Gasoline Consumption Growth to Slow Down Further

In July, the sales of automobiles entered the off season, and China’s automobile industry became sluggish. According to the statistics released by the China Association of Automobile Manufacturers on August 13, in July, both the production and sales volume of automobiles declined from June. Therein, the output of automobiles in July was 1,800 thousand units, down 5% from June and down 11.9% from last year. The sales volume of automobiles in July was 1,808 thousand units, down 12.1% from June and down 4.3% from last year.

In terms of new energy vehicles, in July, the output of new energy vehicles in July was 84 thousand units, down 37.31% from June and down 6.9% from last year. The sales volume of new energy vehicles in July was 80 thousand units, down 47.37% from June and down 4.7% from last year. Specifically, the output of battery electric vehicles in July was 65 thousand units, down 4.8% from last year, while the sales volume was 61 thousand units, up 1.6% from last year. The output of plug-in hybrid electric vehicles in July was 20 thousand units, down 13.2 from last year, while the sales volume was 19 thousand units, down 20.6% from last year. Therefore, SCI reckons that the demand for gasoline in 2019 may grow slowly and is unlikely to revive significantly.

In China’s current gasoline consumption structure, the automobile industry is the major downstream of gasoline, and nearly 90% of the gasoline demand comes from the automobile market. Therefore, the development of the automobile industry is closely associated with the consumption volume of gasoline. According to the statistics, in the first half of 2019, China’s total automobile ownership reached 0.25 billion, and therein, the new energy automobile ownership was 3.44 million, accounting for 1.37% of the total. The continuous increase of automobile ownership provided the basic support to the gasoline demand. However, the growth speed of China’s automobile ownership is declining, and with the development of new energy vehicles, the growth speed of the demand for gasoline will slow down.

After 66 years of development, China’s automobile industry has almost reached its peak. From 2010, the automobile industry started suffering from overcapacity, and the growth of automobile sales volume declined to under 10%. In the last two years, though China cut the automobile purchase tax by 50%, that policy cannot support the automobile market for a long period. According to related statistics, from January to July 2019, the total automobile output was 13.933 million units, down 13.5% from last year, while the total automobile sales volume was 14.132 million units, down 11.4% from last year. In terms of new energy vehicles, from January to July 2019, the total output was 0.701 million units, up 39.1% from last year, while the total sales volume was 0.699 million units, up 40.9% from last year. As for China’s gasoline apparent consumption volume, in the first half of 2019, China’s total gasoline apparent consumption volume was 63.67 million mt, up 3.83% from last year. However, in 2018, the annual growth of the gasoline apparent consumption volume was 4.61%.

From September to the end of 2019 will be the peak season for the automobile industry, and SCI reckons that China’s total automobile sales volume in 2019 is likely to be around 26 million units, down over 7% from last year. China’s total gasoline consumption volume in 2019 is likely to be around 133 million mt, up only 4% from last year.

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