March 2, 2020 / 2:04 PM / a month ago

Coronavirus prompts China's online used car trading firms to cut salaries

BEIJING (Reuters) - Two of China’s biggest online used car trading platforms are putting workers on leave or cutting staff salaries as the coronavirus epidemic dries up sales, the companies told Reuters.

Uxin Ltd (UXIN.O), the country’s largest online used car trading platform, said in a statement on Monday it was using both strategies as part of efforts to control its budget and cash flow.

The company said it would not lay off staff but expected business in the first and second quarter to be “affected by varying degrees”.

Chehaoduo, another online car dealer which secured $1.5 billion in funding from SoftBank’s (9984.T) Vision Fund last year, is cutting staff salaries by different degrees in February and March, according to an internal email seen by Reuters.

Chehaoduo, which operates used car trading website Guazi.com and new car sales platform Maodou.com, said in a statement to Reuters it expected the impact of the coronavirus epidemic on car consumption to be temporary but that it was trying to cut costs by various methods, such as temporary salary adjustments.

It added it would increase its activity on livestreaming platforms to try to boost sales.

China is bracing for a big hit to its economy, President Xi Jinping has said, but policymakers have pledged to prevent large-scale layoffs, telling local governments to help stabilize jobs by drawing on unemployment insurance and similar funds.

Average daily used car sales plunged by around 70% in the last week of February compared with a year earlier, preliminary data from China’s Automobile Dealers Association (CADA), the country’s top dealer association, showed on Monday.

Last month, in a letter publicly addressed to China’s Banking and Insurance Regulatory Commission, CADA asked banks to extend loans to dealers and offer more temporary liquidity support such as credit lines to help dealers who are “facing extreme liquidity pressure”.

Reporting by Yilei Sun and Brenda Goh; Editing by Mark Potter

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