Local governments aim to incentivize auto sales in wake of virus outbreak
Forecasts call for up to 25 percent year-on-year deliveries reduction if outbreak cannot be curbed globally
Local governments in Chinese cities have introduced measures including subsidies for buyers and more available license plates to boost vehicle sales and stimulate domestic demand as the COVID-19 subsides in the country.
The coronavirus outbreak severely reduced demand and disrupted automotive supply chains, making a noticeable impact on auto sales.
According to the China Association of Automobile Manufacturers, sales in the first four months totaled 5.76 million units, down 31.1 percent year-on-year. Sales of new energy vehicles reached 205,000 units, slumping 43.4 percent year-on-year.
CAAM estimates that sales this year could fall by 15 percent from the over 25 million units sold in 2019. If the pandemic cannot be effectively controlled outside China, the worse-case scenario could be a slump of up to 25 percent.
On May 20, Tianjin officials announced that buyers of new energy vehicles would remain exempt from purchase taxes during the next two years.
And those who buy new energy vehicles from June 1 to Dec 31 will get a 2,000-yuan ($280.63) coupon for charging services.
The city also decided to increase 35,000 license plates for passenger vehicles this year, which will be selected under a lottery-styled scheme.
Relaxing car-purchase restrictions has become one of the most popular recommendations at the ongoing third session of the 13th National People’s Congress.
Chen Hong, chairman of China’s biggest automaker SAIC Motor and a National People’s Congress deputy, is calling for cities in China that have introduced restrictions on the number of license plates allocated to citizens to increase those allowances.
He said the restrictions on license plates have become a barrier to automobile consumption. Relaxing the policy will be of great significance for promoting auto sales. With promotion and a greater inventory of premium products, SAIC is aiming for its sales to outperform the overall Chinese market this year, Chen said in a statement.
The carmaker has partnerships with Volkswagen and General Motors.
“Based on the industry development status and impact of the novel coronavirus break, governments should release related policies to relax new energy vehicle restrictions, expand in rural markets and extend subsidies,” said Fang Yunzhou, founder and chairman of Zhejiang Hozon New Energy Automobile Company.
Shanghai and Hainan provinces also released policies to simulate vehicles sales on May 20.
Hainan’s government will offer residents 10,000 yuan if they buy a pure electric vehicle, plug-in vehicle or fuel cell vehicle and register from April 30 to the end of this year.
The province will provide 150 billion yuan at most.
Shanghai government will provide 4,000 yuan for residents who abandon gasoline vehicles with national emissions standard IV or lower and buy a new one with State VI emission standards by the end of this year.
The city will also offer the locals subsidies of 5,000 yuan to pay the private or public charging piles services.
Earlier this month, Wuhan in Hubei province rolled out subsidies to support local auto companies as the city tries to revive its economy after months of heavy lockdowns.
The local authorities will offer 10,000 yuan subsidies to residents who buy locally made electric vehicles.
A gasoline car would come with a subsidy of up to 5,000 yuan.
Wuhan was also considering supporting local automaker Dongfeng Motor Corp.
The city produced 1.5 million vehicles last year and is also home to plants owned by Dongfeng Motor Group’s joint ventures with Honda Motor and Peugeot SA, and General Motors’ partnership with SAIC Motor.
The Hangzhou government in Zhejiang province decided to offer another 20,000 license plates this year. The city is one of eight metropolises in China that limits the number of license plates.
Cities in Guangdong, Hunan and other provinces released different policies based on local conditions to stimulate auto sales during the last two months.
According to a report released by Industrial Securities Company on Thursday, local measures have become the main force of policy simulation this year and are expected to boost passenger car sales of 790,000 to 1.16 million units.
The company estimated that the provinces that have introduced the measures are expected to increase sales of 785,000 units in 2020.
Beijing has the most stringent control of vehicle purchases, for both fuel vehicles and new energy vehicles.
By the end of last December, there were 3.34 million people applying for the license plate of the gasoline vehicle in the capital. Only 38,200 plates will be provided this year.
By the end of April, 54,200 new energy vehicle plates were given away and Beijing still has 438,000 people applying for the license plate of a new energy vehicle. New applicants may have to wait for up to nine years to get one.
Industry insiders said consumption of around 3 million units is suppressed in Beijing. If the city relaxes the restriction, auto sales will surge.
Based on the industry development status and impact of the novel coronavirus break, governments should release related policies to relax new energy vehicle restrictions, expand in rural markets and extend subsidies.” Fang Yunzhou, founder and chairman of Zhejiang Hozon New Energy Automobile Company