(Yicai Global) March 17 -- The outbreak of the novel coronavirus will lead to a 9.7 percent annual decline in passenger car sales in China this year, according to the China Passenger Car Association.

Sales will fall by 2 million units due to the impact on production and consumption, the CPCA said in a statement yesterday. It based the forecast on the epidemic coming under control in April, carmakers fully re-opening factories, logistics companies operating as normal, restored demand and the industry fully recovering in the second half of this year.

If the epidemic re-ignites, especially if cases from overseas are not handled effectively, annual retail sales could face a double-digit decline, the association added. Retail sales in February plummeted 80 percent annually to just 250,000 units and cumulative sales over the first two months were down 41 percent, the CPCA said previously, with Secretary-General Cui Dongshu widening the predicted full-year decline to 8 percent from 1 percent.

Most Chinese automakers had re-opened their production lines by late February and are set to be back in full swing this month, according to the CPCA. Related companies in Hubei province, the epicenter of Covid-19 and an important industry hub with over 600 parts manufacturers, may take longer to get back to work and hamper national supplies over the next two to three months.

The outbreak will also take its toll on the economy and reduce consumer spending power while guiding purchasing away from vehicles and toward medical supplies and daily goods, the CPCA said. There are some consumer groups who desperately want to buy a car to facilitate travel, but this will not be enough to make up the difference, it added.

Editor: James Boynton