China plans to launch policy to alleviate coronavirus impact on automobile spending

China's authorities will draw up and promote the policies that help further stabilize automobile consumption, so as to mitigate the impact from coronavirus outbreak, according to a spokesman for China's Ministry of Commerce (MOFCOM).

Meanwhile, local governments are encouraged to adopt measures to stimulate automobile spending based on local conditions, such as relaxing the vehicle purchase restriction, facilitating auto replacement and boosting NEV transaction, Wang Bin, vice-director of the MOFCOM's Market Operation Department, said at an online press conference on Feb. 20. 

China's auto sales were estimated to fall 18% over a year ago in January, according to the China Association of Automobile Manufacturers (CAAM). There were multiple factors leading to the downturn, according to Mr. Wang. The fewer workdays due to the Spring Festival holiday and the coronavirus outbreak should be blamed. Besides, the overall market climate is also part of reasons as China's auto industry has been experiencing a phase of adjustment since 2019.

In the short term, China's auto consumption will be temporarily curbed because the epidemic extends the shutdown of vehicle sales outlets and delays consumers' car purchase action, Wang Bin added. However, the virus-cased impact will be provisional, and the pent-up consumer demand and growth potential will be quickly unleashed after the epidemic is contained.

This comes after Foshan government promulgated practical policies to encourage auto consumption. The support for promoting the spending of the vehicles meeting the China Ⅵ emission standard is highlighted by local government in a document signed on Jan. 29.

To promote vehicle upgrading and replacement, a car owner that holds the Foshan auto license plate will be subsidized RMB3,000 per new vehicle by virtue of the invoice of a used car transfer or the certificate that can prove a scraped vehicle has been deregistered, according to the document.

Besides, the local government also encourages consumers to buy more China Ⅵ vehicles by offering the subsidy of RMB5,000 per vehicle to a consumer who simultaneously purchases five or more large-sized, medium-/heavy-duty buses or trucks. Each of them should be priced no less than RMB500,000.

To support the new car sale, Foshan's authority will provide a consumer with subsidy of RMB2,000 per vehicle.