The Journal Gazette
Tuesday, January 14, 2020 1:00 am

China auto sales fall for 2nd year amid trade war

JOE McDONALD | Associated Press

BEIJING – China's auto sales fell for a second year in 2019 as a trade war with Washington and an economic slowdown depressed consumer confidence and demand for electric vehicles weakened, an industry group reported Monday.

The downturn is squeezing global and Chinese automakers that are spending billions of dollars to meet government mandates to sell electric vehicles.

Sales in the industry's biggest global market declined 9.6% from 2018 levels to 21.4 million sedans, SUVs and minivans, according to the China Association of Automobile Manufacturers.

Total vehicle sales, including trucks and buses, was off 8.2% at 25.8 million.

After two decades of explosive growth, Chinese auto sales fell 4.1% in 2018 as unease over the tariff war with President Donald Trump and slowing economic growth prompted consumers to put off big purchases.

Forecasters expect sales to level off this year, but that would be more than 3 million units below 2017's peak of 24.7 million.

“Chinese industry sales saw signs of stabilization in 2019,” said Bernstein analysts Robin Zhu, Luke Hong and Xuan Ji in a report last week. “We think consensus expectations for a flat volume year in 2020 are reasonable but consider higher more likely than lower.”

December sales were off 0.1% from a year earlier, CAAM said, an improvement over double-digit declines in previous months.

Sales of electric and gasoline-electric hybrid sedans and SUVs in 2019 sank 4% from a year ago to 1.2 million. That still would make China the technology's biggest market by far, accounting for at least half of global purchases.

Electrics sales rose by double digits in early 2019 but plunged after Beijing ended subsidies to buyers in July. Regulators shifted the burden of promoting the technology to automakers by imposing mandatory sales targets.

Communist leaders are trying to accelerate industry development by ending curbs on foreign ownership of automakers.

Global brands that until now were required to work through joint ventures with state-owned Chinese partners were allowed full ownership in electric-car manufacturing last year, reflecting official confidence local brands can compete directly with foreign rivals.

Limits on foreign ownership are to be removed from the whole auto industry by next year.

Despite those changes, most foreign automakers are expected to stay in joint ventures with Chinese partners to take advantage of their government connections.

General Motors Co. said earlier 2019 sales by the company and its Chinese partners fell for a second year, declining 15% to just under 3.1 million vehicles. GM sales in China peaked at just over 4 million units in 2017.


China losing manipulator label

The Trump administration is dropping its designation of China as a currency manipulator in advance of the signing Wednesday of a Phase 1 trade agreement.

The preliminary pact that the two sides are set to sign includes a section that's intended to prevent China from manipulating its currency to gain trade advantages.

The action announced Monday comes five months after the Trump administration branded China a currency manipulator – the first time any country had been so named since 1994 during the Clinton administration.

Even while removing China from its currency black list, the Treasury Department does name China as one of 10 countries it says require placement on a watch list that will mean their currency practices will be closely monitored, joining Germany, Ireland, Italy, Japan, South Korea, Malaysia, Singapore, Switzerland and Vietnam.

Treasury Secretary Steven Mnuchin said the administration had dropped China's designation a because of commitments in the Phase 1 trade agreement.

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