China car dealers seek help as coronavirus slows showroom traffic

China Yongda Automobiles Services Holdings

06/02/2020 13:54

By Yilei Sun and Brenda Goh
    SHANGHAI, Feb 6 (Reuters) - Chinese auto dealers, who have
seen traffic through their showrooms slow to a trickle due to
the fast-spreading coronavirus, have sought temporary financial
support to see them through.
    The coronavirus has killed more than 560 people in mainland
China and more than 28,000 are confirmed to be infected,
prompting local governments to extend holidays and introduce
travel curbs to halt its spread. urn:newsml:reuters.com:*:nL4N2A6068
    In a letter publicly addressed to China's Banking and
Insurance Regulatory Commission, China's Automobile Dealers
Association (CADA) asked banks to extend loans to dealers and
offer more temporary liquidity support such as credit lines to
help dealers who are "facing extreme liquidity pressure".
    The letter, which is dated Feb. 5 and posted on CADA's
social media on Thursday, said auto sales and after-sales
service "show a cliff-like decline" due to the extension of the
Lunar New Year holiday, travel curbs and other factors. 
    Industry executives said the epidemic was likely to wreak
havoc on auto sales and production in the first quarter, but
that it was too early to push the panic button. Last year, auto
sales in China, the world's biggest auto market, dropped 8.2%
year-on-year to 25.8 million vehicles. urn:newsml:reuters.com:*:nL4N2A02MG
    In a separate poll conducted by CADA, dealers predicted
China's car sales to fall 50-80% this month compared to February
2019. Some 70% of dealers polled by CADA said they had seen
"almost no customers" since the end of January.
    CADA, which represents thousands of dealers nationwide
including China Grand Automotive Services Co  600297.SS , China
Yongda Automobiles Services Holdings  3669.HK  and Zhongsheng
Group Holdings  0881.HK , also said short-term liquidity
pressure was high.
    In China, cities have been shut off, flights cancelled and
factories closed, shutting supply lines crucial to the world
economy. Auto companies including Hyundai Motor  005380.KS ,
Tesla  TSLA.O , Ford  F.N , PSA Peugeot Citroen  PEUP.PA ,
Nissan  7201.T  are taking hits. 
    As business in China's auto showrooms drops significantly,
automakers and dealers such as Tesla, Daimler  DAIGn.DE  as well
as China Grand Automotive and Yongda are promoting products
heavily online.
    The China Banking and Insurance Regulatory Commission did
not immediately respond to a request for comment out of usual
business hours.

 (Reporting by Yilei Sun, Cheng Leng and Brenda Goh; editing by
Nick Macfie)
 ((Y.Sun@thomsonreuters.com; +86 10 66271262; Reuters Messaging:
y.sun.thomsonreuters.com@reuters.net))