Epidemic seen as contributing factor in double-digit sales slump in January

China is considering a slew of measures to boost car sales as part of its efforts to counteract negative effects of the coronavirus outbreak on the auto industry.

"We will work out measures with relevant departments to further stabilize car purchases and alleviate the epidemic's effects on the industry," said Wang Bin, a senior official in charge of market operation at the Ministry of Commerce.

Wang made the remarks at a press conference on Thursday. The ongoing epidemic, which has killed more than 2,400 people, has idled some car manufacturing plants and distanced people from showrooms.

"In the meantime, we encourage local authorities to stimulate sales of new energy vehicles, offer a larger quota of license plates and favorable trade-in policies," Wang said.

Officials in the city of Foshan, Guangdong province, have come up with a favorable policy. Starting March 1, local residents that place orders on vehicles can get a subsidy of up to 5,000 yuan ($711.7).

The Guangdong provincial government also issued a statement on Friday calling on the cities of Guangzhou and Shenzhen to ease their license plate quotas.

The moves came after vehicle sales in China plummeted in January, the 19th consecutive month of decline.

Carmakers delivered 1.94 million vehicles last month, down 18 percent from the same month in 2019, according to statistics from the China Association of Automobile Manufacturers.

Passenger vehicles, which accounted for the majority of all vehicles, stood at 1.61 million, down 20.2 percent year-on-year. Sales of new energy vehicles plunged 54.4 percent, down for a seventh month in a row, according to the association.

Wang said the sales slump is the result of a combination of factors, including the coronavirus outbreak.

"Dealerships have been slow to restart business and consumers are delaying their orders due to the epidemic," he said.

"Car sales will be further affected in the short term."

A survey by the China Auto Dealers Association of 4,661 dealerships in the country show that by Thursday only around 12 percent have resumed business.

But Wang said there is still plenty of room for growth in China's auto market in the long run and demand is robust.

Vehicle sales will rebound as people's lives returns to normal when the epidemic is controlled, he said.

Shi Jianhua, deputy secretary-general of the CAAM, said he supports the commerce ministry's plan to help boost the auto industry.

The CAAM said vehicle sales will slide at least 10 percent in the first half of the year and around 5 percent for the entire year if the epidemic is effectively contained before April.

Its estimate made in January, prior to the epidemic outbreak, was a 2 percent dip in sales this year from 2019.

Shi said the association has suggested postponing the nationwide adoption of State VI emissions standards to 2021.

Its adoption in some parts of the country last year was one of the major culprits behind the 8.2 percent slump in vehicle sales, the association said, because there were fewer State VI models in the market and many people adopted a wait-and-see attitude.

The CAAM said as the epidemic continues, carmakers are under great pressure to clear their inventory of State V models and switch to production of State VI ones before a July 1 deadline.

The association, whose members include hundreds of automakers, suppliers and other companies in the sector, said it conducted a poll among members after the outbreak and submitted its findings and suggestions to the government.

It has also asked the government to offer more policies to support the industry, such as changes to auto-related taxes, adjusted interest rates and banks' reserve requirement ratio.