U.S. auto sales may not follow China's rebound

Talk about a comeback. Sales of new vehicles in China actually rose in April after plunging 80 percent just two months earlier in the depths of the coronavirus crisis.

That's great news for the global auto industry, which still has much of its financial health tethered to the world's largest automobile market.

But anyone who thinks China's recovery will serve as a template for a U.S. rebound best think again.

"No way," declared Yan Fabio, echoing a view three other observers — rich with experience in China — shared with me last week.

Not that she has any special insight into the dynamics of car sales in either market. She does, however, have a unique lens into the vast differences in the ways China and the U.S. have tried to snuff out the coronavirus.

She grew up in China and graduated from the Huazhong University of Science and Technology. The school is in Wuhan, in the province of Hubei, the epicenter of the global outbreak.

And now she is a vice president of the Michigan branch of the Hubei Chamber of Commerce, which in normal times tries to connect its members to businesses around the Motor City.

Through the ubiquitous WeChat app, she heard directly from friends and acquaintances about how forcefully and relentlessly China clamped down on human activity in Wuhan starting in January. In fact, her connections were signaling something was amiss in early January, weeks before the national government got around to acknowledging the tragedy on its hands.

She knows how dramatically the approach in her home country differed from what she sees locally from her home in Michigan.

Here, her governor's stay-at-home orders have been met with a mixture of respect, protest and defiance while much of the nation, urged on by its president, itches to open up the economy as the number of new coronavirus cases falls in some states and rises in others.

The Wuhan lockdown ended after 11 weeks in early April. But even today, "freedom" throughout China is unlike anything most Americans would recognize, or tolerate.

Everyone wears masks. Temperatures are checked at work, at Starbucks, at apartment buildings. The ability to travel freely between cities hinges on the health-code reading — created in partnership among the government and the country's tech giants — on one's mobile phone.

Fabio's friends had their frustrations, but they kept them to private conversations. She and my three other contacts all pointed to something else:

"People in China are more willing to sacrifice their freedom," she says.

Meanwhile, she sees merit in both sides of the arguments raging around her in Michigan and the U.S. at large.

The numbers tell a story of their own: The COVID-19 death rate is about 25 times higher in the U.S. than in China. As of Thursday, May 14, more people had died in Michigan (4,787) than in all of China (4,637), if the official tallies are to be believed.

When six new infections popped up in a Wuhan neighborhood in early May after a monthlong respite, authorities sprung into action, undertaking a crusade to test the city's 11 million people within two weeks.

As my colleague in Shanghai, Yang Jian, writes: Success in putting a lid on new cases has allowed authorities to ease up on lockdown measures and enabled businesses to reopen. This, of course, has juiced demand for cars.

Sales are projected to increase again this month and in June in China. If all goes well, forecasters see a 15 percent decline in sales this year. That's not so bad, considering the freefall in February and March's 43 percent drop.

The question for industry watchers is whether the more benign approach to tackling the virus in the U.S. will do the trick before too much further damage is done to the economy. Or will it open the door to further outbreaks that will result in cycles of lockdowns and letups?

Mike Dunne, a Michigan native who has spent most of his career studying the auto industry in China, anticipates more of the latter. Forget about the debate over whether the U.S. recovery will be V-shaped or U-shaped.

"Think a long, bumpy tail, with lots of twists and turns," said Dunne, who now works out of San Diego as CEO of the ZoZo Go consultancy.

"It will be messy," he said. "But we'll get there."