According to statistics from the China Passenger Car Association, China's auto market experienced its first year-on-year decline in 2018 after 28 consecutive years of growth, with production and sales falling by 4.2% and 2.8% respectively. However, the new energy vehicle sector continued its rapid growth momentum, with annual sales exceeding one million units. Production and sales reached 1.27 million and 1.256 million units respectively, representing year-on-year increases of 59.9% and 61.7%, and maintained a high growth trend.
So what exactly caused the automotive market to decline for 28 years, from 1990 to 2018? And with the rapid development of new energy vehicles today, will they be able to escape the sluggish automotive market?
Although the development of the new energy vehicle industry still has some shortcomings, these shortcomings have led to consumer concerns or reluctance to buy. Let's consider a scenario where, with the number of car buyers remaining the same, consumers face the question of whether to choose traditional fuel vehicles or new energy vehicles. In this case, the guidance of national policies becomes one of the more important factors.
On the other hand, there is the rapidly rising oil price. Regardless of the magnitude of the price increase or decrease, consumers feel that oil is more expensive than before. As a result, many consumers will turn their attention to new energy vehicles supported by the government.
With the introduction of the strictest China VI emission standard in history, major automakers have launched fuel-powered models that meet the emission standards. This has caused many consumers to waver in their choices, which has also affected the changes in the vehicle market to some extent.
Excessive exhaust emissions
At the same time, under the general trend of energy conservation and emission reduction, global automakers are under pressure from current policies and have no choice but to follow the trend and call for vigorous development of new energy vehicles. Many automakers have even declared that they will stop selling gasoline vehicles.
For example, Volkswagen, which has consistently sold very well in China, announced that it will discontinue its internal combustion engine models in 2026, while Mercedes-Benz announced even earlier that it would stop selling internal combustion engine vehicles in 2022. Looking at the plans of major automakers for the future development of the industry, their actions will become a major factor influencing consumer choices.
Furthermore, the license plate and traffic restriction policies in first- and second-tier cities are also having a significant impact on the auto market. On the other hand, the purchase tax reduction policy of the previous two years has prematurely depleted some market demand, resulting in a decline in the current market for gasoline-powered vehicles due to the premature consumption.
Choose your own dream car
Fortunately, in 2019, many first- and second-tier cities slowed down the implementation of the National VI emission standard, and the import tariff issue was further resolved. Looking at the short-term trend, traditional gasoline vehicles should see a recovery. The era of consumer-driven growth is over. For the automotive industry, government policies are now under close consumer scrutiny, so gasoline vehicles may not return to their former levels, while sales of new energy vehicles will continue to rise.
In order to more quickly implement energy conservation and emission reduction targets, the government has put pressure on gasoline-powered vehicles at every turn, leading to a decline in sales of traditional gasoline-powered vehicles. In contrast, the new energy vehicle industry, which the government is vigorously promoting, presents a completely different picture.
The booming new energy vehicle market can be entirely attributed to favorable policies. Even though a subsidy reduction occurred mid-year, causing some concern, the subsequent policy provided a transition period for the subsidy reduction, giving automakers time to restructure and recalibrate new products, thus not putting excessive pressure on the new energy vehicle market.
It's worth mentioning that the government's new subsidy policy for new energy vehicles, which promotes the improvement of driving range, will enable new energy vehicle products to achieve further technological breakthroughs in driving range. When range anxiety no longer troubles consumers, the new energy vehicle market will continue to rise.
New energy vehicles
Meanwhile, driven by the dual-credit policy, the market for gasoline-powered vehicles has become extremely bleak, while the market for new energy vehicles has experienced rapid growth. Furthermore, with more emerging electric vehicle manufacturers successfully completing deliveries, the overall market for new energy vehicles is poised to continue its explosive growth.
In addition to addressing the issue of lagging aftermarket infrastructure development, the government quickly introduced policies to upgrade and improve these facilities to meet the charging needs of one charging station per vehicle. Furthermore, with the market becoming increasingly standardized, new energy vehicles are naturally gaining popularity.
On one hand, gasoline-powered vehicles are losing ground under policy pressure, while on the other hand, new energy vehicles are rising strongly under government promotion. It is undeniable that new energy vehicles are making great strides forward.
Take 2018 as an example. It will be a turning point for China's auto industry. Whether it is the first decline in the domestic auto market in 28 years or the sales of new energy vehicles exceeding one million, they are all witnesses to the transformation of China's auto industry in the new era. Even though the subsidies for new energy vehicles are not as strong as before, judging from the government's guidance, new energy vehicles will definitely become the preferred choice for consumers in the future.
