MNI China Auto Purchase Sentiment Report: Chinese Car Buying Sentiment Edges Lower In July - Plans To Buy Rise To Highest Since June 2015 Led By First-Time Buyers

Consumers’ perceptions of the car purchase environment deteriorated slightly in July, according to the latest MNI China Auto Purchase Sentiment Report. Despite the fall in sentiment, a larger number of Chinese households reported that they currently owned a vehicle compared to June while plans to buy a first car over the next 12 months ticked up.
 
The Car Purchase Indicator – a composite indicator designed to gauge overall conditions in the car market – declined 4.5% to 87.8 in July from 92.0 in June, the lowest reading since January. Against a backdrop of market volatility and economic uncertainty, sentiment moved further adrift of the 100 breakeven level with households increasingly wary about making large outlays.
 
The fall in the indicator was driven by a decrease in the Car Purchase Expectations Indicator which fell 2.9% to 98.6 in July as consumers revised down their outlook for personal finances. The second component, the Price of Gasoline Expectations,  also contributed negatively to the indicator increasing 4.6% to 123.0 in July as more consumers expected the price of fuel to increase in the coming months.
 
Despite the negative tone struck towards buying conditions, car ownership levels increased while consumers revised up their plans to buy a car in the next twelve months. The ownership rate increased to 39.1% in July from 38.1% in June, led by a significant increase in car ownership among those earning more than CNY 96,000 per year.
 
The percentage of those planning to buy a car in the next 12 months rose to 19.5% in July from 17.6% in June. The increase was led by a noticeable rise in the proportion of those planning to buy a first car while the percentage of consumers planning to upgrade or undertake additional purchases declined over the month.
 
Of those planning to buy a car, the budgets allocated by Chinese families towards purchasing a car skewed towards the middle ranges in July with more expensive cars losing popularity. The proportion of those who reported a budget of  CNY 100,000 – CNY 140,000 was suitable rose from 33.3% in June to 33.5% in July. This tier remained the most popular among our respondents. The most expensive tier (cars priced at CNY 200,000 or more) commanded the next highest proportion of responses at 20.8% in July, although it was down from last month’s series high of 36.1%.