Fri, Feb 14, 2020 - Page 10 News List

China auto sales sink to new lows as virus spreads

PRODUCTION DIALED BACK:Analysts said automakers could reduce production in China by 15 percent this quarter, while a parts shortage might hurt its neighbors

Bloomberg

China-made Tesla Model 3 electric vehicles sit on a lot at the Tesla Inc Gigafactory in Shanghai on Dec. 2 last year.

Photo: Reuters

Auto sales in China plunged to fresh lows last month as COVID-19 kept buyers away from showrooms, intensifying the gloom hanging over the industry.

Sales to dealerships fell 20 percent to 1.61 million vehicles last month, the China Association of Automobile Manufacturers said yesterday. That is the biggest monthly drop since January 2012.

The outbreak is exacerbating manufacturer and dealership woes in the world’s biggest market, which is also being hit by a slowing economy and trade tensions.

Electric vehicles led the decline, with last month’s new-energy vehicle sales falling 54 percent. Electric vehicles and traditional premium models would suffer the most from the outbreak, because sales of those vehicles are concentrated in the biggest cities, which happen to be the ones most affected by the epidemic, Sanford C. Bernstein & Co analyst Robin Zhu (朱鑌) said.

Electric-vehicle sales have already been plunging for months in China, the world’s biggest market for the vehicles, after the government scaled back purchase subsidies in July last year.

Tesla Inc, which started deliveries a few weeks ago from its new Shanghai factory, its first outside the US, has been bucking the trend with increasing registrations.

Companies from market leader Volkswagen AG to Tesla and Toyota Motor Corp have warned of disruptions in their operations. Automakers probably would dial back production by 15 percent in China this quarter after extending holiday shutdowns because of the virus, supplier Aptiv PLC estimated.

Although factories and dealers are gradually starting to resume operations after two weeks’ suspension, massive challenges remain. A majority of dealerships remained closed this week for failing to meet the government’s criteria to resume business, and inventories are soaring.

The outbreak has also endangered component supply. Parts manufacturers across China have suspended production through last week and in the case of Wuhan and Hubei Province, factories are still largely closed.

That leaves plants at risk both in China and beyond: South Korea’s Hyundai Motor Co and Japan’s Nissan Motor Co are among automakers that have halted some production in their home countries because of component shortages caused by the virus.

Separately, Tesla is seeking government approval to produce a Model 3 that is about 130kg heavier than the basic versions it produces now in China, a filing with the Chinese Ministry of Industry and Information Technology showed.

Reuters reported that the vehicle would be a longer-range version. The document does not spell out the driving range, but its weight is similar to that of the long-range, rear-wheel-drive Model 3 that Tesla imports from the US.

A company representative declined to comment.

Tesla’s Shanghai plant resumed production on Monday after the COVID-19 outbreak idled the plant.

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