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By Wang Qing, Institute of Market Economy, DRC

Research Report, No. 55, 2020 (Total 5799) 2020-3-25

Abstract: The number of cars sold in China’s market in 2019 kept declining due to the combined impact of internal and external effects and short- and long-term factors, whereas the car price decline and inventory pressure throughout the year had been reduced year on year. The negative impact of the epidemic on the car market, or on the durable consumer market, is less than that on fast-moving consumer goods and service items on the premise that the epidemic will effectively get alleviated or even eliminated in March or April. From the short-term perspective, the overall trend that the car market continues its rebound in 2020 will not become fundamentally changed. And it is expected that the year-on-year growth rate of the new car sales will remain at -2% to 0%. In the mid- to long-term, it is predicted that China’s car parc will reach 410 million with 288 cars per thousand people by 2029. By then, the market will be at a mid- to low-speed growth stage for a long period of time, and it will maintain a potential annual growth of about 1.5% to 2%. Taking excessive short-term measures to stimulate car sales may not be wise even in light of current market performance. It is advisable to take both short- and long-term goals into consideration with focus laid on inventory adjustment in line with the market changes, and to highlight supporting measures on both the supply side and demand side in the short term.

Key words: novel coronavirus pneumonia epidemic, car consumption, judgment, policy options