Charts of the Day: Recovery in Traditional Car Sales Will Trail New-Energy Upstarts: Report
China’s traditional and new-energy vehicle (NEV) markets have both slumped over the last two years, hit by a confluence of factors including a slowing economy, dwindling government support and broader declines in consumer activity during the Covid-19 pandemic.
The market for traditional gasoline-powered cars was cruising for much of the last two decades, propelling China past the U.S. to become the world’s biggest market on strong appetite from the nation’s fast-growing middle class. But that growth hit a speed bump in 2018, and sales have been falling steadily for the last two years largely due to a slowing economy.
That slowdown has hit China’s smaller cities disproportionately hard, with all but the largest cities posting falling sales dating back to 2016, according to a recent report from AlixPartners. It forecast that light car sales for the entire country wouldn’t return to 2017 levels until 2025.
Meantime, NEV sales followed a similar rapid growth trajectory to make China the world’s biggest market, thanks largely to government incentives for both buyers and consumers. But the government began scaling back that assistance over the last two years, first to car manufacturers and most recently to buyers with a sharp reduction in subsidies midway through last year.
As a result, NEV sales peaked at about 1.3 million in 2018, before dipping to 1.2 million last year. They are expected to bottom out at 1 million this year, according to the AlixPartners report. That market segment is expected to recover sooner than the broader market, as the industry consolidates around makers of more affordable, high-performance vehicles from names like U.S. giant Tesla and homegrown manufacturer BYD.
The following are several charts from the recent AlixPartners report highlighting some of the industry’s latest trends, as well as forecasts for the next five years.
Contact reporter Yang Ge (firstname.lastname@example.org)
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