| 3:31 PM EST

Car Sales Vanish (Temporarily) in China

Digging out of a 92% sales drop will take time.
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How big a deal is China’s coronavirus outbreak? If you’re a car dealer there, it meant close to zero business earlier this month.

Vanishing Volume

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Retail deliveries crashed to a grand total of about 800 units nationwide in the first week of February, the China Passenger Car Assn. says. Sales last week improved, but only to a paltry 4,100 cars.

In short, sales in the first half of February crashed to about 8% of last year’s volume. At this rate, retail sales are headed for a 70% decline for February and 40% for the January-February period, CPCA calculates.

The group’s statistics show that retail deliveries fell 6% in 2018 and 8% last year. In early January, CPCA had been predicting a 1% increase for 2020. Now it appears certain that year-on-year sales will slip again, although probably by only a few percentage points.

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Another year of shrinkage also is bad news for carmakers, who make their money on wholesales to dealers rather than retail sales to consumers.

Producers were already forecasting a 2% drop in factory sales for 2020 after three straight years of erosion. That figure will only get worse this year.

The backup in retail sales means Chinese dealers won’t be eager to restock inventories as quickly as manufacturers had hoped. It also portends another disappointing year for car companies.

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