(Bloomberg) -- China’s car sales are set to fall 8% this year, an auto-industry group said, slashing its forecast for a second time as the coronavirus keeps buyers away.
The prediction given by China Passenger Car Association on Monday signals the world’s largest market is set to shrink for a third straight year. The PCA last month predicted a 5% decline after initially forecasting 1% growth at the end of last year.
The outlook is darkening for automakers from market leader Volkswagen AG and Tesla Inc. to smaller local contenders that were already battling an unprecedented slump before the outbreak. PCA Secretary General Cui Dongshu has called for nationwide stimulus policies to help revive demand.
The outbreak has paralyzed China’s auto industry just as it was looking to gradually halt a two-year decline, with manufacturers now left with little visibility into when sales might recover. Automakers have poured billions of dollars into the market in a bet on its growth potential.
PCA’s forecast suggests the group expects a recovery in demand as the year progresses. Car sales fell 79% in February, the biggest monthly plunge ever, PCA said, slightly revising initial numbers given last week. Honda Motor Co.‘s China sales fell 85% last month, while Nissan Motor Co. reported an 80% decline.
Sales of new energy vehicles, including electric cars, fell in line with the broader auto market, dropping 78% last month, PCA said. EVs and traditional premium models could suffer the most from the outbreak because sales of those vehicles are concentrated in the biggest cities, which happen to be the ones most affected by the epidemic, according to Robin Zhu, an analyst at Sanford C. Bernstein & Co.
Electric-car sales have already been plunging for months in China, the world’s biggest market for such vehicles, after the government scaled back purchase subsidies in July. Tesla started deliveries to customers from its new Shanghai factory at the start of the year.
©2020 Bloomberg L.P.
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