China's government gives cash to car buyers as sales drop due to COVID-19 crisis

Local governments in China are now offering cash in a bid to revive the sales of automobiles which is one of the hardest-hit sectors by the coronavirus pandemic. The coronavirus infection which emerged in Wuhan last year has now swelled up to infected over 82, 249 people across mainland China. Meanwhile, the strict lockdown measures imposed by the government have resulted in a major plunge in sales. 

Efforts to revive sales

Chinese government has already begun to take dramatic steps to shore up sales. Last month, it announced that it would extend subsidies and tax breaks for new energy vehicles for another two years. The category of new energy vehicles includes electric and hybrid cars amongst others. Reports suggest that electric cars have suffered more than the rest with only 53,000 cars being sold in the previous month. Meanwhile, local governments in many cities and provinces are now offering cash subsidies as much as $1,400 per vehicle to prompt buyers. 

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According to statistics released by the China Association of Automobile Manufacturers(CAAM), car sales have declined by 42 per cent in the first quarter of 2020. February saw a major plunge with only 3,10,000 cars being sold in a country with a population of 1.4 billion. The Chinese economy is largely dependent on the auto industry with nearly 40 million people working in the sector for livelihood. 

Last week, China Association of Automobile Manufacturers (CAAM) said in a statement that as automakers restart production, boosting sales was now its "primary issue" and "urgent need” It added that while the market may “rebound in the second quarter “ it was almost impossible that the nation would be able to make up for its losses. 

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The total trade volume of China in the first quarter suffered a year-on-year decline of 6.4%, with the trade surplus decreasing by 80.6%, China's General Administration of Customs reported. Exports fell 3.5% from February in Chinese currency terms to 1.3 trillion yuan (183 billion US dollars), the customs agency reportedly announced. In the first three months of the year, China's global exports fell 11.4% in Chinese currency terms from a year earlier to 3.3 trillion yuan (470 billion US dollars), according to Li. Imports declined 0.7% to 3.2 trillion yuan (455 billion US dollars).

(Image credit: AP)

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