(Yicai Global) Jan. 6 -- Car dealers in Beijing and Shanghai said customer traffic and sales fell during the New Year holidays compared with a year earlier, as a result of Covid-19 outbreaks and higher demand in the months leading up to the annual break.

During the three-day holiday, customer numbers were the same as an average weekend in the past few months, sales staff in the two cities told Yicai Global.

A BYD 4S (sales, spare parts, service and survey) store had only five orders during the period, versus 15 to 20 on previous weekends, said Zhu Ping, general manager of a BYD car dealership. The current Covid-19 outbreak is at its peak, putting buyers off visiting showrooms, she said.

In Beijing, which is gradually recovering from the mass spread of Covid-19 infections, footfall at supermarkets and restaurants is rising. But Zhang Bin, a salesman at a luxury brand's 4S store in the capital, said the number of customers entering his showroom over the New Year holiday slumped, showing no difference from December when the epidemic was more serious.

“There were only one or two daily orders, down more than half from the same period in 2021,” he said.

Customers bought cars before vehicle subsidies ended at the close of the year, further limiting demand in the new year, Zhu said, adding that the end of state incentives raised the cost of vehicles, curbing demand among price-sensitive consumers.

Following the expiration of the subsidies, some car models now cost about CNY50,000 (USD7,270) more, one buyer in Shanghai said, adding that he has decided to wait and see if the Chinese government introduces a new subsidy policy.

Sluggish first-half demand is inevitable after the policy ended, and domestic consumption of passenger cars may be under pressure this year, according to a report by Citic Securities, China's biggest brokerage. The fourth quarter of 2022 may have taken about 1 million sales from the first quarter of this year, it added.

The auto market faces unknowns in terms of policy and business environment, making it difficult to predict sales numbers, car dealers and auto executives told Yicai Global. Some industry insiders expressed concerns about a possible cold market this year, especially in the fuel car segment.

Editor: Martin Kadiev