A slowing economy and changing consumer attitudes will cut the annual growth rate of vehicles sales in China in half over the next five years.
That according to McKinsey, which released an extensive new survey of Chinese consumers’ shifting attitudes towards cars as the country’s top auto show began today in Beijing.
The big number in McKinsey’s survey: the firm forecasts auto sales growth to slow to 5% annually through 2020, after vehicle sales rose a scorching 12% annually from 2010 to 2015 in China, during which the country passed the U.S. as the world’s largest car market.
“Changing consumer attitudes and macroeconomic headwinds are slowing growth in China’s vehicle market,” McKinsey said.
China’s economic headwinds are well documented. The changing consumer attitudes not as much. Sixty percent of consumers surveyed said owning a car was no longer a status symbol in China. Instead, 42% said owning a car is less appealing “due to high maintenance costs and worsening traffic congestion.”
Thirty seven percent said owning a car wasn’t as important because of the rise of ride-sharing, leasing, renting, and hailing apps like Uber and Didi Kuaidi. By 2030, McKinsey predicts, these types of services could reduce annual vehicle sales by 10%. (By that time, China’s vehicle sales might top 40 million annually.)
The other big survey takeaway: the twin concepts of thrift and ‘buying used’ have finally entered the Chinese car lexicon.
When McKinsey surveyed premium car buyers in 2011, budget was the fourth biggest factor in buying a car; this year it moved up to second biggest factor, after brand.
Likewise, buying used is beginning to gain attention after almost no market existed even five years ago. In 2011, only 18% of consumers said they’d consider buying used; by 2016, the number jumped to 47%.
Steve Lind, president of Kelley Blue Book, told Fortune last year his used car valuation company is expanding in China as used sales multiply. In the U.S., the used car market is three times the size of new car market. The reverse is true in China: new car sales are at least four times the size of used sales. “We see the used car growing very quickly there,” Lind said.
The other interesting takeaway from the McKinsey survey is that more than any other major car market, the Chinese are interested in automotive services beyond maintenance. Sixty-seven percent say they want advice on driving safely and avoiding wear and tear in difficult conditions. Sixty-four percent are interested in remote assistance with vehicle problems.
The demand for these services becomes apparent in Chinese cities where novice drivers and clogged roads lead to higher rates of traffic fatalities than any other major country. The World Health Organization said 260,000 die each year on China’s roads. Road injuries are China’s third leading cause of death, behind stroke and heart disease. Its fatality rate is eight times the rate in the U.S.