Time:2020-04-01
The globalization of the COVID-19 has led to the disruption of the supply chain of the automobile industry and the shutdown of factories. Many enterprises have said that they cannot make predictions about the impact on sales and performance. However, according to predictions from global research institutions, sales in major markets around the world will experience varying degrees of decline.
Global: Car sales may drop by one Europe
With regard to the impact of the epidemic on the automotive industry, IHS Markit said, "In 2020, the global automotive industry will experience unprecedented demand stagnation. The COVID-19 pandemic is the largest single risk factor facing the automotive industry for many years.".
IHS has lowered its sales forecast for almost all regions worldwide. In terms of overall global sales, IHS predicts that car sales will decline by over 12% to 78.8 million units, a decrease of 10 million units from the company's January forecast. In contrast, during the global economic recession of 2008-2009, the decline in global car sales was 8%.
Another forecasting agency LMC Automotive stated that the external environment remains very volatile, and it is expected that global light vehicle sales will fall below 77 million units in 2020, a decrease of 15% compared to 2019 (14 million units, which is equivalent to nearly a year's car sales in Europe). The agency stated that in the worst-case scenario, global car sales could drop to 69 million units. In January, the agency predicted that global car sales in 2020 would be 90.1 million units, which is relatively stable compared to 2019.
Morgan Stanley predicts that global car sales will decrease by 8 million units in the first half of the year, a decrease of nearly 20%. Previously, the institution had expected a 50% loss in sales or a recovery in the second half of the year, but it seems unlikely at present.
Europe: The automotive industry regresses by ten years
Industry analysts and financial rating agencies have stated that due to the closure of factories and dealerships due to the coronavirus crisis, European car sales are expected to decline by up to 20% this year, resulting in a loss of millions of car sales.
For the European region (Western and Central Europe), IHS predicts that car sales in 2020 will be 15.6 million units, a decrease of 14% (1.9 million units) from the previous forecast. The organization stated that as health security and economic crises intertwine among various economies, Europe is facing months of production disruptions.
Morgan Stanley expects European car sales to be around 12.5 million units in 2020, compared to its previous forecast of 13.7 million units. In percentage terms, the institution currently predicts a 13% decline in the global market, compared to the previous forecast of a 4% decline.
German credit rating agency Scope Ratings is the most pessimistic predictor. The company stated that sales in Western Europe will decrease by 20% (3 million vehicles) this year. Scope predicts that the demand for cars in economies such as Russia that rely on crude oil and natural gas may decrease by more than 50% this year. During the epidemic, the prices of crude oil and natural gas will drop significantly.
When will the European automotive market truly recover to pre pandemic levels? Ferdinand Dudenhö, Head of Automotive Analysis at the University of St. Gallen in Switzerland; FER stated that technological changes and trade wars have already had a significant impact on the automotive industry, and even if banks do not collapse and the European economy begins to recover in three months, the European passenger car market may not recover to 2019 levels until 2030.
US: Annual car sales may decline by 20%
With the severe situation of the epidemic and the closure of more factories, the well-known research institution J D. Power recently predicted that for the entire month of March, retail sales in the US auto market will be 38% to 45% lower than in March 2019, with year-on-year declines of 78% and 75% in April and May, respectively. J. D. Power stated that the outbreak of the virus may lead to a reduction in US car sales by 1.8 million to 2.8 million units by the end of July. At the same time, the agency has lowered its 2020 US car sales forecast from 16 million units for the whole year to 14 million units.
Previously, Morgan Stanley predicted that the sales volume of the US auto market would decline by 9% this year due to the COVID-19; The latest research from IHS Markit also shows that as the United States begins to implement stricter epidemic prevention and control measures, the already under pressure automotive industry will be further threatened. This year, US car sales may only reach 14.4 million units, a year-on-year decline of 15.3% (2.4 million units). However, data from Royal Bank of Canada Capital Markets shows that the chain reaction of the pandemic on consumer demand could lead to a 20% decline in US car sales in 2020.
China: Retail sales of passenger cars in the second quarter may drop by 13% year-on-year, and may only break free from negative growth in the fourth quarter
In the past two years, the Chinese automobile consumption market has gradually shown signs of fatigue, coupled with the weak market momentum in the first quarter of this year and the impact of the epidemic, the industry's development is facing a huge impact. Therefore, the sales data for the first quarter of 2020 will still decline. According to the China Association of Automobile Manufacturers, compared to the 5.09 million retail market in the first quarter of last year, the sales decline this year is estimated to be around 2.1 million vehicles. It is expected that the sales volume in the first quarter of 2020 will be about 2.99 million vehicles.
According to the Gaishi Automotive Research Institute, the Chinese automotive market is expected to gradually recover, but consumer confidence in purchasing cars in March is unlikely to return to normal. It is expected that there will be a small peak in April and May. This wave of consumption mainly comes from the backlog of car consumption since the Spring Festival holiday and the demand for a small number of car purchases and exchanges driven by the epidemic. According to the research conducted by Gaishi Automotive Research Institute, most of the surveyed objects have the willingness to consume, but there is still a lot of uncertainty about whether they can ultimately complete their consumption behavior, so there may not be a large-scale car consumption wave like the one caused by SARS in 2003
Meanwhile, the Gaishi Research Institute predicts that retail sales of passenger cars in the second quarter of 2020 are expected to decrease by 13% compared to the second quarter of 2019. Considering the uncertainty brought about by the globalization of the epidemic, it is currently estimated that the fourth quarter will be the first quarter to break free from the negative sales growth of the domestic passenger car market for two consecutive years.
Japan: Annual light vehicle sales may drop by 8%
Japan is the third largest automobile market in the world, with annual car sales ranging from 4.9 to 5.5 million units in the past decade. In 2019, the total car sales were 5.18 million units. But according to data from the Japan Association of Automobile Manufacturers (JADA) and the Japan Association of Automobile Manufacturers (JAMA), the Japanese car market has had a poor start to 2020. In February of this year, Japanese car sales were 787000 units, a year-on-year decrease of 10.2%, marking the fifth consecutive month of decline.
As the COVID-19 epidemic has led to a sharp decline in global automobile demand, Japanese automobile manufacturers have successively closed factories in Europe, North America and Japan. In general, the global output of seven Japanese automobile manufacturers is currently expected to decline by 50% compared with 2019. In 2019, the seven major Japanese car manufacturers produced a total of 26.07 million cars worldwide.
According to Moody's forecast, Japan's light vehicle sales will decrease by 8% in 2020, while the agency's previous forecast was a slight increase of 0.4%. Although the launch of new models is expected to boost sales, the decline in demand and component shortages caused by the outbreak of the pandemic will lead to a sharp decline in sales in the Japanese automotive market.
India: The pandemic has hindered production in all segmented markets of the automotive industry
In terms of car sales, India has replaced Germany as the fourth largest car market in the world, and was once considered to surpass Japan to become the third largest car market in the world. At present, there is no specific forecast on India's automobile market sales in 2020, but this month the Indian Automobile Manufacturers Association (SIAM) officially said that the outbreak of COVID-19 pneumonia will have a significant impact on the production of Indian automobile manufacturers. SIAM Chairman Rajan Wadhera stated that disruptions in the supply of automotive components could severely hinder the production of all segmented market models, including passenger cars (PV), commercial vehicles (CV), tricycles (3W), two wheelers (2W), and electric vehicles (EV), with electric vehicles being more affected.
Many Indian car manufacturers import about 10% of their raw materials from China. Companies such as Tata Motors, Mahindra, TVS Motor, and Hero MotoCorp have stated that they will face supply chain disruptions due to the outbreak of the pandemic. Last month, some companies even announced production suspensions. Wadhera stated that considering the Chinese Lunar New Year, the Indian automotive industry ensured a certain level of inventory at the beginning of the year, but due to the current lockdown in some parts of China, the supply of vehicles that meet BS-VI emission standards may be affected.
