MNI Indicators: Chinese Consumers More Upbeat On Buying Cars - More Than 20% Of Respondents Plan To Buy A Car In Next 12 Month

Chinese consumers were increasingly optimistic about the car buying environment in July as the proportion of respondents planning to purchase a car rose to the highest since the series began in March 2012.
 
After a stumble in the month before, 20.7% of respondents said they were planning to buy a car in the next 12 months, up from 16.2% in June and 18.6% in May. A significant share reported that they were either upgrading their existing car or buying another. Those earning more than the median annual earnings of CNY 96,000 were more likely to buy a vehicle.
 
The positive tone was supported by an improvement in sentiment towards the general car buying environment. The Car Purchase Expectations Indicator (a gauge of whether consumers believe it is a good time in general to buy a car) increased 1.1% to 101.1 in July from 100.1 in June, lifting the indicator to the highest level since August 2014 and the second consecutive month it has stood above the 100 breakeven level. This increase helped to keep the Car Purchase Sentiment Indicator (a composite gauge of car buying conditions) broadly stable at 87.1 in July from 87.2 in June. While sentiment has been resilient in the last few months, the indicator has remained below 90 for 14 months in a row, far beneath the 100 breakeven level. The other component that makes up the indicator, Gasoline Price Sentiment, increased slightly to the highest since July 2014 as expectations of fuel prices rose.
 
Car ownership levels showed an early sign of reversing the slide reported in the second quarter. Having been in a downtrend since March, the ownership rate found some support in July with 40.3% of consumers reporting that their family owned a car, up from 39% in June. Increasing ownership among those earning more than CNY 96,000 per year continued to support the overall level, although ownership among those in the lower income bracket also saw a small rise.
 
The planned car budget of Chinese families tended towards the middle ranges in July, although continued to move further away from the cheapest options. The largest percentage of responses was again in the mid range of CNY 100,000 – CNY 140,000 while the most expensive tier commanded the next highest proportion of responses.   

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