Image used for representational purpose. (REUTERS)
Image used for representational purpose. (REUTERS)

Coronavirus fallout: Chinese car companies consider pay cut to stay 'healthy'

  • Some estimates suggest that vehicle sales in the country have crashed by as much as 80% with coronavirus as one of the primary reasons.
  • Companies are now looking at going online to target prospective buyers who are avoiding a personal visit to showrooms.

Coronavirus threatens to have a deep impact on several industries across the globe and its deepest impact may be felt by the Chinese automotive sector. The world's largest car market has suffered from factory closures and production suspensions in the past several weeks since coronavirus outbreak occurred and some local players are now reportedly cutting employee salaries to cut back on losses suffered.

According to Chinese state-run media outlet Global Times, Shanghai-based SAIC Motor - parent company of MG Motor - has reportedly started cutting salaries. Sources have been quoted as saying that 'ineffectiveness' is the reason assigned for pay cuts but no other detail has been given.

(Also read: Chinese auto company claims its car can fight coronavirus)

Other companies are also taking precautionary measures even if the drastic step of cutting salaries has been kept at bay for now.

Chinese automotive industry has suffered drastically since coronavirus - officially called Covid-19 - outbreak. Some estimates suggest that vehicle sales in the country have crashed by as much as 80%. There was a general slump in the sector for two years even before the outbreak but the deadly virus has come as the deafening blow after the punch. Footfall in showrooms have become scarce and car makers - both local as well as international players - are increasingly looking at targeting online platforms to reach out to prospective buyers. "Dealers returned to work gradually in the first three weeks of February and their showroom traffic is very low," China Passenger Car Association (CPCA) was quoted as saying by news agency Reuters.

All of this, quite understandably, has had an impact on the global automotive sector as a whole. Supply of crucial parts for companies like GM and Tesla have received a jolt. Ford has banned business trips after two of its employees contracted coronavirus. Even in India, companies like Tata Motors and Mahindra have predicted troubled times ahead.