MNI China Car Purchase Indicator: Chinese Car Buying Sentiment Rebounds In August - Improved Buying Conditions Belies Drop In Plans To Buy

Chinese consumer sentiment towards the car market improved in August as consumers turned more enthusiastic about car buying conditions and revised lower their expectations for fuel prices. Car ownership and plans to buy, though, weakened between July and August amid a deterioration in consumers’ household finances, adding a note of caution to the improvement of the headline Car Purchase Indicator.  

The MNI China Car Purchase Indicator, a composite indicator designed to gauge overall conditions in the car market, rose 3.7% to 91.0 in August from 87.8 in July. Although still below the neutral 100 level that separates pessimists from optimists, confidence sat above the 12-month average of 89.5 and the long-term average of 87.6. 

The gain was led by an increase in the proportion of respondents who thought that the car purchase environment improved, as measured by the Car Purchase Expectations Indicator. This component edged up 4.2% to a four-month high of 102.7 in August from 98.6 in July. The other component, Gasoline Price Expectations, also contributed positively by falling 1.9% to 120.7 in August from a six-month high of 123.0 in July as fewer consumers expected the price of fuel to increase in the coming months.

A deterioration in consumers’ balance-sheets and uncertain economic prospects appear to have played down the latest improvement in car buying conditions, with car ownership levels and planned purchases down on the month.  

Car ownership rates decreased slightly to 38.4% in August, having picked up to 39.1% in the month before. There did not appear to be any plans to revise up this figure either, with the proportion of consumers planning to buy a car in the next 12 months falling sharply to 11.9% in August from 19.5% previously. Further detail indicates there was a significant reduction in both first and second-time buyers. 

The car budget of Chinese families continued to trend towards the middle range of CNY 100,000 - CNY 140,000 in August while the second most expensive tier, CNY 150,000 - CNY 190,000 commanded the next highest proportion of responses. Further detail in the report indicates some consumers turned more conservative in their expenses, with those who reported they had a car budget above CNY 200,000 down significantly.