Chinese shoppers bought fewer cars last year as trade tensions and a weaker economy contributed to the first annual sales decline in two decades.
The China Passenger Car Association said Wednesday that vehicle sales fell 5.8% in 2018 to 22.4 million vehicles. It’s the first annual decline in nearly 20 years, according to state broadcaster CCTV.
China is the world’s biggest car market, and many global automakers have come to depend on blockbuster sales fueled by Chinese consumers who purchased vehicles as they joined the middle class.
But the market became much tougher last year because of a sharp slowdown in China’s economy. Growth in 2018 is set to be the weakest since 1990, and 2019 looks even worse.
The world’s second largest economy is feeling the effects of government attempts to rein in risky lending after a rapid rise in debt levels. Trade tensions with the United States have only made matters worse.
General Motors (GM) said Monday it delivered 3.6 million vehicles in China last year, almost 10% fewer than in 2017. GM plans to launch more than 20 new and refreshed models this year in China.
Volkswagen (VLKAF), the world’s biggest automaker, is yet to report annual data. But its sales in China dropped 7.3% in November compared to the previous year.
“As in previous months, the tariff dispute with the USA had a marked impact on the overall market [in Asia],” it said last month. “The resulting reluctance of Chinese consumers to purchase vehicles led to a fall in deliveries.”
The pain may continue. Chinese carmaker Geely (GELYF) expects sales to be roughly flat at 1.5 million vehicles this year, after 20% growth in 2018.
Other companies that rely on China’s enormous market to boost their global sales have also come under pressure.
Apple (AAPL) said last week that weaker economic growth in China had harmed iPhone sales. CEO Tim Cook said the company had been blindsided by “the magnitude of the economic deceleration” there.
Yong Xiong contributed reporting.