China sales collapse spurs call for relief

Reuters
REUTERS

A Nissan dealership in Beijing on June 23, 2019. LMC, citing the COVID-19 outbreak, this week forecast China’s light-vehicle market will decline 7 percent to 23.7 million units in 2020.

BEIJING -- Automakers in China are calling on the government to help after industrywide sales plunged 79 percent in February to mark their biggest ever monthly decline, with demand lashed by the coronavirus outbreak.

Their wish list includes cuts to the sales tax on smaller vehicles, measures to support sales in rural markets and an easing of vehicle emissions requirements, the China Association of Automobile Manufacturers said.

February sales in the world's biggest auto market tumbled to 310,000 from a year earlier, falling for a 20th straight month.

"China's auto sales for February returned to levels not seen since 2005," said Chen Shihua, a senior association official.

Sales of new energy vehicles, which include battery-electric cars, fell for an eighth month in a row, also hurt by a rollback in government subsidies.

CAAM said it is also calling for authorities to extend subsidies for new energy vehicles, ease restrictions on the number of consumers in big cities who are eligible to purchase the eco-friendly cars and expand investment in infrastructure such as charging stations.

How automakers fared in Feb.
  • BAIC BluePark, the electric unit of state-owned BAIC Group, sold 1,002 units in February, down by 65 percent from a year earlier.
  • Shenzhen electric vehicle maker BYD sold 5,501 cars last month, down 80 percent.
  • Chongqing-based Chongqing Changan Automobile, which has joint ventures with Ford and Mazda, sold 28,763 units last month, down 74 percent.
  • Dongfeng Motor Group, which is based in Wuhan, the epicenter of coronavirus, said it sold 26,117 units last month, down 81 percent.
  • Ford's venture with Changan sold 4,089 units last month, down 40 percent.
  • Guangzhou-based GAC, which has joint ventures with Toyota, Honda, Mitsubishi and FCA, said it sold 19,347 vehicles in February, down 81 percent.
  • Geely Automobile said its sold 21,168 Geely and Lynk & CO. light vehicles last month, down 75 percent.
  • General Motors' Shanghai joint venture with SAIC Motor sold 7,612 units in February, down 92 percent.
  • GM's Guangxi-based venture with SAIC Motor and a local partner sold 11,800 units in February, down 88 percent.
  • Great Wall, one of China's top SUV manufacturers, said it sold 10,023 units in February, down 86 percent.
  • Honda Motor Co,, which has joint ventures with GAC and Hubei-based Dongfeng, sold 11,288 units in China last month, down 85 percent.
  • Volkswagen Group's Anhui-based electric vehicle partner JAC sold 11,550 units in February, down by 63 percent.
  • JMC, in which Ford also has a stake, sold 4,672 vehicles in February, down 64 percent.
  • Japanese automaker Mazda's venture with Changan sold 1,759 vehicles last month, down 74 percent.
  • Electric vehicle maker Nio Inc. delivered 707 cars in February, down 13 percent.
  • Nissan, which has a joint venture with Dongfeng, said China sales dropped 80 percent to 15,111 in February.
  • Peugeot SA's main joint venture with Dongfeng sold 735 units last month, down 89 percent.
  • Renault's main joint venture with Dongfeng sold no cars in February, compared to sales of 1,470 in Feb, 2019.
  • SAIC Motor, China's biggest automaker, which has joint ventures with Volkswagen and General Motors, said group sales dropped 87 percent  to 47,365 last month.
  • Toyota Motor Corp., which has joint ventures with FAW Group and GAC sold 23,800 Toyota and Lexus cars and light trucks, down 70 percent.
  • Volkswagen's Shanghai-based venture with SAIC Motor sold 10,000 light vehicles last month, down 91 percent.

"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.

March rebound

"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.

CAAM said auto sales will 'definitely' rebound in March and should return to normal in the third quarter.

An association official told Reuters last month that auto sales are likely to drop by more than 10 percent in the first half of the year. If the outbreak in China is effectively contained before April, the decline could shrink to around 5 percent for the full year, he added.

The association has also asked authorities to improve logistics and support the resumption of production at factories in Hubei, the province where the outbreak began and a major car manufacturing hub responsible for nearly 10 percent of China's light-vehicle output.

Dongfeng Motor Group Co. and its partners Honda Motor, Renault and Peugeot have all delayed the restart of production in Hubei.

However, after authorities in Hubei's capital Wuhan lifted restrictions on Wednesday for a few key industries and allowed some people to return to work, Honda resumed limited output at a car plant in the city.

Nissan Motor has also said it plans to partially resume production in Xiangyang, another city in Hubei, as well as its plant in Zhengzhou, Henan.

Outside of Hubei, Tesla's production and delivery plans in Shanghai, have also been disrupted.

A CAAM poll showed that production for China's automakers had returned on average to more than 40 percent of normal output levels.

A drop in auto sales this year would be the third year in a row of declines. Industry-wide auto sales fell 8.2 percent last year, pressured by new emissions standards and trade tensions with the United States.

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