Hard-hit China industry asks government for incentives

China's auto industry is calling for government support to help restart car sales there, as the coronavirus depresses the world's biggest auto market.

The China Association of Automobile Manufacturers said last week that government incentives are now necessary to get the industry back on track.

China's new-vehicle sales plummeted by an astonishing 82 percent in February, to just 224,000 vehicles.

Just two months ago, the association forecast that industry sales volume would drop a modest 2 percent in 2020.

But last week, after several weeks of quarantined cities and a widespread curtailment of commercial activity, the association said it could not provide a forecast for how the year will end up.

"Because of the impact from the coronavirus epidemic, the annual sales fall will be steeper than our previous forecast if the government doesn't roll out incentive policies," said Xu Haidong, association assistant secretary-general.

However, the retail market is slowly improving, according to the China Automobile Dealers Association.

Last week, the group predicted that March light-vehicle sales will recover to about 1 million as closed assembly plants and dealerships resume operations.

That is still a painfully low number for China, a market that automakers all over the world now rely on for volumes and profits. In 2019, Chinese retailers sold 21.36 million passenger vehicles.

"China does appear to be working past the worst of the outbreak, as the country begins to restart operations and return to normal, a process that is expected to take a few months at a minimum," LMC Automotive said of the industry last week. However, "this process also carries some risk of restarting outbreaks."

Some observers wonder just how quickly shoppers will return to showrooms in China, even after the deadly virus abates.

A new survey conducted by J.D. Power and Associates' office in China indicates it is unrealistic to expect consumer demand for cars to quickly bounce back as the epidemic fades.

The survey, conducted late last month, found that 21 percent of consumers who had previously planned to buy a new car have dropped their plans, because of the virus.