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China annual auto sales fall for first time in about two decades with more pain on the way

Key Points
  • Auto sales in China fell 3 percent in 2018 — their first decline in about two decades, according to China auto consulting firm ZoZoGo.
  • It was a mild introduction to even more pain coming for automakers doing business in Asia this year.
  • ZoZoGo sees an even bigger drop coming in 2019.
A vehicle at a Hongqi car dealer in Beijing on Nov. 22, 2018.
Fred Dufour | AFP | Getty Images

Auto sales in China fell 3 percent in 2018 — their first decline in about two decades and a mild introduction to even more pain coming for automakers doing business in Asia this year, according to China auto consulting firm ZoZoGo.

The slowdown is especially painful for U.S. automakers operating in China, which dwarfs the U.S. as the world's largest car market. Automakers sold roughly 28 million automobiles in China in 2018, compared with about 17 million in the U.S. — the second-largest auto market.

A combination of trade tensions and consumer jitters have stalled sales in a country that has historically been a considerable source of growth for the industry.

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"Look for the market to fall another 5 percent in 2019 because consumer confidence remains shaky," said Michael Dunne, the CEO of ZoZoGo, which advises automakers doing business in China. Dunne is the former president of GM Indonesia. "There's simply too much uncertainty amidst a slowing economy, job security worries and then there is the big cloud of angst about US-China trade tensions. "

U.S. automaker General Motors has said it is doing well in the country, despite what it calls a challenging business environment. Ford has been less fortunate, due in part to automaker's failure to churn out product fast enough in the highly competitive Chinese market.

U.S. stocks fell sharply on Thursday following a dire quarterly warning from Apple and the release of weaker-than-expected manufacturing data. The iPhone maker blamed a slowing Chinese economy for the shortfall, intensifying fears that the global economy may be slowing down.