Public Transport Virus Fears May Give China Carmakers a Lift

(Bloomberg) -- The escalating coronavirus outbreak may turn out to be a boon for automakers as Chinese consumers weigh the benefits of riding in a personal car versus public transport, analysts including Morningstar Inc.‘s Ivan Su predicted.

“Panic buying” is likely to pick up after the virus peaks, which is expected to happen in 1-2 months, Su said in a Feb. 1 note. In the very near term, demand may remain weak though as consumers stay at home, away from dealerships, he said.

Any uptick in demand would be welcome news to automakers mired in a slump in the world’s biggest car market that threatens to push sales down for a third year. Yet supply issues may hinder a recovery -- the virus outbreak has caused plant closings in the epicenter Wuhan and across China.

Piper Sandler Cos. analysts Alexander Potter and Winnie Dong drew comparisons to the 2003 SARS outbreak, which had a slightly positive impact on auto demand. But SARS isn’t a perfect comparison, as China’s car market is much bigger now and therefore there is less untapped demand, the analysts said in a Jan. 27 note.

Researchers from both the institutions estimated that longer-term, China’s weaker economic growth is set to continue to weigh on car sales.

©2020 Bloomberg L.P.

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