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China's car sales have declined for 17 months in a row, and the market continues to be saturated, but in the context of the stock market, the luxury car market has achieved reverse growth and polarization. Experts believe that the reason for the decline in China's car sales is that the income gap is widening.

According to the latest research of the National Research Center, Liu Shijin, vice president of the China Development Research Foundation and former deputy director of the Development Research Center of the State Council, said that according to the latest research by the National Research Center, the consumption of cars under 100000 yuan and below county-level cities decreased significantly in the first half of this year, while luxury car sales increased against the trend. The reason is that the income gap is widening.

Liu Shijin asked, "China now has more than 170 cars per 1,000 people, less than 180, compared with 800 in the United States, and about 600 in Europe and Japan. We still have a long way to go. Although car growth will no longer grow at a high speed, it is entirely possible to maintain medium or low speed growth, such as an annual growth rate of 3% to 5%. But why has it declined so much in the past two years? "

Liu Shijin speculates that the reason is that the income gap is widening. "Why has China's auto consumption dropped so much in the past two years? There may be many reasons. My guess is that those low-income people who stay below the county level and want to buy cars of less than 100000 yuan will run out of money in their pockets when it is time to buy a car. " "the income is not enough to support their consumer needs," he said. "

Liu Shijin also quoted data from the National Research Center as saying that from January to June 2019, under the county-level cities, which accounted for nearly 30% of the total car sales, the negative growth reached more than 20%, and the negative growth of cars under 100000 yuan, which accounted for about 40% of the total market share, reached 23%. Both declines are obvious. At the same time, luxury brands are bucking the trend.

The share of luxury cars exceeded 10% for the first time.

The analysis of data over the years shows that the market share of luxury cars is increasing year by year, especially in 2019. According to the latest report of the passenger car Market Information Association, the luxury car market share reached 10.8% from January to November 2019, compared with 8.8% in 2018, and will rise by about 2% this year, an all-time high.

Luxury car market share continues to rise, reflected in the realization of double-digit growth against the trend. According to the data, luxury brand sales reached 202400 in November, up 18.6% from a year earlier, and comprehensive sales in the previous November totaled 2.003 million, a year-on-year growth rate of 11.5%, achieving double-digit growth.

Luxury car sales are up, but the overall passenger car market continues to decline. From January to November 2019, passenger car sales fell by about 8% compared with the same period last year, including 5.3% for mainstream joint venture brands and 15.4% for independent brands.

According to the sales rankings released by major manufacturers, BMW Group sold 655783 vehicles in China in the first 11 months, up 13.6% from a year earlier, Audi 3.5% and Mercedes-Benz 6.3%. This was followed by a 21 per cent increase in Lexus sales and a 16.3 per cent increase in Volvo, even if Cadillac sales fell 5.7 per cent, lower than the decline in the overall passenger car market.

In addition, it is worth noting that the price reduction effect of luxury cars is obvious, further squeezing the new car market. According to an auto circulation industry analyst, the average terminal sales price of Audi and Cadillac brands has fallen to less than 300000 yuan, while Volvo has remained at around 335000 yuan. In the middle and high-end models of mainstream joint venture brands and luxury models with reduced prices, consumers tend to prefer luxury brands with a higher brand premium.

Does the gap widen or consumption escalates?

Of course, the change in the structure of China's car market is caused by a combination of many factors, such as widening income gap, consumption upgrading, price reduction of luxury brands, change of car consumption concept, active second-hand car market, housing loans and so on.

In this regard, netizens have different views.

A Sina financial columnist said, "when I bought a car for the first time ten years ago, the grassroots looked at the price. Less than 100000 are basically domestic miscellaneous brands, and they dare to buy a car." Now people in counties and townships change cars and buy cars for the first time, choosing more big factories and big brands. This is the main reason why 'independent low-end brands' can't get mixed up. "

Netizens said that the rise in luxury car sales against the trend can be understood as the rise in Chinese spending power.

Lin Yun, a financial commentator and host of CCTV, said, "the total growth is negative, foreign brand luxury cars maintain double-digit growth, and low-end cars and local brands suffer."

Generally speaking, the decline in consumers' purchasing power of cars is an indisputable fact, whether the market is saturated and why car sales continue to decline, perhaps the real consumers are the most clear.

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