China’s most globally high-profile and successful carmaker, Geely, reported a near 40 per cent drop in car sales in the last month of 2018 and is forecasting flat sales this year, representing a sharp slowdown from 2018 as the world’s largest auto market struggles with softening demand as the economy slows further.
Geely Automobile Holdings Ltd, the main listed unit of the Geely which owns Volvo Cars and Proton, posted sales growth of 20 per cent in 2018, a better performance than most of Chinese automakers when China is set to have the first yearly drop in the overall car sales in 2018 in nearly two decades.
However, in December, the carmaker reported a 39 per cent year-on-year drop in car sales, according to monthly sales data filings. In particular, its car sales in China tumbled 44 per cent in the month.
Geely said in a filing that despite its growth last year, it had missed a sales target of 1.58 million cars by around 5 per cent.
Some other domestic and international firms have flagged a sharp drop in demand in China at the end of last year, including Apple Inc, which cut its global sales forecast due to Chinese weakness.
Geely’s chairman Li Shufu said in a new year’s address that the year ahead was pivotal.
“We must lay the foundation for our survival, otherwise we may soon face a period of demise,” he said in the address posted on Geely’s social media.
China’s auto market is expected to have contracted last year for the first time since at least 1990, the China Association of Automobile Manufacturers (CAAM) said last month, citing economic shifts, weakness in smaller cities and “international reasons”.
The industry body expects around 28 million vehicle sales in 2019, roughly in line with 2018.
According to China auto consulting firm ZoZoGo, auto sales in China fell 3 per cent in 2018 — their first decline in about two decades.
“Look for the market to fall another 5 percent in 2019 because consumer confidence remains shaky,” said Michael Dunne, the CEO of ZoZoGo, which advises automakers doing business in China. Dunne is the former president of GM Indonesia. “There’s simply too much uncertainty amidst a slowing economy, job security worries and then there is the big cloud of angst about US-China trade tensions. ”