China car sales begin recovery after virus plunge
13 May, 2020
The lifting of coronavirus lockdowns in China has given the stuttering auto industry a jumpstart, with sales rising for the very first time in 2 yrs as buyers return.
Sales in the world's biggest car market commenced to slide in 2018 and plunged further when the pandemic paralysed the economy, nonetheless they have rebounded as the united states tames the virus and lifts restrictions on travel and businesses.
Sales rose 4.4 % year-on-year in April, the latest figures from the China Association of Automobile Manufacturers show, driven by strong demand for commercial vehicles, which soared more than 30 per cent.
The recent uptick came as China emerged from months of lockdown and restrictions on movement imposed around the united states earlier this season to curb the spread of the virus.
Passenger car sales suffered at the time, plunging near 80 % from this past year in February, according to China Passenger Car Association data.
The auto industry is an essential one for China and among those which have been supported by state measures.
Beijing decided in late March to increase the tax exemption for the purchase of electric vehicles by 2 yrs.
Several municipalities also have lifted restrictions that cap the number of new vehicles placed on the street - a move formerly targeted at limiting congestion and pollution.
SUBWAY FEARS
The moves are essential to help stimulate the marketplace after its earlier fall, said Laurent Petizon of consulting firm AlixPartners.
"In recent months, business has been difficult because people have stayed in the home," said Zhang Fengkai, a sales employee at a dealership for Japanese brand Mazda in Beijing.
"But customers are needs to come back", he told AFP.
Some industry players believe the pandemic, which includes killed a lot more than 286,000 people worldwide, could be nudging consumers towards private vehicle ownership as they seek in order to avoid infections on public transport.
"Driving yourself is more practical and it is also more reassuring in times of an epidemic," said an Audi sales employee surnamed Pu in the southwest city of Chengdu.
Volkswagen Group China's leader Stephan Woellenstein said recently that "sales are normalising".
In a commentary published the other day, he said the business has "seen interest from a fresh kind of customer, those keen to possess a personal vehicle to flee the risks of infection on public transport".
The recovery in auto sales after a virus outbreak isn't a fresh phenomenon in China. IHS Markit analyst Henner Lehne told AFP that the 2003 SARS epidemic also resulted in strong demand for vehicles in the united states.
But unlike the economic boom China was experiencing at the time of SARS, the economy contracted in the first quarter this year, hit by weakened consumer confidence and uncertainties relating to employment, he said.
Petizon warned a "double-digit" downturn was expected in the auto market this season.
For now, it would appear that wealthy customers are time for the market quicker, according to Woellenstein, whose group owns the Porsche, Lamborghini and Audi brands.
Electric vehicles are also on the rise, buoyed by recent support from Beijing, although this niche only represented about five percent of sales in 2019, said Lehne.
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