Business Essentials for Professionals


Record Drop In Auto Sale In China For February, Industry Calls For Aid From Government

Record Drop In Auto Sale In China For February, Industry Calls For Aid From Government
There was a 79 per cent year on year plunge in the sale of new auto and vehicles in China – the largest auto market of the world, in the month of February – the month that saw the strictest curbs in the country on travel and movement and on production because of the spread of the deadly coronavirus.
According to the China Association of Automobile Manufacturers (CAAM) a total of only 310,000 vehicles only in the entire market which also marked the 20th straight month of drop in sale of auto in the country.
February was also the month with the highest drop in auto sale in the country ever.
"China's auto sales for February returned levels not seen since 2005," said Chen Shihua, a senior official of the CAAM.
February was also the eighth straight month for a decline in the sale of new energy vehicles, which include battery-electric cars.
According to estimates of the CAAM that was published last month, the industry body had predicted a 10 per cent drop in sale of vehicles in China in the first half of this year. The body had also said that the decline in sale could be as low as 5 per cent if it was possible for China to contain the spread of the disease before April.
Dongfeng Motor Group Co Ltd and its partners Honda Motor, Renault SA and Peugeot SA, that have manufacturing units in the Hubei province – the epicenter of the coronavirus outbreak and which is one of the major hubs for the auto industry in China accounting for about 10 per cent of the total output, have said that their plans for restarting of production operations have been delayed.
The plans of manufacturing electric cars in at its shanghai plant of Tesla and delivering them from there have also been disrupted.
At the same time however, the authorities in Wuhan, the city from where the coronavirus originated at the end of December last year, relaxed some restrictions that had been imposed on a limited number of key industries there which gave the chance to some of the workers to return to work. For example, partial output was started by the auto agent Honda.
Another Japanese auto giant Nissan Motor also announced that it would start partial manufacturing activities at its plants in Xiangyang, another city in Hubei, as well as in its factories in Zhengzhou, Henan.
Following the revelation of the historic drop in auto sale in china in the month of February, automakers of the country had urged the government to provide aid measures to the industry.  The CAAM said that they want a cut in the purchase tax on smaller vehicles, aid measures for boosting sale of vehicles in the rural areas of the country and relaxation of car emission standards for a short period of time.
CAAM also called on the government to extend subsidies for new energy vehicles, relax cap put on the number of consumers in big cities making purchase of eco-friendly cars and make more investments in infrastructure for new energy vehicles such as building more charging stations.
“The government will consider these proposals but it is unlikely they will launch so many policies,” said Yale Zhang, head of Shanghai-based consultancy AutoForesight. “Measures like cuts to the purchase tax, support for rural markets and easing purchase restrictions on new energy vehicles are reasonable and would have an immediate impact,” he said.
( &

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc