Volkswagen Group, Nissan and Guangzhou Automobile Group are among the automakers increasingly counting on Chinese government tax cuts to stimulate demand and help the world's biggest auto market rebound from its worst slump in a generation. The unanswered question is when that will happen.
Auto executives attending this year's auto show in Shanghai gave a range of estimates from this month to the second half of this year. As a point of reference, the state-backed China Association of Automobile Manufacturers said last week that sales could rebound in July or August after the effects of government tax breaks trickle down to consumer spending -- but overall growth likely would be flat this year.
The tax reductions could be big. China announced plans to cut a total of 2 trillion yuan ($298 billion) in duties and fees, including value-added taxes, this year to help bolster the world's second-largest economy.
Still, not everyone is convinced that the stimulus will be enough to keep all automakers competitive.
"I'm not optimistic about the overly fragmented and capital-intensive industry business model," said Bill Russo, chief executive officer of Shanghai-based consultancy Automobility. "The headwinds are still there."
While automakers showed off some exciting new models at the Shanghai show, consumers likely will remain cautious until there is some resolution to the U.S.-China trade negotiations and clarity on the direction of the overall economy, said Steve Man, a Hong Kong-based analyst with Bloomberg Intelligence. On Wednesday, China said gross domestic product rose 6.4 percent in the first quarter from a year earlier, exceeding economist estimates.