Auto industry to suffer coronavirus pain throughout 2020

China State Council introduces green policies to boost use of new-energy vehicles 

by Yang Ying and Xu Jiangshan
Auto industry to suffer coronavirus pain throughout 2020
Analysts foresee year of pain for motor industry but government eyes opportunity to make roads greener.

(ATF) – China's fast-growing auto industry has pressed the pause button amid the coronavirus epidemic. 

As it does so, the government has seized the opportunity to reshape the sector from a fossil-fuel polluter to new-energy flag bearer.

The State Council decided on Tuesday to put in place three policies to promote automobile consumption and to usher a green future for China’s roads.

Among them is a two-year extension of the purchase subsidy and exemption from purchase tax for new-energy vehicles.

The government will also offer support for key regions such as Beijing, Tianjin and Hebei to phase out diesel trucks with the lowest emission standards. 

Finally, it will impose a value-added tax of 0.5% of sales from May 1 to the end of 2030 on used-car distribution enterprises.

A pessimistic Dong Yang, former executive vice-chairman and secretary-general of the China Association of Automobile Industry, said that the impact of the epidemic on the automobile industry will not be limited to the first half of the year, but is likely to extend to the entire year.

Guoxin Securities auto industry analyst Liang Chao said that, from the perspective of supply and demand, factories’ return to full capacity only after a months-long lockdown to halt the coronavirus spread would not be a factor restricting consumption.

On the contrary, the recovery will take time on the demand side, he said.