Beijing show opens to uncertainty

Visitors inspect a BMW i4 concept car at the Beijing autoshow, a rare industry event held in person during the pandemic, which fewer people attended and where new models were scant. (Reuters)
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Updated 27 September 2020

Beijing show opens to uncertainty

  • World’s biggest car market has been hit by lockdowns that froze economic activity — but some signs of hope

BEIJING: China’s auto market has rebounded smartly from the COVID-19 crash in recent months, especially for high-end cars, but questions about the durability of that recovery hung over the Beijing autoshow that started on Saturday.

A rare industry event being held in person during the pandemic, the show marks a triumph for the world’s biggest car market, pummelled from late last year as lockdowns froze economic activity in the country where the disease erupted.

However, this show will be a far cry from the usual ebullience as fewer attend, new models are scant and prospects remain uncertain.

Among the bright spots; the Chinese market’s sharp bounce since April, strong demand for midsize to large luxury vehicles and a flood of interest — and investment — in electric vehicles.

China’s auto sales rose 11.6 percent in August from a year earlier, the fifth straight rise after plunging during the lockdown. When almost all residents were told to stay home in February, sales collapsed a record 79 percent to their lowest since 2005.

Guangzhou-based GAC, which has partnerships with Toyota Motor and Honda Motor, expects sales to grow for the full year, general manager Feng Xingya said on the sidelines of the show, formally the Beijing International Automotive Exhibition 2020.

Germany’s BMW expects “single digit growth” in China this year, said Jochen Goller, head of BMW China.

“We were heavily affected during quarter one of course, and massively in China,” with a 30 percent on-year sales drop, Goller said. But the second quarter saw a 17 percent rebound and this quarter “is running really well.”

“You can say confidence is back,” Goller said.

China’s typically busy car-buying season, “Golden September, Silver October,” is off to a good start, according to preliminary data, with passenger car sales up 12 percent in the first 20 days of September.

The rebound means this year’s sales will fall less than 10 percent, the China Association of Automo- bile Manufacturers estimates, better than its May forecast of a 15 to 25 percent decline.

Much of the upturn is driven by sales of larger passenger cars by makers such as Daimler and BMW, boosted by new models, automakers’ discounts and a broader recovery in the world’s second-largest economy.

Premium vehicles accounted for a record 15 percent of the Chinese market in August, up from around 10 percent for all of last year, said the China Passenger Car Association.

Electric vehicles are also providing a buzz to the Beijing show, as a boom in Tesla shares has propelled interest in China. EV startups like Nio, Xpeng, Li Auto and WM Motor have together raised more than $8 billion this year.

But the recent improvement reflects Chinese carmakers making earlier model launches as they could not wait for the usual hype from the delayed autoshow before going to market. That suggests a more limited upside to the current sales rise.

“This year’s auto sales are very different from previous years,” said senior LMC Automotive analyst Alan Kang. “Many cars were sold during summer because customers delayed purchases after the lockdown.”

Sales of larger sedans and sport-utility vehicles have returned to last year’s levels, but competition among mass-market brands is intensifying, said Yale Zhang, head of Shanghai-based consultancy AutoForesight.

That is a key battleground for international and domestic brands including Volkswagen, Toyota, and Geely. Still, he said, “Sales performance in these two months will give us a clue about what will happen next.”


Lebanon plunged into ‘deliberate depression’: World Bank

Updated 01 December 2020

Lebanon plunged into ‘deliberate depression’: World Bank

  • The fall 2020 edition of the Lebanon Economic Monitor predicted the economy will have contracted by 19.2 percent this year
  • Lebanon’s economy started collapsing last year as a result of years of corrupt practices and mismanagement

BEIRUT: Lebanon’s economy is sinking into a “deliberate depression,” the World Bank said Tuesday in a damning report stressing the authorities’ failure to tackle the crisis.
The fall 2020 edition of the Lebanon Economic Monitor predicted the economy will have contracted by 19.2 percent this year and projected a debt-to-GDP ratio of 194 percent next year.
“A year into Lebanon’s severe economic crisis, deliberate lack of effective policy action by authorities has subjected the economy to an arduous and prolonged depression,” a World Bank statement said.
Lebanon’s economy started collapsing last year as a result of years of corrupt practices and mismanagement.
The crisis was made worse by a nationwide wave of anti-government protests that paralyzed the country late last year and the Covid-19 pandemic this year.
The August 4 Beirut port blast, one of the largest non-nuclear explosions in history, brought the country to its knees and further fueled public distrust.
“Lebanon is suffering from a dangerous depletion of resources, including human capital, with brain drain becoming an increasingly desperate option,” the World Bank warned.
In 2020, Lebanon defaulted on its debt, banks imposed capital controls and inflation has reached triple-digit rates, dragging the country into its worst ever economic crisis.
Instead of taking emergency measures to rescue the economy, Lebanon’s political elite has continued to dither and bicker.
The previous government headed by Hassan Diab failed to adopt ambitious policies to tackle the crisis. It resigned under pressure over the blast nearly four months ago and a new cabinet has yet to be formed.
“Lack of political consensus on national priorities severely impedes Lebanon’s ability to implement long-term and visionary development policies,” said Saroj Kumar Jha, World Bank regional director.
He called for the quick formation of a new government capable of implementing short-term emergency measures and addressing long-term structural challenges.
“This is imperative to restore the confidence of the people of Lebanon,” he said.
An annual index compiled by Gallup that tracks people’s experience of stress and sadness said “no other country in the world saw negative experiences skyrocket across the board as much as Lebanon.”
The Negative Experience Index’s data was collected before the Beirut port blast, Lebanon’s worst ever peace time disaster.