Chinese car makers brace for another bumpy ride after tough 2018

Ford was the worst performer among global carmakers in China last year, with its sales shrinking 37 percent. (AFP)
Updated 14 January 2019

Chinese car makers brace for another bumpy ride after tough 2018

  • Companies such as homegrown Geely and Britain’s biggest carmaker Jaguar Land Rover have in recent days flagged caution about China sales in 2019
  • China’s state planner has said it will introduce policies to lift domestic spending on items such as autos, without providing specifics

BEIJING: Carmakers in China are bracing for zero to tepid growth in sales this year, after a tough 2018 when the world’s top auto market probably contracted for the first time in about two decades, as slowing economic growth drags on demand.
Companies such as homegrown Geely and Britain’s biggest carmaker Jaguar Land Rover have in recent days flagged caution about China sales in 2019, hit also by Beijing’s trade war with the United States.
“We should notice the big uncertainties among macro economy and trade tensions, which hit the auto market in China last year and may happen again this year,” Yale Zhang, head of consultancy AutoForesight, said.
China’s top auto industry association expects the country to sell 28 million vehicles in 2019, steady versus 2018, while other government and industry bodies see a 0-2 percent growth.
China’s Association of Automobile Manufacturers (CAAM) is expected to announce later on Monday that the country’s car market contracted in 2018, the first time since the 1990s.
Shares in Chinese carmakers Geely and BYD fell more than 2 percent in morning trade ahead of the data.
Automobile sales in China fell about 14 percent in November from a year ago, steepest in nearly seven years and the fifth straight decline in monthly numbers.
Ford was the worst performer among global carmakers in China last year, with its sales shrinking 37 percent.
Geely, China’s most successful carmaker, sold 20 percent more cars in 2018, but this was sharply lower than a 63 percent growth in 2017. It is forecasting flat sales this year.
Japan’s Toyota Motor, however, bucked the trend, with a 14.3 percent rise in sales in China, versus 6 percent growth in 2017, helped by better demand for its luxury brand Lexus and improved marketing efforts.
The bleak numbers add to worries for investors, already spooked by signs of a broader drop in demand from the world’s No.2 economy, especially after Apple’s rare revenue warning citing weak iPhone sales in the country.
Analysts are, however, counting on measures promised by China to buoy spending as well as rising demand for new energy vehicles (NEVs) to bring some relief.
NEV sales are expected to hit 1.6 million units in 2019, versus 1.2 million in 2018, CAAM has predicted.
China’s state planner has said it will introduce policies to lift domestic spending on items such as autos, without providing specifics. Beijing has also made changes to the income tax threshold to hike incomes and personal spending power.
This could help resolve the industry’s current issues of unsold inventory, drive sales growth and provide relief to the economic pressures China is facing, said Patrick Yuan, Hong Kong-based analyst at Jefferies.
“With that, car sales growth could recover to as high as 7 percent” this year, he said.
According to Alan Kang, an LMC Automotive analyst, demand could also draw support as consumers stop putting their buying decisions on hold in hopes Beijing will reintroduce purchase tax cuts on smaller cars — a policy it phased out last year.
As their hopes for tax cuts “evaporate in 2019,” these consumers will trickle back in, he added.
However, some analysts struck a somber note amid forecasts China’s economy would slow further this year. Data this month is expected to show the economy grew around 6.6 percent in 2018 — the weakest since 1990. Policy sources have said Beijing is planning to set a target of 6-6.5 percent for 2019.


Lebanon removes banking secrecy rules to fight corruption

Updated 55 min 42 sec ago

Lebanon removes banking secrecy rules to fight corruption

  • The move opens the way for investigations into bank accounts of current and former officials such as Cabinet ministers

BEIRUT: Lebanon’s parliament approved on Thursday a law to remove decades-old banking secrecy rules in order to better fight rampant corruption that has pushed the country to the edge of economic collapse.
The move opens the way for investigations into bank accounts of current and former officials such as Cabinet ministers, legislators and civil servants, state-run National News Agency reported.
The restoration of stolen public money in the corruption-plagued nation has been a key demand of protesters who have been demonstrating since mid-October against Lebanon’s ruling elite, which they blame for widespread corruption and mismanagement.
The approval of the law came two months after the Cabinet approved a draft resolution to abolish the country’s banking secrecy laws, which have turned tiny Lebanon into the region’s Switzerland, attracting clients from around the Arab world who prized the anonymity its banks offered.
The new law gives powers to National Anti-corruption Commission and a Special Investigative Committee at the central bank to investigate bank account of officials, the report said.
For Thursday’s session, Lebanese lawmakers convened inside a Beirut theater so that they could observe social distancing measures imposed during the pandemic. Dozens of anti-government demonstrators briefly clashed with riot police outside as legislators met.
As lawmakers in face masks arrived at the theater, known as the UNESCO palace, paramedics sprayed them with disinfectant before they entered, one at a time.
Lebanon has been facing its worst economic crisis in decades, with unemployment figures soaring and the local currency losing more than half of its value against the dollar.
After the banking secrecy measure was passed, Parliament Speaker Nabih Berri suspended the session until later in the afternoon when the legislators were to discuss a draft general amnesty law.
The amnesty issue has deeply divided parliamentary blocs, with Christian groups calling for pardoning Lebanese who fled to Israel after it ended its occupation of southern Lebanon in 2000, while former Prime Minister Saad Hariri and others want the release of hundreds of Islamists held as terror suspects.
Lebanon and Israel are at a state of war and some Lebanese who fled to Israel now hold Israeli citizenship. Scores of protesters demonstrated in Beirut and southern Lebanon on Thursday against pardoning those living in Israel.