Since more than 40 million people's livelihood depends on the auto industry in China, the government is handing out cash incentives to car buyers so as to revive car sales in the country.
The Coronavirus pandemic has stalled businesses across the world, and as a result, losses are inevitable. The global auto industry is no exception and it’s of course feeling the pinch because of the COVID-19 outbreak. Sales of vehicles are dropping like a stone in global markets and there seems to be no respite – at least not for the coming few months.
The Chinese auto industry, which is the largest in the world, is going through a rough phase as well. However, in an interesting development, China has come up with a unique solution to push car sales in the country – hand out cash to car buyers! Yes, the Chinese government is reportedly assisting car buyers of the country by giving cash benefits so as to revive the local auto industry.
Being the largest car market in the world, the Chinese auto industry would have despatched close to 6 million cars by this time in a year. However, thanks to the Coronavirus outbreak, the number of vehicles sold stands at around 3.7 million as the country reported a decline of 42% in car sales in the first quarter of 2020.
As to why the Chinese government is helping the auto industry, well, it’s pretty simple. The auto industry is one of the most crucial businesses for China as over 40 million people’s livelihood depends on the industry, directly or indirectly. For a sense of perspective, the population of a country like Spain is 47 million. So, you can imagine how important the auto industry is for the Chinese. Not to mention, the auto industry contributes roughly 10% of China’s manufacturing output and generates over 1 trillion US dollar of revenue every year!
Despite being the epicentre of the COVID-19 outbreak, China has also resumed production of vehicles at manufacturing units across the country. However, the industry is not expected to show positive growth anytime soon – not until the end of 2020, to say the least. A similar trend is also expected in the global auto industry across the world.