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Post-coronavirus China car market could hold positives for other countries

Volkswagen and Daimler report good news out of China, which provides some hope the rest of the world will rebound as well.

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- 01:26

A sign of hope, perhaps.

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China this week removed lockdown measures for numerous areas across the country after 76 days to control the coronavirus outbreak, and as the government slowly allowed citizens to move around more fluidly, some automakers are seeing positive signs of encouragement.

According to a Thursday Reuters report, officials are watching China's car market start to rebound, and the industry could return to pre-pandemic levels of activity this summer. Of course, we need to take this information with more than a few grains of salt, and this assumes China keeps the coronavirus, which causes COVID-19, largely under control without stringent lockdowns.

Both Volkswagen and Daimler said showroom traffic and demand have returned to pre-pandemic levels in China. A senior official at the National Development and Reform Commission, Cai Ronghua, underscored the massive sales drops in the country were temporary and didn't reflect an organic drop in demand. Vehicle sales in China have slumped somewhat in the past year, but the sharp 79% drop was blamed entirely on lockdowns due to contain the COVID-19 disease.

Nonetheless, this should provide a small spark of hope to automakers nervously looking at Europe and the US, still deep in the COVID-19 pandemic. Auto sales took a nose dive in March and Q1 as US states one by one issued stay-at-home orders and closed nonessential businesses like car dealerships. April will surely shape up worse than March and could put an even bigger damper on Q2 results. The hope is car buyers do finally emerge when governments start to relax some social distancing guidelines to boost the industry.

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