Dealers to shed inventory as sales remain stagnant

The association said although more 4S stores started to open the doors, customers have suspended their purchases for self-protection. In addition to fewer new car purchases, the number of vehicle maintenance in 4S stores also significantly fell.

To reverse the sliding sales, some carmakers and dealers have cooperated to launch a new marketing service model of virtual-reality shopping and online purchases that allows customers to browse online showrooms and check vehicle information.

However, sales results showed that the conversion rate of the new marketing model is not optimistic.

The effectiveness of selling cars online is hard to judge in the short term, as car purchases are an important decision that customers tend to experience in person when they can communicate with dealers, said Matt Tsien, GM executive vice-president and president of GM China, in an interview with National Business Daily.

Tsien added that the new model still helps carmakers keep in touch and communicate with user groups.

Some carmakers launched special plans and purchase subsidies for customers. Cadillac began renting their cars with preferential prices. Taking its XT4 as an example, monthly rent of the model in the first year is only 1,999 yuan ($288.46).

Last month, SAIC GM sold 7,612 units, down 92.2 percent year-on-year. SAIC's other joint venture SAIC Volkswagen saw a year-on-year decline of 90.1 percent.

BYD decreased 79.5 percent year-on-year to 5,501 units in February.

BJEV, a subsidiary of China's BAIC Group, sold 1,002 units in February, a decrease of 65 percent compared with last year.

The Chinese government is also considering a slew of measures to boost car sales to counteract negative effects of the coronavirus outbreak on the auto industry.

The government encourages local authorities to stimulate sales of new energy vehicles, offer a larger quota of license plates and favorable trade-in policies.

By now, Foshan, Guangzhou and Shenzhen in Guangdong province and some cities in Hunan province have all come up with favorable policies. Foshan locals that place orders on vehicles can get a subsidy of up to 5,000 yuan starting March 1.