China is giving cash to car buyers to revive sales crushed by the pandemic

In a normal year, China would have sold more than 6 million new cars by now. This year, the number is closer to 3.7 million, and now the government is handing out cash to help the¬†world’s biggest auto market¬†get back on its feet after the¬†coronavirus¬†pandemic.

Car sales declined 42% in the first quarter of 2020 compared to last year, according to data released late last week by the China Association of Automobile Manufacturers.

While that is largely because of a whopping 79% plunge in February — when the country of 1.4 billion people recorded just 310,000 sales — the market remains very weak. Only 1.43 million vehicles were sold in China last month, a 43% decline over March 2019.

Crucial economic role:¬†More than 40 million people in China rely on the auto sector for jobs, either directly or indirectly. And the more than $1 trillion in revenue the industry generates each year contributes to nearly 10% of China’s manufacturing sector.

A healthy Chinese car market is also important to the rest of the world. Global automakers like¬†Volkswagen and¬†General Motors¬†sell millions of cars in China — each of those companies, for example, depend on the country for roughly 40% of their total sales.

China is giving cash to car buyers to revive sales crushed by the pandemic

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