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Share Name | Share Symbol | Market | Type |
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Ihs Markit Ltd. | NASDAQ:INFO | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 64.61 | 0.001 | 64.77 | 0 | 01:00:00 |
IHS Markit expects light-duty vehicles sales in China this year to decline by around 6 percent from 2018. Electric vehicle sales remain a bright spot but not enough to offset sales declines overall, new analysis says
China’s light vehicle (LV) sales fell nearly 10 percent in June 2019 from prior year—the 12th consecutive month sales declined—casting new doubts on what has been the world’s biggest growth engine for auto sales, a recent analysis by business information provider IHS Markit (NYSE: INFO) says.
Total LV sales in China over the past 12 months (July 2018-June 2019) were 25,396,063, down more than 10 percent from the prior 12-month period. Sales in the United States during the same stretch were 17,149,780, a decrease of 1.5 percent from the previous 12 months.
China’s auto sales downturn began in mid-2018 and the country closed out that year with an annual decline in LV sales for the first time this century.
The Mobility and Energy Future analysis explores what may be behind falling Chinese auto sales. It asks, does the recent stretch of monthly declines represent a weak period, reflecting economic factors and the U.S.-China “trade war,” or a structural shift toward a “new normal” of lower sales?
“One of the major axioms of the global automobile industry, that China will continue to be a growth engine of world auto sales, is no longer the case,” said Daniel Yergin, vice chairman, IHS Markit and chair of Mobility and Energy Future project. “Whether declining LV sales in China is a blip in a multidecade upward trajectory or the beginning of a “new normal” of slower—and at times negative—growth, this is the key question.”
Should the decline in auto sales be more protracted than it is now, it would likely prompt a fundamental reassessment of automakers’ strategies, according to the analysis. As it is, the slowdown has already unsettled a global auto industry that has been geared to high growth in China.
A new Mobility and Energy Future report from IHS Markit, entitled China’s Auto Sales: Why Have They Fallen As Much as They Have? identifies a mix of macroeconomic and auto industry-specific factors that have contributed to the China’s auto sales slowdown—a slowdown that has been surprisingly consistent across all of China’s provinces and despite continued economic growth.
“Recent sales trends point to a decoupling of car sales and economic growth in China,” said Nigel Griffiths, chief automotive strategist, IHS Markit. “This is a fundamental shift since the two have been strongly correlated up this point.”
Among the factors contributing to the sales downturn:
The one bright spot amid the downturn has been electric vehicles (EVs), the analysis says. New registrations of EVs (defined as battery electric vehicles [BEVs] and plug-in hybrid electric vehicles [PHEVs]) in China rose at a monthly average of 85 percent during July 2018-March 2019 compared to year-earlier period. However, EV sales are not enough to offset the significant declines in internal combustion engine vehicles.
“The continued strength of EV sales in China is likely largely the result of supportive government policies, including subsidies and a production mandate for new energy vehicles,” said Elena Pravettoni, senior economist, IHS Markit. ”But EVs still remain a small fraction of the total Chinese market.”
New registrations of EVs for Q1 2019 were 222,602—less than 4 percent of the China’s total car sales in that period, the IHS Markit analysis shows.
IHS Markit does expect LV sales in China to eventually stabilize and return to positive growth in the coming future, with average annual gains of about 3 percent in 2020-2025 even when accounting for continued deceleration of gross domestic product growth. By comparison, annual gains averaged 7 percent from 2011-2017.
“This is a substantial correction but the expectation still is that some short-term market distortions will clear up as the contributing factors dissipate,” said Jeff Meyer, director, IHS Markit. “Recent data on final consumer demand is at last indicating that the market may be at or nearing a bottom. But should the decline be more protracted, it could prompt a fundamental strategic reassessment by automakers for what, up to now, has been the world’s biggest growth engine for auto sales.”
Note to editors: Light vehicles refers to cars, SUVs and light trucks
For media inquiries, please contact Jeff Marn (Energy), jeff.marn@ihsmarkit.com or Michelle Culver (Automotive), michelle.culver@ihsmarkit.com
About IHS Markit (www.ihsmarkit.com)
IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.
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View source version on businesswire.com: https://www.businesswire.com/news/home/20190716005184/en/
News Media: Jeff Marn IHS Markit +1 202 463 8213 Jeff.marn@ihsmarkit.com
Press Team +1 303 858 6417 press@ihsmarkit.com
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