MIIT calls for more stimulus policies to support China’s car industry

Xin Guobin, Deputy Minister of Industry and Information Technology (MIIT), has urged regional officials to speed up the introduction of policies to boost automobile consumption.

Speaking at a press conference during China’s Manufacturing Industry Resumption Meeting on March 30, Xin said MIIT are “actively cooperating with relevant ministries and commissions to study policies and suggestions for stabilizing and expanding automobile consumption.”

Many provinces have echoed the MIIT’s calls and issued supportive measures to boost car consumption, Xin said, adding he believes more stimulus policies will follow.

Xin was introducing the operational status of the car industries during the press conference on Monday. The overall operating rate of enterprises in the automotive industry has increased to 97% from around 60%, while the rate of returning employees has risen to 82% nearly 50% since March 19, according to Xin.

Although the resumption of production is relatively high, barriers to continual improvement include sluggish consumer demand, and this could lead to further productivity decline later, Xin admitted.

Data from the China Association of Automobile Manufacturers (CAAM) showed China produced 285,000 vehicles and sold 310,000 units in February, drops of 79.8% and 79.1% year on year respectively. Total production and sales of automobiles in the first two months of the year stood at 2.048 million and 2.238 million units respectively, marking a 45.8% decline in production and a 42% fall in sales from the same period a year earlier.

The price of ADC 12 aluminium alloy, widely used in automotive production in China, has moved down significantly since the beginning of January due to weak demand from car companies which were struck heavily by the Covid-19 coronavirus outbreak in China.

Fastmarkets’ weekly price assessment for aluminium ingot ADC 12, exw dp China stood at 13,800-14,100 yuan (1,944-1,987) per tonne as of March 25, down by 500-1,000 yuan per tonne from 14,300-15,100 yuan per tonne at the start of the year.