China car sales to see historic plunge in first months of 2020

China car sector to take hefty first-quarter hit from Coronavirus outbreak and its fallout, but 2020 outlook not necessarily grim.
By : Bloomberg
| Updated on: 04 Feb 2020, 12:51 PM
Tesla Inc. Model 3 vehicles sit parked at the company's Gigafactory in Shanghai, China, on Monday, Dec. 30, 2019. Tesla delivered its first China-built cars on Monday, a milestone for Elon Musk's company as it accelerates a push in the world's largest electric-vehicle market. Photographer: Qilai Shen/Bloomberg (Bloomberg)
Tesla Inc. Model 3 vehicles sit parked at the company's Gigafactory in Shanghai, China, on Monday, Dec. 30, 2019. Tesla delivered its first China-built cars on Monday, a milestone for Elon Musk's company as it accelerates a push in the world's largest electric-vehicle market. Photographer: Qilai Shen/Bloomberg (Bloomberg)
Tesla Inc. Model 3 vehicles sit parked at the company's Gigafactory in Shanghai, China, on Monday, Dec. 30, 2019. Tesla delivered its first China-built cars on Monday, a milestone for Elon Musk's company as it accelerates a push in the world's largest electric-vehicle market. Photographer: Qilai Shen/Bloomberg (Bloomberg)
Tesla Inc. Model 3 vehicles sit parked at the company's Gigafactory in Shanghai, China, on Monday, Dec. 30, 2019. Tesla delivered its first China-built cars on Monday, a milestone for Elon Musk's company as it accelerates a push in the world's largest electric-vehicle market. Photographer: Qilai Shen/Bloomberg

China’s car sales are likely to slump the most on record in the first two months of 2020 as the coronavirus keeps buyers away from showrooms, intensifying headwinds for automakers in the world’s biggest market.

Sales are set to fall by 25% to 30% in the January-February period, according to a preliminary forecast by Cui Dongshu, secretary general of China Passenger Car Association. The virus outbreak will likely drag down China’s full-year auto sales by as much as 5%, Cui said Tuesday.

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China’s auto sales were already heading for an unprecedented third straight annual decline before the virus forced authorities to lock down the epicenter of Wuhan city and beyond. About two-thirds of China’s economy remains closed this week and companies are set to face difficulties when operations resume, including potential supply-chain issues and parts shortages.

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“China’s car industry has never had to factor in so many negative issues -- the challenges have been piling up," Cui said. “It will take months for economic activity to return to normal. People’s purchasing power will be undermined by falling incomes."

Companies from Tesla Inc. to Volkswagen AG and Toyota Motor Corp. have warned of disruptions in their operations. Automakers probably will dial back production by 15% in China this quarter after extending holiday shutdowns because of the virus, supplier Aptiv Plc said.

The PCA is scheduled to report China car sales for January next week.

First Published Date: 04 Feb 2020, 12:51 PM IST
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