The Chinese auto market, the world’s largest, has grinded to a halt these past few months – but the trouble is good news for the ones ready to invest into the purchase of a new vehicle this year.
The prices are getting lower every month – dealers have been slashing retail prices these past few months because the industry could see the lowest delivery rate of the past four years. Hundreds of models in major cities are discounted by up to 30 percent – for example, according to Autohome, a popular car-pricing portal, the flagship Audi A8L that was 1.97 million yuan ($317,000) at the start of the year now can be had for 1.28 million yuan. “Prices are getting lower all the time, even as cars are getting better,” comments a Chinese consumer who has a job in the industry at an auto parts company. “If it’s not urgent, one can wait.” Such people that are not in a hurry could deliver a trouble bubble across the Chinese new vehicle auto market, which passed the US as the biggest in the world back in 2009. The Chinese economy is expected to have the smallest gain in 25 years, the government has been hitting car registrations because of environmental concerns and the stock market has been highly volatile the past two months – so the auto industry is now pulling all the strings it has to lift sales.
“This round of price cuts is the worst in China’s auto industry history in terms of the number of models involved and the depth of the cuts,” comments Su Hui, a deputy division head at the state-backed China Automobile Dealers Association. “Nobody saw it coming, not the government, not the automakers, not the dealers.” If the automaker strategy has been successful, it should be reflected by the July industry sales data, scheduled for release on Tuesday by both the Passenger Car Association and China Association of Automobile Manufacturers.