China’s MIIT says it won’t resoirt to bailout despite auto output and sales falling to new low

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China’s auto output and sales growth in the Jan-July period fell to new low in the past 10 years. The auto output and sales in the period grew only 2.3% and 3.2% from a year earlier to 10.46 million units and 10.6 million units. Different from the attitude of the concerned Chinese authorities before, the Chinese government won’t take any bailout measures this time to ease the market conditions.

Actually, the auto market growth slowdown is within expectations as a result of the overdraft of auto sales in the previous two years and the chain effect of the overall policy contraction.

But the figures released by China’s Association of Automobile Manufacturers (CAAM) for August make the industry insiders feel relieved. Although August is a traditional low season, the output and sales of the locally-made vehicles in the month grew 6.66% and 8.29% from a month earlier respectively and went up 8.72% and 4.15% from a year earlier respectively. CAAM’s vice chairman Dong Yang is optimistic about the market performance in the next few months due to the quicker launch of new products and more attractive sales promotions. He believes the full-year sales of locally-made vehicles will surpass 18.6 million units, up 3% to 5% from a year earlier.

However, the auto sales are still sluggish in September, the traditional peak season for the auto industry. It seems the auto industry will keep going down.

The situation of China’s homegrown brands is most worrisome. The sales of the homegrown-branded vehicles in August decreased 2.86% from a year earlier to 407,400 units, accounting for 37.2% of the total sales of passenger vehicles, down 3.96% from a year earlier. What makes it worse is the government’s plan of raising the standard for the subsidy policy on fuel-efficient vehicles. The average fuel consumption requirement for the qualified models will be raised from 6.9L/100KM to 6.3L/100KM, which means 70% of the existing models covered by the subsidy policy will become disqualified, and most of them are homegrown-branded vehicles.

Despite the difficult situation, China’s Ministry of Industry and Information Technology (MIIT) will not issue any stimulus policies for the auto industry, and the industry’s full-year growth is expected to be around 5% this year, said a MIIT official. The ministry will focus on creating favorable external environment for the independent innovation of China’s auto industry in future. China’s auto industry has proceeded from a rapid growth period to a steady growth stage, and the automakers should adapt themselves to the market situation with no stimulus policies and make more investment in technology development and brand building.