Sales to take a further hit as result of virus

Auto sales in China fell 18 percent year-on-year in January, the 19th consecutive month of decline, and the country's leading industry association expects the short-term prospects to be even gloomier, as the novel coronavirus outbreak continues.

Carmakers delivered 1.94 million vehicles in January, 27 percent less than in December, according to statistics the China Association of Automobile Manufacturers released on Thursday.

Passenger vehicles, which accounted for the majority of overall vehicles, stood at 1.61 million, down 20.2 percent year-on-year.

Sales of new energy vehicles plunged 54.4 percent, down for a seventh month in a row, according to the association.

BYD sold a total of 25,173 vehicles in the month, down 42.68 percent year-on-year.

Its new energy vehicles saw an even deeper fall of 75.12 percent. Great Wall Motors, China's largest SUV maker, saw its January sales fall 28.6 percent to 80,261.

The association said the sales falls were primarily the result of the Spring Festival holiday, which meant there were only 17 working days in the month.

It said the novel coronavirus, which started to spread outside of Hubei province around Jan 20, had limited effects on the lackluster performance in January.

However, the association's poll of around 300 carmakers and auto suppliers showed they expected the epidemic to wreak more havoc in the short term on auto sales and production than the 2002-2003 SARS outbreak.

China extended this year's Spring Festival holiday, and local governments have imposed travel restrictions and warned residents to avoid public spaces.

Many will work from home for several weeks before they go back to their offices.

"It will have a lot of effects on the Chinese auto industry, which is undergoing a transformation. The epidemic will see slashed demand in the short run," said Chen Shihua, deputy secretary-general of the association.

The CAAM said that just a third of China's 183 car manufacturing plants had resumed production as of Wednesday.

Hubei, the epicenter of the epidemic, is responsible for around 9 percent of China's car manufacturing.

So far carmakers in the province have postponed all production.

Some industry executives including Volvo CEO Hakan Samuelson said they could recoup lost production throughout the rest of the year. Ford said it is too early to estimate the implications of the novel coronavirus on its business.

A poll by the China Automobile Dealers Association showed that dealers in the country predicted China's car sales to fall 50 to 80 percent year-on-year in February.

Some 70 percent of dealers polled said they had seen "almost no customers" since the end of January.

Xu Haidong, vice-chief engineer of the CAAM, said sales in the first quarter will be greatly impacted but he expected a short-term rebound when the epidemic is over.

Those who don't have a car may decide they need a car in case of emergencies, he said.

Xu added, though, there is little room for optimism for whole-year performance in 2020.

The association warned before the outbreak that automakers need to get used to a new normal of "low speed growth" in China.

It predicted last month that sales are likely to shrink 2 percent year-on-year this year, after an 8.2 percent fall in 2019 and a 2.8 percent dip in 2018.

Shi Jianhua, deputy secretary-general of the CAAM, said he does not believe the epidemic will have lasting effects on China's automotive industry.

"The auto industry will not be insulated from the novel coronavirus, but its long-term trend of stable growth will not change because the Chinese economic fundamentals are sound," he said.