20 April 2019

Domestic brands to suffer most if new car curbs rolled out

Chinese media have often used the word “miracle” to describe the growth of the nation’s car market. They point out that while it took 50 years for annual car sales in the country to jump from virtually zero to the 10 million mark, it took just four years for that figure to double to 20 million. 

The growth is no doubt awe-inspiring, but it has come at a heavy price as almost all major cities in the country are now suffering from serious pollution and traffic congestion problems.

Latest data suggests that car sales in China are set to achieve double-digit growth and surpass 20 million unit sales for the first time this year. According to figures released by the China Association of Automobile Manufacturers (CAAM), car sales stood at 19.9 million units as of end-November.

Government statistics show that the total number of registered motor vehicles in China reached 250 million units by the end of October.

The China Securities Journal reported, citing the Beijing municipal government, that exhaust gas emissions from motor vehicles accounted for 22 percent or more of the PM 2.5 particles released in the capital. 

Shanghai, meanwhile, has been blanketed by smog for much of this month. Concentration of tiny, harmful PM 2.5 particles was 602.5 micrograms per cubic meter in the financial hub last Friday, an extremely hazardous level and marking a new high since the launch of the index.

Such alarming pollution has prompted the National Development and Reform Commission to issue a fresh call last week to strengthen the carbon emission reduction and energy-saving efforts. Following that call, Tianjin on Sunday unveiled measures to rein in the vehicle population in the city, including issuance of new car plates through a lottery system.

Meanwhile, other cities such as Dalian and Shenzhen are also planning steps such as car-purchase limits and curbing the number of cars on the roads.

CAAM estimated in July that if authorities implement purchase limits on cars in cities like Shenzhen, Chongqing and Wuhan, car sales will tumble around 25 percent or 400,000 units in those areas.

In fact, Beijing, Shanghai and Guangzhou have already implemented purchase limit on sedans. Based on Beijing’s experience, domestic brands are likely to take the biggest hit from the car curbs.

In the capital city, the market share of domestic brands has slipped nearly half to about 10 percent after purchase restrictions were put in place.

– Contact the writer at [email protected]


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