China Car Sales to See Historic Plunge in First Months of 2020

(Bloomberg) -- China’s car sales are likely to slump the most on record in the first two months of 2020 as the coronavirus keeps buyers away from showrooms, intensifying headwinds for automakers in the world’s biggest market.

Sales are set to fall by 25% to 30% in the January-February period, according to a preliminary forecast by Cui Dongshu, secretary general of China Passenger Car Association. The virus outbreak will likely drag down China’s full-year auto sales by as much as 5%, Cui said Tuesday.

China’s auto sales were already heading for an unprecedented third straight annual decline before the virus forced authorities to lock down the epicenter of Wuhan city and beyond. About two-thirds of China’s economy remains closed this week and companies are set to face difficulties when operations resume, including potential supply-chain issues and parts shortages.

“China’s car industry has never had to factor in so many negative issues -- the challenges have been piling up,” Cui said. “It will take months for economic activity to return to normal. People’s purchasing power will be undermined by falling incomes.”

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Companies from Tesla Inc. to Volkswagen AG and Toyota Motor Corp. have warned of disruptions in their operations. Automakers probably will dial back production by 15% in China this quarter after extending holiday shutdowns because of the virus, supplier Aptiv Plc said.

Should passenger-vehicle sales in China fall 20% from last year’s 21.4 million units, that would threaten to end the country’s run as the largest auto market, a rank it’s held for more than a decade.

China also is the world’s biggest market for electric vehicles. The demand for EVs and traditional premium models will suffer the most because sales of those vehicles are concentrated in the biggest cities, which happen to be the ones most affected by the virus outbreak, according to Robin Zhu, an analyst at Sanford C. Bernstein & Co.

The PCA is scheduled to report China car sales for January next week.

©2020 Bloomberg L.P.