In what may be of some comfort to Irish car dealers, initial reports from China are that the market for new cars is steadily returning to normality.
Ash Sutcliffe is head of press relations for the Geely Group, which among other interests owns Volvo and Lotus, and has recently signed an agreement with Daimler-Benz to take over the manufacture of Smart cars. He told The Irish Times: "I'm seeing that a lot of people are cautiously optimistic about the next quarter. People are going into dealers. People are buying cars out there. They're registering their interest in buying cars."
Significantly, Sutcliffe is seeing evidence that those sales lost in February and March have not been lost entirely, but deferred, and perhaps altered in their focus. “I don’t think many of those sales were destroyed. Many people were saying that all of the sales from February and March were completely lost, but I think many people have probably deferred their purchasing until later into 2020. And probably many people are looking at the economic conditions as well, and are downgrading their plans to purchase.”
There had been some suggestions that the crisis might make Chinese car makers ever more insular, and more likely to focus only on the home market, rather than looking to expand into Europe, Africa and the United States. Sutcliffe says that's unlikely: "I think it'll still be business as normal for companies, certainly like Geely, that are more global and outward-looking, because it takes it takes a village to make a good car. You can't just have it all in China made by Chinese for Chinese only. The global economy calls for good things come together."
Volkswagen, too, is reporting improving market conditions in China. All 2,000 of the German car maker's Chinese dealers are now open again, and are claiming that customer traffic through the doors is roughly the same as it was in March of last year (admittedly, that was in a market that was slowing down, but nonetheless was facing nothing like the sales crisis of the past couple of months). Most of the dealers representing VW Group's other companies – Audi and Skoda most notably – have also reopened, and 32 out of the 33 Volkswagen-affiliated factories in China are back at work, and building up to full capacity again.
Volkswagen Group China chief executive Stephan Wöllenstein said: “Our dealerships are seeing customers on the showroom floors once again. There are growing signs of recovery, with a good chance that the Chinese car market could reach last year’s level in early summer. For Volkswagen, many highlights are still to come in 2020. This year, MEB production will begin and the Volkswagen ID family will debut in China.”
Fully-electric models
That mention of MEB and the ID family is a significant one, as it will be the first time that VW has built fully-electric models in China, which remains the biggest market in the world for battery-powered cars. Later this year, VW plans to start production of both the ID.3 electric hatchback and the ID.4 SUV (which share the same MEB all-electric platform) at factories in Anting and Foshan, which will have a combined capacity of 600,000 units per year – assuming, of course, that VW can get over much-reported software snafus with the ID.3, which have apparently delayed European sales and production.
Bloomberg is reporting pent-up demand in the Chinese market, with one Audi dealer saying he was "shocked" by the number of orders and sales, and described the past few days as "a boom after a two-month dormancy".
Some of that demand is apparently coming from the fact that people are now more nervous of using public transport, with Audi in China reporting that many of those rushing for cars are buying second and even third cars for their families.
Speaking to Car Dealer Magazine in the UK, BMW also confirmed that its Chinese dealers were seeing a rush of orders, and that it "points towards a sustainable recovery".
Sutcliffe says that much will depend on how both the local and national governments respond in China. “People are very cautiously optimistic. They want to go out and consume, but how they’re consuming, even with smaller things like clothes or restaurant visits is still to be seen,” he said. “I think the government is doing a lot to spur on consumption, especially at a city and provincial level. And the central government has put out eight policies for stimulating automotive groups, but we shall have to wait and see.”
