New vehicle sales in China tumbled 18% in January due to the Lunar New Year celebration and the coronavirus outbreak.
Already facing a tough start to 2020 due to the Lunar New Year holidays, China’s auto sales plummeted 18% due to the aforementioned holiday and the coronavirus outbreak that forced people into their homes crashing auto production and sales.
The decline marked the 19th consecutive month that sales in the world’s largest automotive market fell, according to the China Association of Automobile Manufacturers. The group noted that February is going to be a difficult month as well.
Preliminary data for January shows new vehicle sales fell by nearly 20%, but even worse sales of battery electric and other new energy vehicles plunged 54.4%, down for a seventh month in a row, the association said.
(Coronavirus expected to have big impact on Chinese auto industry.)
The Lunar Holiday, which started earlier than usual, was the biggest driver of the decline, CAAM noted. The celebrations typically keep shoppers off dealer lots. However, the outbreak of the virus and the subsequent moves by the government, such as warning residents to avoid public places, seemingly ensured that another decline.
The coronavirus could keep many auto plants in China closed, hurting sales in February too.
The question now is how will this impact February sales. Some automakers are just now beginning to crank production back up, but there are still plenty that have kept their doors shut.
“Due to the extension of the holidays, the shortage of workers and auto parts, we predict that the production of more than 1 million vehicles will be impacted by the coronavirus epidemic,” Chen Shihua, a senior association official told Reuters.
(As Hyundai closes Korean plants, global automakers increasingly worried coronavirus epidemic.)
The association said last month sales are likely to shrink 2% in 2020, a third straight year of contraction. Sales in China fell 8.2% in 2019. The impact of the virus is beginning to be felt in the U.S. as well.
United Auto Workers officials in Flint, Michigan, representing workers at the General Motors truck assembly plant in Flint, Michigan, have taken to social media to warn of potential parts shortages at the General Motors truck assembly plant created by the medical emergency in China created by the outbreak of coronavirus.
Sales were predicted to fall in China in 2020 by 2%, but that could rise depending upon the coronavirus impact.
UAW Local 598, in a message to members in a social media post, said the threat of parts shortages is growing and also threatens production at key GM assembly plants in Arlington, Texas, and Fort Wayne, Indiana.
(China’s coronavirus crisis could cripple car production in the U.S.)
Neither FCA nor Ford has indicated whether they are facing potential parts shortages of key parts from China that could curtail production.