Auto sales slump 8.2% in 2019, will the 2020 auto market winter dissipate?

China's auto market winter has lasted two years since 2018, will it get better in the third year? It's not easy to say.

The Great Leap Forward in the car market is over

From the data released by the China Association of Automobile Manufacturers (CAAM), we learned that China's automobile production and sales in 2019 finished at 25,721,000 and 25,769,000 units, down 7.5% and 8.2% year-on-year, respectively. Even so,production and sales are still the world's first.

The formation of the cold winter of the car market from the development of China's automobile industry to start. 1990s, China's automobile industry broke out of the shell, and formally with the international standards into the development stage. So far, the full count is only 30 years of history.

The development from scratch has been very rapid, especially after the node of time came to the 21st century. National economic growth, people's living radius to expand, car-free families began to buy cars. In order to meet the growing market demand, car companies expanded their factories and recruited new employees, and the Great Leap Forward in the car market began.

After nearly 20 years of explosive sales, in 2018, car companies suddenly found that the car "can not be sold"? Is the market saturated? No, it's just that the pace of consumer car purchases has returned to normal. If the relationship between car ownership and time is expressed in an equation, it must be a power function. The total amount is rising, but the slope is getting smaller and smaller. Consumption has slowed its pace, and the car companies are paying for the employee and factory costs they had previously accumulated.

Luxury brands' pace is getting bigger and bigger

2019 has not affected the luxury brands, although sales are declining. 2019 Chinese market BMW (including MINI), Mercedes-Benz and Audi achieved 13.1%, 6.2% and 4.1% year-on-year growth respectively.

In the initial stage of the cold winter of the car market, the first decline in the market segment is the small car market, the automobile market presents "the cheaper the more difficult to sell" scene. The main reason for this phenomenon is that the main body of consumption caused by economic changes.

Automobiles are the second largest consumer product after real estate, and consumers in first- and second-tier cities are the main force in purchasing cars. When their economic strength has been improved, the formerly unattainable luxury brands have become the first choice. It is understood that in the early stages of the car market winter is the first to be hit hard by the small car segment. For the first line of limited license cities, hard-won indicators will naturally choose a reliable and good use of the model. With the gradual penetration of automotive products into the life of people also know more about the car, not limited to the city consumers show "rather lack than abundance" awareness, on the choice not to buy a car will not be considered cheap, poor stability of the product.

Looking for a breakthrough takes time

A mature market has to go through ups and downs and fluctuations. 2019 even the U.S. market, which is already a very mature auto market, and the Japanese market are experiencing different degrees of decline. China's car ownership is still far from saturation and still has a lot of potential, but the shape of the economy can no longer support the rapid growth of the car market. From a national perspective, reducing the gap between the rich and the poor and increasing the consumption power of the whole population will have a positive effect on the growth of the car market. But this process is very long.

From the perspective of car companies, we need to be ready to "move from the South back to the North". The great leap forward in the automotive market may be gone, and good cost control, research and development for the new era of more mature products can go a long way.

This article was written by the author of Auto Home, and does not represent the views of Auto Home.