The car sales succession has officially struck the world's largest car market.
By now it's starting to become clear that the auto market is heading into a period of dramatic change that could end with the automotive landscape looking much different than it does today. If the latest alarming comments from carmaker CEOs are true, the future will see plenty of brands die out, and those that don't will likely be forced to merge with their competitors. That's because companies are starting to realize they need to invest heavily in new technologies at exactly the same time that the car market is contracting.
And to make matters worse, any hope that the world's largest car market would serve as a crutch during these hard times are all but gone. According to Reuters, that's because the car sales recession has officially hit China.
According to China's Association of Automobile Manufacturers (CAAM), the country's largest auto industry association, growth in the Chinese car market is expected to decline by 5% this year, to 26.68 million units. That's a stark difference from its previous forecast of 0% growth and larger than last year's 2.8% decline.
So what gives? Why is it that the world's largest auto market, with an appetite for luxury cars so large it was once considered the saving grace of struggling automakers like Jaguar Land Rover, suddenly turning its back on buying new cars? One reason is the trade war, which has consumers in the mainland curtailing necessary expenses. To combat the slowdown, the Chinese government has promised to grease the wheels and take measures to increase sales.
The effort, however, is being undermined by other government policies, including an accelerated adoption of new emissions standards that have hurt sales. But the main reason has to do with the fact that it's never really been easy to buy a car in China. Even with financial incentives, it's expensive to buy a new car in China due to the costs and wait time associated with getting a new car registered.
Many new car buyers have to compete in a lottery system for a license plate if they hope to drive their cars, which can in some cases force people to wait years until they are allowed to register their cars. While those rules certainly hurt prospective car owners, it seems as if they are finally taking a toll on the world's auto industry as a whole now.