Amidst major economic headwinds, China's auto sector struggles to meet 7% growth estimates.
According to IHS Automotive, China will likely sell just 23.4m light vehicles this year, up only 1.4% on 2014 volume. IHS had previously offered a conservative forecast of 4.4% growth in 2015, but has since revised it down on poor sales data even though light-vehicle sales rose 2.6% in the first eight months to 12.78m units.
The Detroit-based consultancy expects sales to increase by 3% to 24.2m in 2016, thanks to lower vehicle prices, an increasingly affluent middle class and lower interest rates.
Light vehicle sales were down 3.4% in August, dipping for the third consecutive month to just 1.42m units. Sedans fared poorly, with deliveries down 16% year-on-year, while the robust MPV segment saw sales drop 9.1% to just 132,700 units in August. SUVs continued to outperform the market, with sales surging almost 46% to 453,200 units.
Carmakers are now struggling to adapt to a 'new normal' demand from the once-booming region. Industrial powerhouse Volkswagen AG has already curbed production at its Chinese FAW tie-up and is now cutting staff shifts and slashing bonuses to cut costs. Staff bonuses typically account for almost half of their annual take-home pay.
Fellow global giant, GM, has also reduced local production by around 5% in July, although both VW and GM remain committed to growth in the Chinese market.