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Research Report

06/03/2020 17:38

China's auto to see boost from Guangzhou's new measures

[ET Net News Agency, 6 March 2020] Moody's Investors Service said in a new report that
Guangzhou's newly-announced auto consumption measures are credit positive for China's auto
industry, providing a boost for the sector.
"Auto sales in China have been on a downward trajectory, shrinking by 8.2% in 2019 due
to US-China trade disputes and slower economic growth," said Gerwin Ho, a Moody's Vice
President and Senior Credit Officer.
"In the wake of coronavirus outbreak we expect auto sales to further drop by 2.9% in
2020 on weaker consumer and corporate demand as well as production impairment, but
Guangzhou's new measures are likely to provide a buffer against this forecast," adds Ho.
On 4 March, the municipal government of Guangzhou -- the capital of Guangdong province
with 14.9 million permanent residents and 2.8 million vehicles -- announced measures to
promote auto consumption, including a RMB10,000 subsidy for each new energy vehicle
purchase, a RMB3,000 subsidy for purchasing a new China VI emission standard vehicle when
replacing or scrapping a used vehicle, and accelerating the implementation of previously
announced relaxation in vehicle ownership controls.
The measures are part of a plan announced by the Guangzhou government to support its
local economy by mitigating the economic weakness caused by the disruption from the
ongoing coronavirus outbreak.
Moody's expects Chinese auto sales to decline significantly in February and March 2020
from the same period last year, with automakers likely to claw back only about half of the
lost sales during the rest of the year. But sales will begin to grow again in 2021, with a
rebound of about 2.5%. (KL)

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