Carmakers have been gradually reopening factories in China that were idled by anti-virus control. File picture: AP Photo/Ng Han Guan.
Carmakers have been gradually reopening factories in China that were idled by anti-virus control. File picture: AP Photo/Ng Han Guan.

China's car industry wastes no time coaxing buyers back into showrooms

By Yilei Sun and Norihiko Shirouzu Time of article published Mar 27, 2020

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Beijing - China's car industry is going pedal to metal in its post-pandemic campaign drive, with manufacturers and dealers quick to woo back lockdown-weary consumers through campaigns as unusual as a makeup-promoting personality touting car leasing.

Social media celebrity Lipstick King urged millions of fans on a live-streamed shopping show to sign up to a lease deal for Cadillac's CT4 compact sedan.

"This colour has the sense of 'I'm in charge' independence," he said, displaying a scale model of a chocolate-coloured car.

The plug is just one part of an eruption of promotional campaigns featuring steep discounts, cold-calling and gimmicks, from an industry obliterated by government restrictions on movement imposed in January to curb the spread of a virus which in China has infected 81 000 people and caused 3300 deaths.

The economy shrank 21% in January-February with sales in the world's biggest vehicle market last month plunging 79%. Retail sales of passenger cars dropped 45% in the first three weeks of March, and the China Association of Automobile Manufacturers does not expect demand to normalise until the third quarter.

With authorities gradually easing restrictions, carmakers and dealers have started the engines on their promotional machinery to undo what consulting firm IHS Markit described as an "unprecedented and almost instant stalling of demand".

US electric carmaker Tesla has launched test-drive and delivery services involving no staff contact, while Geely is delivering disinfected cars and dropping off keys with drones.

The EV unit of Guangzhou Automobile Group is even testing a system to perfume its Aion LX SUV with the aroma of traditional Chinese medicine.

Free masks

A month ago, SAIC-GM-Wuling (SGMW) started offering up to 11 000 yuan off purchases of its Wuling and Baojun brand vehicles, until the total discounts given reach 1 billion yuan (R2.5bn). Buyers also get medical masks.

Seeing the promotion, restaurateur Wang Zhiyuan, 37, visited an SGMW dealership in Beijing earlier this month and received a 2000 yuan discount on a Wuling Hongguang commercial minivan.

Family sauna equipment supplier Mo Xiufeng, 40, was at the same dealership viewing the same vehicle to make a purchase he had been chewing over since before the lockdown.

"I haven't been able to come in the meantime because, fearing the virus, I didn't want to leave my home," he said.

The dealership sold just 20 vehicles in February. It targets March sales of 100, versus an average of 500 before the virus.

No inventory

Still, industry bodies have called for government help including purchase tax cuts on small vehicles, support for sales in rural areas and eased emission rules. The China Automobile Dealers Association has lobbied for loans to dealerships and temporary liquidity support such as credit lines.

Local authorities in cities that rely heavily on vehicle manufacturing, such as Guangzhou in the south and Ningbo in the east, have also started to offer purchase incentives.

File picture: Xiao Yijiu/Xinhua via AP.

Visits to showrooms by a Reuters reporter and telephone interviews with 50 dealerships across China indicate the campaigns are indeed bringing shoppers back.

A Beijing dealership for a joint venture between Dongfeng and Honda, however, has a problem beyond footfall that is likely to leave March sales in "single digits" versus the usual 100.

"The problem now is we don't have enough cars in inventory," the sales manager told Reuters.

Dongfeng Honda is based in the city of Wuhan where the virus was first reported at the end of last year, and where business activity has been restricted for two months. A Honda spokesman said production at the venture was gradually increasing.

"The manufacturer said new cars would not arrive until mid-April," the sales manager said, standing in a deserted showroom. 

Reuters

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