GUANGZHOU/NEW YORK -- New automobile sales worldwide in 2019 are expected to fall on a unit basis by about 4%, according to data released as of Saturday, a drop so steep it was last seen in the midst of the global financial crisis in 2008 and 2009.
This marked the second straight year of declines and at a steeper rate than the 0.6% of 2018. Car sales were dragged down by China, the world's biggest market, and fourth-ranked India. The prolonged slowdown in the developing world that had been propelling the market raises the possibility of job cuts and an industry shake-up.
Sales including commercial vehicles totaled 72.6 million units between January and November, down 4% from the same period in 2018, in the world's major markets. Based on this, the total global number for the year is expected to be 91 million vehicles.
The single biggest cause of the downturn is the faltering Chinese market, which accounts for about 30% of global demand. Economic growth has slowed there due in part to the trade war with the U.S., triggering a decline in wages and worries about job security. As a result, Chinese consumers in inland areas who have annual incomes of about $10,000 to $20,000 have grown more reluctant to buy new cars.
Chinese car sales slid 9% on the year from January through November and are expect to be down 8% to 9% for the entire year. Competition for buyers has intensified. Unit sales of local low-priced offerings have plummeted, and U.S. automakers such as General Motors are also struggling in China. Japan's Suzuki has pulled out of a Chinese joint venture while France-based Peugeot maker PSA Group has decided to sell its 50% stake in local luxury vehicle tie-up Changan PSA.
China's automobile industry accounts for nearly 10% of the nation's gross domestic product. President Xi Jinping as begun to consider a lower economic growth target for 2020.
India's sales for the first 11 months of 2019 dropped to 3.51 million vehicles, down 14% on the year, putting the figure on track to fall for the first time in five years. Problems at major nonbank financial institutions has reduced lending, hitting vehicle sales. It appears that auto sales in South Korea, Southeast Asia and Russia will break below last year's levels as well.
Japan, the U.S. and Europe are seeing milder declines in auto sales. The U.S., the world's No. 2 market, will see somewhere around 17 million vehicle sales in 2019 for the first drop in two years. Interest rate cuts from July lowered car loan rates, but that was not enough to offset poor sales in the first half of the year.
Between 2009 and 2019, the global auto market expanded by 40%, largely due to growing demand in the developing world. But now that growth in those markets has faltered, an industry shake-up may be in the works.