China auto sales drop 18%, with coronavirus keeping buyers at home

BEIJING/SHANGHAI — China’s vehicle sales likely fell by almost a fifth in January, marking a 19th consecutive month of decline, hurt by Lunar New Year holidays that started earlier than last year and by the coronavirus outbreak.

The epidemic will hit auto sales and production hard in the short term, the China Association of Automobile Manufacturers said, predicting competition in the industry would get fiercer and some smaller parts suppliers could collapse.

Preliminary data for January shows vehicle sales tumbled 18% while sales of battery electric and other so-called new energy vehicles plunged 54.4%, down for a seventh month in a row, the association said.

It did not give absolute figures.

Although the earlier start to the holidays, when consumers don’t do much shopping, was the main factor behind the dismal numbers, local governments began imposing travel curbs and warning residents to avoid public spaces in the last two weeks of January.

An extension of the holidays to counter the virus also discouraged dealers from ordering cars at the end of the month as is their usual practice.

“Due to the extension of the holidays, the shortage of workers and auto parts, we predict that the production of more than one million vehicles will be impacted by the coronavirus epidemic,” Chen Shihua, a senior association official said.

The association said last month sales are likely to shrink 2% in 2020, a third straight year of contraction.

However, the avoidance of public spaces might go on for quite some time. Formula One organizers on Wednesday postponed the Chinese Grand Prix, which was due to be run in April. And the British website Autocar cited sources who said April’s Beijing auto show will also be postponed. 

In Hubei province where the outbreak began and a major car manufacturing hub responsible for nearly 9% of China’s output, Dongfeng Motor Group Co Ltd and its partners Honda Motor Co Ltd, Renault SA and Peugeot SA have all said they are delaying the restart of production.

Tesla Inc, which started delivering cars built at its $2 billion plant in Shanghai last month, restarted production in Shanghai on Monday with local government help.

Those operating plants outside Hubei province such as Volkswagen AG and General Motors Co have said they will keep some factories idled for an extra one or more weeks.

Industry sales fell 8.2% last year, pressured by new emission standards in a shrinking economy and by trade tension with the United States.