Car makers canceling sales targets
February 11, 2020 Category China News Round-up, Weekly
Automakers in China are canceling sales targets and offering subsidies to help their dealers during the novel coronavirus outbreak that has slashed traffic to showrooms across the country since late January. In a poll conducted by the China Automobile Dealers Association (CADA), dealers in the country predicted China’s car sales to fall 50% to 80% this month compared to February 2019. Some 70% of dealers polled said they had seen “almost no customers” since the end of January. Volvo was the first to offer favorable policies to its dealers, announcing that it will not set dealers’ sales targets for February. Usually, carmakers will financially penalize dealers that cannot meet their sales targets. Volvo also announced subsidies of up CNY10 million to sales people whose wages are mainly made up of sales commission. Many Chinese and international carmakers soon came up with similar or more generous policies.
BMW canceled dealers’ sales targets in February and said the targets in March and in the first quarter as a whole will be flexibly set. Brands including Volkswagen, Ford and Hyundai have decided not to assess the sales performance of their dealers in the first quarter. Hyundai has also canceled goals for dealer purchases from its car plants to prevent rising inventory and has extended promotional policies. Jaguar Land Rover has removed monthly sales targets for its dealers and offered subsidies on their inventory to alleviate financial pressure. The China Automobile Dealers Association is asking banks to extend loans to dealers and offer more temporary liquidity support to help those who are “facing extreme liquidity pressure”. The Association said that auto sales and after-sales service “show a cliff-like decline” due to the extension of the Spring Festival holiday, travel curbs and other factors.
Volvo said the coronavirus outbreak would affect first-quarter operations, but CEO Hakan Samuelsson said he expected Volvo to recoup any lost sales and production over the rest of this year. “We think the effect for the whole year will be relatively minor,” he told Automotive News. Automakers and dealers are also trying innovative marketing strategies including online shopping to boost sales and improve after-sales service. BMW is offering live streaming sessions on its Tmall and JD stores where sales people will promote various models. Mercedes-Benz said that its customers can choose cars, pay deposits and have inquiries answered online. Companies including GAC Motor, WM Motor, BYD and Baojun, have launched online viewings of on-sale vehicles using virtual reality technology. Cars purchased online will be delivered to the buyer’s home, the China Daily reports.
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