China’s Smartphone And Auto Sales Tumble As Coronavirus Hits Demand

China is the world’s largest market for smartphones and autos – responsible for c30% of global sales for both.Yet as Reuters notes:

“Most western policymakers and journalists view the world economy through a framework that is 10-15 years out of date, failing to account fully for the enormous shift in activity towards China and the rest of Asia.”

The critical fact is that both markets are now about to go into a severe downturn as a result of the coronavirus epidemic. This is already having a major impact on domestic sales in China, and is starting to create major disruption to today’s globalised supply chains.

SMARTPHONES SALES HAVE BEEN IN DECLINE SINCE 2017

As the chart shows, global smartphone sales were down again in Q4.2019 sales were 1.4bn, versus their 2017 peak of 1.5bn. And, of course, Q1 is going to be a terrible period for sales, given the coronavirus impacts.

China has been the world’s largest market since 2012, but sales were down 37% in January as consumers began to worry about the risks from the virus.February will clearly be much worse, as a result of the major lockdowns in place.As Strategy Analytics warn:

“The smartphone market will be adversely impacted by the slowing GDP growth and the plunging consumer spending. It will also impact global smartphone supply and manufacturing, because China makes 70% of all smartphones sold on the planet.”

Research firms IDC and Canalys are already forecasting that China’s market will be down 40% in Q1. But this is likely an under-estimate, given the impact of the lockdowns.Most retail stores, including Apple’s, have been shut during February, after all. And as Chinese business paper Caixin reported:

“China’s capital might be officially back to work, but it would be hard to tell from walking around the normally congested city. Tourist sites and other popular destinations remain unusually free of sightseers, customers or pedestrians.”

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Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this ...

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