Shifting tastes, maturing market will support upgrade, NEVs
Chinese new-energy vehicle (NEV) manufacturer BYD Co said that it's bullish about the future of alternative-fuel vehicles even as the world's largest auto market enters a new era of flat growth.
The comments came after the China Association of Automobile Manufacturers (CAAM) warned earlier this week that China's auto sales may be near a plateau, with growth estimated at 3.5 percent this year and 3 percent in 2018.
Xu Haidong, assistant to the secretary-general of the CAAM, estimated that production will also rise 3.5 percent this year.
The latest CAAM figures are significantly lower than the 5 percent growth rates it provided at the start of 2017, China Central Television reported on Wednesday.
For the first 11 months of this year, domestic vehicle production and sales in China stood at 25.99 million units and 25.84 million units, respectively, data from the CAAM showed.
The full-year figure for sales or production of 29 million units estimated by the CAAM would still make China the world's largest auto market, for the ninth consecutive year.
However, the organization said that the market is set for only "marginal" growth from now on. It said sales may decline in certain segments such as traditional sedans and commercial vehicles, with sizable increases in sport utility vehicles (SUVs) and NEVs.
In an e-mail statement sent to the Global Times on Thursday, BYD said that 2017 saw brisk growth in NEV sales, with "particularly strong" conditions in the second half.
According to data from the China Passenger Car Association (CPCA), China's NEV sales in November recorded 81,000 units, up 87 percent year-on-year.
"Due to factors including environmental protection, energy shortages and national security, NEVs will become path to the future. With the implementation of China's sales quota for electric cars and the shift from gasoline-based cars to electric cars globally, the trend will further intensify," the statement said.
BYD said that the potential for NEV development was still huge, and it hoped that more entrants to the market could help promote alternative-fuel vehicles and improve industry quality through competition.
BYD is not alone in the drive toward NEVs. Domestic automaker BAIC Motor Corp, which also makes vehicles in joint ventures with South Korean carmaker Hyundai Motor Co and Germany's Daimler AG, plans to stop selling own-branded conventional fuel-powered cars by 2025, media reports said on Tuesday.
Slowing sales growth in China is inevitable and will force automobile producers to improve their competitiveness, Yale Zhang, head of Shanghai-based consultancy Automotive Foresight, told the Global Times on Thursday.
"The industry is finally embracing market-driven brand consolidation," Zhang said.
"This means that there will be one of two outcomes for the 23 major brands. The foreign-funded makers may stay weak and their market shares may slide. Strong brands will gain more market share," he noted.
Companies that depend on new models for driving sales growth will not be able to survive as easily as they did years ago, Zhang pointed out.
As the Chinese economy moves toward higher-quality growth, the vehicle sector will follow suit. Strong consumption upgrading will occur, especially in first- and second-tier cities and at the middle and high ends of the market, the CAAM said.
The reality is in all China's large and medium-sized cities, the rates of car ownership are already high, Zhang said.
By January 2018, the car sales tax will be adjusted back to 10 percent from 5 percent, which will be another factor for lower growth for the industry, Zhang added.
"With an aging population in China, SUVs will be preferred by Chinese consumers because of their larger interiors. Mini and small cars might not be so popular," said Zhang.
Also, "Entry-level luxury cars might become more popular. After years of driving a car with a price tag of 100,000 yuan ($15,134), consumers tend to choose [luxury cars] as a social statement," Zhang said.
