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Chinese Auto Industry on Road to COVID-19 Recovery

The world’s largest automotive market is still feeling the aftershocks of COVID-19, consultant Michael Dunne says. Sales this year could finish at roughly 20 million units, down from a high of 27 million units.

The COVID-19 pandemic has changed daily life in China, where it originated, but it hasn’t disrupted automakers’ plans to continue developing electric and autonomous vehicles – or their designs on the U.S. market, industry consultant Michael Dunne says.

One of the first Chinese auto companies expected to set up in the U.S. is Zotye, which plans a network of more than 100 dealers selling models costing about $20,000, Dunne, head of Asia auto-industry consultancy ZoZoGo, says during an Automotive Press Assn. webinar.

Fourteen Chinese companies are testing autonomous vehicles in California and nearly 80 suppliers are operating in Michigan alone, he says, adding, “China is determined to be the export center for electric vehicles globally.”

For the Detroit 3, China presents challenges that predate travel restrictions prompted by COVID-19, Dunne says. General Motors sold 4 million cars in the country in 2017 and is projected to sell just 2.4 million this year. Long-established brands such as Buick have slipped in prestige and aren’t necessarily seen as aspirational by Chinese consumers, he says.

Ford and Fiat Chrysler are in an even worse position in China, while Tesla is the U.S. automaker with the best chance of competing against German luxury brands Mercedes-Benz, BMW, Porsche and Audi, which sell a combined 2 million units a year, he says.

All foreign automakers are operating at a time when “U.S.-China relations have not been this bad in 40 years,” Dunne says. “There’s not a lot of common ground.”Michael Dunne ZoZo Go CEO.jpg

Asked if it was conceivable that U.S. automakers could be forced out of China, Dunne – noting Renault and Suzuki have left the market – says it’s more likely difficulties would accumulate before they ultimately would say, “We’re done.”

The world’s largest automotive market is still feeling the aftershocks of COVID-19, Dunne says. Sales this year could finish at roughly 20 million units, down from a high of 27 million units.

The government continues to offer incentives and is easing up on restrictions on EV sales, he says, adding: “They’re really trying to steer demand for electric vehicles. EVs are in the picture whether consumers want it or not.” Government and taxi fleets account for many EV sales.

China is ahead of the U.S. in developing an EV-charging infrastructure, he says, noting the government requires the installation of charging stations at new housing developments.

Ride sharing is down but not by much, while use of mass transit “nosedived” in the throes of COVID-19 but is not going away in areas with high population density, Dunne says.

The country still operates under restrictions on personal movement and continues to require social distancing to control COVID-19, Dunne says. “China certainly doesn’t feel it’s past the storm.”

The Chinese government has more power to control citizens’ actions than does the U.S. The greatest challenge in the U.S. may be continuing to observe social distancing, washing hands, wearing masks and undergoing body temperature checks, he says, noting the Chinese “can’t get over” many Americans’ lack of seriousness about COVID-19.

 

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