Retail sales of new passenger vehicles in China declined by 3.4% to 2.14m units in December 2019 from very weak sales of 2.22m units in the same month of the previous year, according to preliminary data released by the China Passenger Car Association (CPCA).

The December decline was the 18th in the last 19 months and brought the full year total to 20.69m units, down 7.4% year on year.

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The data covers passenger cars, SUVs and MPVs.

This followed a 5.8% drop to 22.35m units in 2018. Dealer inventories were also said to have been reduced by 250,000 units last year. 

The association expects the passenger vehicle market to have bottomed out this year with retail sales forecast to rise slightly to around 21m units in 2020 after a slow start to the year.

This would include 13.6m passenger vehicle replacements with existing owners increasingly attracted to the market by more frequent model upgrades and new technology.

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Market sentiment was expected to improve this year as trade tensions with the US reduce with the two countries expected to sign a preliminary Phase 1 trade agreement this week.

The Chinese government has also indicated it would not significantly cut subsidies for new energy vehicles (NEVs) this year.

Substantial cuts in NEV subsidies last June were a key source of market weakness in the second half of 2019.

The China Association of Automobile Manufacturers was less optimistic about short-term prospects, however, forecasting a decline in total vehicle sales – including commercial vehicles – of least 2% in 2020.