SHANGHAI – For nearly two months now, China residents have confined themselves to homes or workplaces for fear of catching the coronavirus.
With the epidemic fading and more retail businesses reopening, they will go out and resume spending money with a vengeance, the theory goes.
A shopping spree may be in store for some consumer goods, but not necessarily for a new sedan or crossover.
That’s the takeaway from a new survey conducted by J.D. Power and Associates, a market consultancy in China.
The survey, conducted from Feb. 24 to 28, indicates it is unrealistic to expect consumer demand for cars to increase as the epidemic fades.
Among survey respondents who previously did not intend to purchase a new vehicle, only 5.9 percent have changed their minds and will buy a new car to avoid using public transport, which would, in theory, increase their exposure to the virus.
Meanwhile, 21 percent of respondents haven’t changed their mind, with no plans to purchase a new vehicle, while the rest of the respondents are not sure.
Among respondents who had intended to buy cars prior to the outbreak, the results are also mixed: While 25 percent said they plan to make a purchase ahead of schedule, 21 percent have dropped plans because of the epidemic.
J.D. Power didn’t indicate why the epidemic has prompted some consumers to give up plans to acquire a new vehicle.
But there is one likely reason: Households have decided to cut expenses in anticipation of lower incomes in the wake of the epidemic.
It’s a rational decision. A large number of small and medium-size businesses, including car dealerships, remain closed for failing to provide sufficient protective resources for employees, as required by the government.
And because of government bans on travel to help block the spread of the virus, more than 31 million migrant workers – the primary earners for families in inland regions – were still unable to return to work in coastal areas by the end of last week, according to government statistics.
Beijing will loosen requirements and restrictions now that the viral outbreak has been effectively curbed – the number of new infections in its epicenter, the central city of Wuhan, has also dropped to a single digit this week, as it did in the rest of China.
But the loss of income endured by a big portion of Chinese families can’t be recovered overnight. As long as tough times continue, it is hard to expect consumers to spend more on cars.