according to data released Tuesday (Dec. 11) by the government affiliated China Association of Automobile Manufacturers (CAAM). In total, around 25 million cars were sold in China in the first 11 months of the year, a 1.7% decline compared to the same period in 2017. CAAM predicts that auto sales would drop 3% for 2018 compared to a year earlier.
The decline comes amid a weakening macroeconomic environment as China’s slowing economy comes up against a souring trade relationship with the US, with Beijing imposing a 40% tax on American cars in July. After the leaders of the two countries met recently in Buenos Aires, Donald Trump tweeted that China would “reduce and remove” tariffs on US cars, without elaborating.
Meng Wei, a spokesperson for China’s National Development and Reform Committee, said in mid-November that both international and domestic factors (link in Chinese) have affected the passenger car market.
There’s one bright spot, however—sales of new-energy vehicles (NEVs), a category including battery-powered, plug-in hybrids, and fuel-cell electric cars, kept growing despite the overall sluggish auto market. Some 1.03 million NEVs were sold in China in the first 11 months of the year, up 68% from the same period in 2017, according to CAAM data.
That’s thanks to China’s continuous support (paywall) for NEVs, which includes government subsidies and license plate controls on diesel cars. NEVs now account for around 0.6% (link in Chinese) of all the vehicles on the road in China as of June, according to data from the Ministry of Public Security. The country wants NEV sales to make up 20% of the total auto market by 2025.