China Car Sales Drop Record 80% as Virus Empties Showrooms
China’s car sales had the biggest monthly plunge on record as the coronavirus kept shoppers away.
(Bloomberg) --
China’s car sales had the biggest monthly plunge on record as the coronavirus kept shoppers away, intensifying the pressure on automakers already battling an unprecedented slump before the outbreak.
Sales fell 80% in February, according to preliminary numbers from the China Passenger Car Association released Wednesday. Average daily sales improved toward the end of the month compared with the first three weeks, PCA said.
The outbreak has paralyzed the 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 world’s largest car market over the past decades in a bet on its growth potential.
Everyone from market leader Volkswagen AG and electric-car maker Tesla Inc. to smaller local contenders have been pummeled as the spreading Covid-19 outbreak hit both demand and production. Wholesales from carmakers to dealerships probably plunged 86% in February, PCA said.
Millions of companies in China are in peril as consumers stay home and output at factories remains disrupted. Activity in the country’s manufacturing sector contracted sharply in February, with the official gauge plunging to the lowest level on record.
The Stoxx 600 automobiles and parts index was down 0.1% as of 9:22 a.m. in Frankfurt.
Even though the central government has stressed the car industry’s importance, it has yet to unveil fresh support measures. Local authorities, which are running against the clock to meet annual economic goals, have started to put in place their own incentive plans to stimulate demand.
The southern city of Foshan this month began providing rebates of as much as 3,000 yuan ($430) to car buyers. Guangzhou’s municipal government will give 10,000 yuan to new-energy vehicle buyers while a development zone in the city of Xiangtan, Hunan province, started offering 3,000 yuan to those purchasing locally made Zhejiang Geely Holding Group Co. vehicles.
With a slowing economy and widening fiscal gap, the central government has limited options to spur car sales. Its probable choices include reducing the 10% car-purchase tax, easing congestion-related purchase bans and offering incentives for rural residents to buy new-energy vehicles, according to Cui Dongshu, PCA secretary general.
--With assistance from Matt Turner.
To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net
To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Ville Heiskanen
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With assistance from Bloomberg