In February car sales in China fell by 92 per cent and the Vehicle Inventory Alert Index, which reflects trends in car sales, reached 81.2 per cent due to the coronavirus shutdown. How has the Chinese automotive market developed since then?
The latest issue of the Vehicle Inventory Alert Index by the China Automobile Dealers Association (Link 1) was released at the end of August and was 52.8 per cent – figures below 50 per cent indicate a strong demand for cars. Since July it has dropped by a further 0.5 per cent. These numbers confirm that the automobile dealers’ market has improved, but still is in a downturn.
To reverse sliding sales, some car manufacturers and dealers have actively marketed car sales over the internet. Which concrete measures did they take to promote sales?
During the pandemic, consumers preferred to stay at home, of course. Therefore automotive manufacturers and dealers had no choice but to upgrade their digital service standards. They have used popular online tools such as Tik Tok and Kuaishou, for example, to produce short videos and thereby enable consumers to look at the cars from home. Other companies did provide door-to-door test drives and remote maintenance and diagnostic services. The coronavirus had a lot of negative effects on the industry, but it also has facilitated the digitalisation of car sales services as well as after sales services to a certain extent.
Which measures did the Chinese government introduce to boost the automotive industry – and did they help?
The Chinese government has introduced some measures to boost the automotive market. For instance they have increased the number of car licenses by relaxing purchase restrictions in some major cities like Beijing, Tianjin and Hangzhou this year. Furthermore, many local governments have introduced subsidies and related consumer policies to promote automobile consumption such as car purchase subsidies, a trade-in subsidy and car scrappage scheme. Another policy stimulates car purchase in rural areas. In addition, a tax reduction policy for used cars was introduced, from the original two per cent reduced to 0.5 per cent. We had seen the rapid recovery of the auto market from March and April, and the unexpected growth of the auto market in June and July. This reflects that the series of measures have played an important role in promoting car consumption.
How can the aftermarket recover from the effects of the pandemic? What actions are required now?
Since the usage of cars mainly for travel and business hasn’t been fully resumed, the automotive aftermarket has not yet returned to the pre-pandemic level. But in August, the overall economic environment has continued to improve and we also noticed that car sales in August have continued to rise contrary to the usual seasonal decline in other years. Many companies have launched different kinds of maintenance service packages in order to attract customers to return to their store on a regular basis. With activities like these, with the support of manufacturers and new policies coupled with several automobile exhibitions like Automechanika Shanghai and the 818 Car Festival, the release of new car models and increasing traffic, I am optimistic that the market will recover.
‘Automotive manufacturers and dealers had no choice but to upgrade their digital service standards. So the coronavirus has facilitated the digitalisation of car sales services to a certain extent.’
About Lang Xuehong
Lang Xuehong is Deputy Secretary-General of the China Automobile Dealers Association and Director of the Industry Coordination Department. She developed the Vehicle Inventory Alert Index, the Used Car Manager Index, the Auto Consumption Index and other key indices of the auto industry. As a senior expert with more than 20 years of experience in auto market research and consulting, Lang Xuehong is committed to in-depth research into the auto industry and policy, products, consumers, channel management and marketing strategy, and has been invited to express her unique views on multiple domestic financial, commercial and marketing media.
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