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.”

Businesses win COVID-19 insurance payouts after UK top court ruling

Updated 35 min 56 sec ago

Businesses win COVID-19 insurance payouts after UK top court ruling

LONDON: Small businesses, from restaurants to nightclubs and wedding planners to beauty parlors, have won the right to insurance payouts after Britain’s highest court ruled their policies should cover losses caused by coronavirus lockdowns.
Six of the world’s largest commercial insurers — Hiscox, RSA, QBE, Argenta, Arch and MS Amlin — argued many business interruption policies did not cover widespread disruption after Britain’s first national lockdown last March.
But the UK Supreme Court dismissed appeals by the insurers after scrutinizing non-damage insurance policy clauses — which cover disease, denial of access to business premises and hybrid clauses — in a victory for the regulator and policyholders.
The test case, which has been watched closely overseas, has pitched the industry regulator against major insurance companies since last May and has been expected to affect 370,000 policyholders, 60 insurers and billions of pounds in claims.
Alistair Handyside, executive chair of the Professional Association of Self-Caterers UK, whose members had a policy with RSA, said he was delighted by a judgment that would mean survival for many amid a third lockdown.
But policyholders are now bracing for the next stage in their fight for payouts.
“It would appear we have won another battle 10 months too late,” said Murray Pulman, who runs The Posh Partridge cafe in Dorchester, southwest England.
“The war is not over, however,” he said.
“Getting payment, compensation and costs ... is another whole new fight which begins today.”
Hiscox, MS Amlin, Argenta and RSA said they would be paying claims as soon as possible.
Other insurers were not immediately available for comment. Hiscox estimated its 2020 COVID-19 estimate for business interruption had risen by $48 million net of reinsurance, bringing total claims to £136 million ($185.52 million).
Britain’s Financial Conduct Authority (FCA) said it would work with the industry to ensure they settled claims quickly and made interim payments if possible.
The case turned on business interruption policies with clauses offering cover when insured premises cannot be accessed because of public authority restrictions, in the event of a notifiable disease within a specified radius and hybrid wordings.
Insurers said they were paying valid claims but that they could not provide limitless cover for losses amassed when almost the entire economy was shut down and healthy people consigned to their homes in the most stringent restrictions on public life since World War Two.
London’s High Court ruled last September that some insurers had been wrong to deny cover, prompting six insurers, the FCA and the Hiscox Action Group of policyholders to challenge elements of the ruling they had lost in an appeal that leapfrogged the Court of Appeal because of its critical nature.
Christopher Croft, CEO of insurance brokers’ association LIIBA, said the industry’s reputation had been damaged.
“We need to think hard about how we redress that,” he said.