China’s auto market back on the roller coaster，new subsidies for car purchase in rural areas may come in near future

Gasgoo.com (Shanghai May 12^nd)– After a pretty sweet first quarter, China’s auto market may go back on the roller coaster again. Statistics released by several major automakers shows that their sales records in April have all witnessed significant decreases compared against this March.

At the beginning of 2016, China Association of Automobile Manufacturers predicted that the auto sales in China this year will increase 6% to 26.04 million. The sales in the first quarter actually lived up to China Association of Automobile Manufacturers’ expectation, but after that, it turned out to be not pretty at all.

Traditionally, the second quarter tends to be the off-season in auto market. Supporting that, JAC sold 53,470 units this April, up by 4.68% compared against last April, but down by a significant 13.97% compared against this March. Great Wall Motors has sold 53,470 units in the same period, up by 1.72% compared against last April, but down by 3.15% compared against last April. Besides, Changan sold 223,600 units in this April, down by 1.61%.

Some carmakers has prepared for the off-season, Zhu Huarong, president at Changan, predicted that China’s auto market will be faced with significant challenges, especially in April, and this carmaker only estimated 25.34 million sales in China’s 2016 auto market, which represents an increase of 3%.

Under this relatively depressing auto market, SUV has boosted sales in auto market as one of the most important drivers. In 2015, among all the new models introduced by major carmakers, half of them were SUV models. And recently, at the 2016 Beijing Auto Show, several domestic Chinese automakers, including Changan and GAC Motor, have all introduced 7-seater SUV models, which highlighted car companies’ willing to explore new segments.

With increasingly intensified competition, the sales of some main stream SUV models have been declining rapidly, which could be devastating for some SUV-powered companies including GAC. Under this background, many carmakers have no other choice but to enter the price war. Star products including Great Wall Haval H6 and Changan CS75 compacts all lowered their sticker prices, so as to compete in the SUV market.

To be noted, China’s auto market also witnessed a decline in last April, followed by another 5 successive months of decreasing. In a bid to boost sales, China’s government introduced a preferential policy last September that consumers who buy vehicles with a displacement of 1.6L or below will enjoy 50% reduction of vehicles purchase tax. China’s auto market finally scored 24.5976 million sales in 2015, and ended the year with an increase of 4.7% compared against 2014.

Under this background, what can be done to save China’s auto markets?

Reportedly, Chinese government was planning to initiate a new round of subsidies for car purchase in rural areas of China in the near future, which could significantly boost sales in China’s auto market. Besides, four provinces in China, namely Hebei, Liaoning, Henan and Yunnan, has lifted ban on pickup trucks entering cities, which could also boost production and sales of pickups in Chinese auto market.