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China automakers seek government relief because of coronavirus

Automakers in China are asking the government to help after industry-wide sales dropped 79% in February to mark their biggest ever monthly drop, with demand hit by the coronavirus outbreak.

Their wish list includes cuts to the purchase tax on smaller automobiles, measures to support sales in rural markets and simplifying car emission requirements, the China Association of Automobile Manufacturers (CAAM) stated.

February sales in the country tumbled to 310,000 vehicles from a year previously, dropping for a 20th straight month.

“China’s auto sales for February returned to levels not seen since 2005,” stated Chen Shihua, a senior association official.

Sales of new energy vehicles, which consist of battery-electric cars, contracted for an eighth month in a row, also damaged by a rollback in government subsidies.

CAAM stated it is calling for authorities as well to extend subsidies for new energy vehicles, simplifying restrictions on the number of consumers in big cities who purchase the eco-friendly cars and boost investment in infrastructure such as charging stations.

“The government will consider these proposals but it is unlikely they will introduce so many policies,” stated Yale Zhang, head of Shanghai-based consultancy AutoForesight.

“Measures such as cuts to the purchase tax, support for rural markets and easing purchase restrictions on new energy vehicles are reasonable and would have an immediate impact,” he stated.

CAAM stated auto sales will ‘definitely’ rebound in March and get back to normal in the third quarter this year.

Dongfeng Motor and its partners Honda Motor, Renault SA and Peugeot SA have all delayed resuming the production in Hubei.

However, after officials in Hubei’s capital Wuhan lifted restrictions on Wednesday for a few major industries and permitted some people to return to work, Honda restarted limited output at a auto plant in the city.

Nissan Motor has also stated that it plans to partially restart production in Xiangyang, another city in Hubei, along with its plant in Zhengzhou, Henan.

Outside of Hubei, Tesla’s production and delivery plans in Shanghai, have been experiencing disruptions caused by coronavirus.

A CAAM poll revealed that production for China’s automakers had returned on average to over 40% of normal output levels.

A decline in auto sales this year would be the third year in a row of drops. Industry-wide auto sales dropped 8.2% last year, due to the new emission standards and trade war with the United States.

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