(Yicai Global) Nov. 20 -- Car sales in China have slumped last month and many vehicle firm chiefs say that the market growth may have reached its ceiling.
A slowdown in car sales this year is almost inevitable, and low growth will become the new normal, several executives said to Yicai Global during interviews at the Guangzhou International Automobile Exhibition which continues until Nov. 25.
Sales dropped almost 12 percent to 2.4 million in October, data from the China Association of Automobile Manufacturers show. This makes 2018 as the first year when the annual growth of the Chinese auto market has been negative in nearly two decades since 2000.
Institutions once estimated that the annual sales will reach about 35 million units by 2025, but the number may reduce to 30 million, Wang Yongqing, the general manager at SAIC General Motors said, adding that this means that the annual growth rate may be as low as 2 percent.
With the annual sales close to 30 million, the domestic auto market will bid farewell to high growth, said Tian Qingjiu, the general manager of FAW Toyota Motor Sales.
Tian estimated that this month and the next will show similar drops as in October. It is almost impossible to surpass the sales performance in November and December 2017, said Chen Shihua, an assistant to the secretary general of CAAM.
"The market condition this year is a result of weakened purchasing power caused by economic fluctuations," said Li Ruifeng, the vice president of Great Wall Automobile.
The sluggish auto market is not a result of a single factor, but related to various ones such as macroeconomic regulation, economic fluctuations, the China-US trade frictions, as well as stock markets and the real estate market, said Feng Xingya, the general manager of GAC Group.
Net profits of nearly 70 percent of listed carmakers decreased between June and September, some 17 firms' quarterly earnings reports show.
Despite market volatility, Li considered that China has room to grow. The rate of car ownership is just 156 out of each one thousand residents, which is far behind developed countries, he said, adding that there is potential in terms of residents in fifth and sixth-tier cities. "The market is expected to show a slight growth next year," he added.
The average car ownership in China is low, so the ceiling won't come for at least 20 years, added Chui Dongshu, the secretary general of the China Passenger Car Association.
In the face of market saturation, some insiders tweaked the grim prospects with positivity. There will still be demand for replacements, said Ji Qiwei, sales and marketing director of Chevrolet under SAIC-GM.
Editor: Emmi Laine