• Bryan

Coronavirus Hits China's Car Sales

The coronavirus outbreak is taking its toll on China's economy, especially the auto industry as car sales fell by a whopping 92 per cent in the first half of February.

Much of China's business activity has been affected through temporary closure of businesses and self quarantining by the population, and consequently, vehicle dealerships across China have remained closed as potential customers stayed at home.

According to the China Passenger Car Association, sales are down to a daily average of just 811 vehicles, which is significant given the size of China. Contrast this with 21 million cars that were sold last year in China, which is the world's biggest car market.

But it is not only car dealerships that have been affected by the virus outbreak, but car production in China has also been hit with major manufacturers warning that there will be delays to production and deliveries.

Authorities in China, as well as industry insiders, are hopeful that operations across the auto industry in China will start picking up next week. However, some companies are warning that even when businesses reopen, full capacity will take a lot longer.

What does this mean for the markets?

It has significance from the greater view of things, slower spending from the consumer will mean less is being contributed towards growth. Additionally, a slowdown in actual production is also worrying, as this is likely being seen across all industries relating to manufacturing. A domino effect could very well be observed with other markets globally.

Important to note that Chinese manufacturing PMI will be out later on in the week. A soft number here will confirm the above-detailed slowdown. Should this be the case and a contraction is reported, then this would be negative for the following; AUD, NZD, stock indices globally. Positive for Gold, CHF.


Are you an aspiring trader who finds the fundamentals overwhelming?

We have a brand-new fundamentals course that explains everything in a digestible, easy to understand way. CLICK HERE.

We also have a dedicated team of in-house analysts whose job it is to track, report on and write an up-to-date market analysis on all of the major themes in today’s market. Check out our membership options HERE.