Chinese consumers were increasingly optimistic about the car buying environment in April but were less likely to act on this assessment as plans to buy a car over the next 12 months continued the downward movement seen since the start of the year. Meanwhile, a fall in expected running costs helped boost overall sentiment towards the sector.
The MNI China Car Purchase Indicator, a composite indicator designed to gauge overall conditions in the car market, rose 6% to 96.9 in April from 91.4 in March. The gain in the indicator, which is made up of two components, was driven by a combination of a decrease in consumers’ expectations for fuel costs, as well as an improvement in the assessment of the current buying conditions for cars. The Price of Gasoline component fell to 115.2 in April from 120.6 in March, with most consumers still expecting the price of fuel to increase in the coming months while the Car Purchase Expectations component edged up 5.5% to 109.1 in April, the second consecutive rise and the highest outturn since October 2010.
The improved sentiment towards the car market was not matched by actual ownership levels or planned purchases. The level of car ownership fell to 37.6% in April from 44.2% in March and there did not appear to be any plans to revise up this figure, with the proportion of consumers planning to buy a car in the next 12 months falling to 11.7% in April from 13.9% previously. Other detail in the report suggests uncertain economic prospects may have played a role, with 61.4% of respondents who thought it was a good time to buy a car putting it down to low prices rather than brighter income prospects or supportive policies.
Having continued to edge higher since March, the percentage of respondents with a car loan rose notably to 9.4% in April from 4.1% in March. Moreover, those with higher incomes (over CNY 96,000) were more likely to use leverage in April.
Of those still planning to buy a car, the planned budget of Chinese families gravitated towards the more expensive bands in April with the cheaper options falling out of favour. The largest percentage of responses went to the most expensive tier –over CNY 200,000– while there was a scale back in the mid-range of CNY 100,000 – CNY 140,000, which commanded the next highest proportion of responses. The second most expensive tier, CNY 150,000 – CNY 190,000, continued to gain more popularity between March and April.
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MNI China Car Purchase Indicator: Chinese Car Buying Sentiment Turns More Optimistic - General Optimism Belies Drop In Ownership And Plans To Buy
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