World's biggest car market crashes by 80 per cent

Chinese car-makers are approaching a cash-flow crisis point after the Coronavirus poleaxed its usual car sales rate for the second month running.

The world’s largest car market followed up a stunningly bad January sales month by collapsing 80 per cent in February to send the country’s huge car industry into an unprecedented paralysis.

It was even worse at the wholesale end, where deliveries to dealerships were squeezed an eye-popping 86 per cent, the China Passenger Car Association (CPCA) said.

Just days after next month’s 2020 Beijing motor show was cancelled, the CPCA admitted the market situation had become grave in China, where several struggling homegrown start-up car-makers were on the edge before the crisis struck.

All of Europe’s joint-venture operations in China have admitted to expecting huge hits in the country, including the usually rampant market leader, Volkswagen.

"Dealers returned to work gradually in the first three weeks of February and their showroom traffic is very low," the CPCA said.

It expects the sales rates to slowly improve from February, though, with dealership sales staff slowly returning to work.

Toyota’s sales fell 70 per cent in the February, it admitted, while GM, BMW, Hyundai, Kia, Nissan, Honda, Mercedes-Benz, Peugeot and Audi also confirmed they would face serious challenges in its first quarter sales.

China’s car market had been on a slow decline for two years before the crisis hit, and no car-maker has been able to provide any clarity about when or how much it will recover.

The timing could not be worse for Tesla, in particular, which just opened its new factory near Shanghai and desperately needed Chinese cashflow to pay for it.