In Threat to Global Car Industry, China Sales Slow

China’s car sales rose only 3% in 2017 to 28.9 million. China is the world’s largest car market by far, and global manufacturers have staked their future growth on success in the market there, which was once growing rapidly.

The data on passenger car sales was even more depressing, according to a flash sales data report from MarkLines: up only 1.4% to 24.7 million. Nationwide sales were just above 5 million in 2005, which shows how much the market has rocketed up until recently.

For decades, global car sales success depended on the U.S. market, and throughout the 1970s and 1980s, Japanese and German car companies in particular increased their fortunes by taking market share from American manufacturers. The Great Recession caused annual car sales to drop from over 16 million per year from 1999 to 2008 to just above 10 million in 2009. The market has recovered to over 17 million units sold each year from 2015 until last year. Most experts believe U.S. sales have now peaked and will begin annual declines, albeit small ones.

While the Japanese and European markets for cars are relatively large, they have not grown rapidly, except for recoveries from the recession.

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Global manufacturers have raised their investments in Chinese facilities. Volkswagen and General Motors are the traditional market share leaders in the People’s Republic. Local manufacturers have grown and threatened their sales leadership. Every large manufacturer from the United States, Europe and Japan has made investments of hundreds of millions, or even billions, of dollars to increase their chances for better China sales.

China’s market has started to look more like the United States as far as car company competition is concerned. The battle is no for larger pieces of a stagnant market instead of what was participation in a market that is growing at double digits. Investments in China, therefore, do not come with an assurance that success can be built as the market grows by millions of unit sales per year.

Even with the rise of electronic and autonomous vehicles, global car companies have become locked in a battle to increase sales by eating away at those of their competitors. Whether new cars are gasoline powered or electric powered, the world’s appetite for them has plateaued because China’s has.

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