Shanghai (ZXZC)- China's auto outputs and sales are projected to slump 45% year on year in the first quarter (Q1) if the coronavirus epidemic is effectively contained by the end of March, and slide 25% for the first half of the year (H1), according to Ye Shengji, deputy secretary general of the China Association of Automobile Manufacturers (CAAM).

The abrupt outbreak of coronavirus epidemic worsens China's auto market climate, which has faced two-consecutive-year YoY sales downturn. Mr. Ye said the demands will temporarily surge after the epidemic, while the full-year development seems not that good as the income of some residents—especially, mid/lower-income community—will be decreased.

The China Passenger Car Association (CPCA) estimated that the Q1 PV retail sales in the country will stand at around 29.9 million units, tumbling from 5.09 million vehicles handed over a year ago. It pointed out the sales number in March may be higher than Feb., while will still remain low, and it’s hard to see a complete recovery over consumers’ confidence this month.

To revitalize the auto market as soon as possible, the industry is calling for the launch of powerful policies and incentives. Mr. Ye proposed on behalf of the CAAM a series of measures for unleashing consumers' shopping potential.

For instance, the license plate quota should be increased as appropriate in regions where the auto purchase restriction policy has been implemented. Such cities as Beijing, Shanghai, Tianjin and Hangzhou should actively follow up Guangzhou, Shenzhen and Guiyang in adding the car ownership quota, including easing the limit over NEV shopping.

The individual car purchase expenditure should be taken into account over the special additional deductions from taxable personal incomes. As of buyers of energy-saving or new energy vehicles, the deduction should be executed annually in several tranches.

Other recommendations include cutting the purchase tax of the PVs with emissions of 1.6 liters or below, offering the policies to further encourage the auto market growth of fourth & fifth-tier cities and rural regions, and lowering the use-cost for car owners.  

Moreover, the CAAM advised the finance industry to more support the special fund of personal automobile consumption credit from Mar. to Dec. The professional data platform should be built to improve the nationwide transaction of used cars.

Regarding the NEV area, the association said the central and regional governments should continue making vigorous efforts to develop NEV industry. What they can do include sustaining and improving NEV subsidy policies, streamlining the procedure of appropriating subsidies, enhancing the facilitation in using NEVs, strengthening the infrastructure construction and popularizing NEVs.