Authorities look to jump-start auto sales

China will further promote automobile consumption in order to drive economic growth, as work and vehicle production resumes at a steady pace, the Ministry of Industry and Information Technology (MIIT) said on Monday.

The ministry also announced that 97 percent of automobile companies have resumed work, compared with 60 percent as of February 19. Meanwhile, around 82 percent of employees in auto companies have resumed work, compared with 50 percent late last month. The rate at which production quotas are being met is also approaching similar levels seen at this time last year.

Xin Guobin, vice minister of the MIIT, said that joint efforts from all sectors of society have helped achieve such results, and more will be done to stimulate automobile consumption in the future.

In addition, Xin said that China will adjust its new-energy vehicle related policies to further promote the auto industry's development.

Amid the COVID-19 outbreak, China has introduced notices and guidelines to further promote sales of vehicles. Local governments also issued policies in an attempt to spur automobile purchasing.

According to preliminary statistics from Beijing Business Today, at least 12 cities across the country have introduced related policies; these mainly cover subsidies for National-VI-emission-standard or new-energy vehicles and the relaxation of restrictions on the purchase of traditional gasoline vehicles.

Cui Dongshu, secretary-general of the China Passenger Car Association, said that: "although the government has proposed a stimulus policy for the car market, the actual implementation of policies in some cities will be in April and the effect of these policy is not so prominent in the early stages. Consumer confidence is difficult to return to normal by the end of March and car purchase demand is unlikely to see a significant increase in the short term."

Cui suggested that comprehensive measures such as the implementation of vehicle purchase tax reductions, subsidies for new-energy vehicles, subsidies for mini electric vehicles sold in rural areas and other measures can also be considered.

Zhang Xiaofeng, an independent market analyst, said that "stimulus policies are very beneficial to enhance market confidence. Policies can play a role in alleviating the impact of the market downturn amid the epidemic. Consumer confidence can be attributed to a number of factors and the effect needs to be observed."

Zhang said that industry insiders are discussing whether Beijing, Shanghai and other large cities will follow up to relax restrictions on purchases. He thinks Beijing and Shanghai will take multiple factors into consideration and release proper methods for stimulating the market. Large cities have long limited the issuance of car plates due to environmental concerns.

Statistics from the China Passenger Car Association show that an average of 16,666 passenger cars were sold daily in the first week of March, and the figure rose to 21,696 in the second week, and 25,842 in the third week. That was lower than in the same period in 2019, but much better than in February's daily average of 7,099 units.