Global Auto Demand Faces Shocking Plunge Amid Coronavirus Crisis
Colin Couchman, an executive director at IHS Markit, shared insights on the research group’s latest predictions regarding the auto industry amid the Covid-19 pandemic.
With the coronavirus spreading rapidly, countries worldwide are enforcing stricter measures to curb infection rates. Several European nations are ramping up existing restrictions, and the USA is starting to take more aggressive steps in various regions.
In recent weeks, IHS Markit has been closely examining auto demand in light of these containment efforts, coupled with updates on individual carmakers’ responses, such as plant shutdowns and limitations on dealership activities.
The global automotive industry is facing its biggest challenge in years due to the coronavirus pandemic. This crisis adds significant strain to an already struggling industry, leading to downgrades in forecasts across nearly all regions. While China is gradually resuming operations, the main concern is shifting from production issues to decreasing demand as the pandemic’s impact grows.
Forecast revisions highlight China, Europe, and North America, but nearly all regions will likely experience some demand disruption in the coming months. Global auto sales are expected to drop sharply in 2020, with a forecasted decline of over 12% from 2019, bringing total sales to around 78.8 million units. This is a reduction of ten million units compared to earlier forecasts made in January 2020.
To put it in perspective, a 12% decline in 2020 would be significantly worse than the 8% drop experienced during the 2008-2009 global recession.
Globally, the auto industry faces a steep decline in the short term, followed by a slow recovery. The risks lean towards further declines, making it essential to evaluate just how low the market could dip and consider recovery prospects.
Market conditions vary, with China showing some signs of recovery, though there’s a risk of the virus resurging. Government actions are crucial to control the spread and provide economic support through various stimulus packages.
In China, sales expectations for 2020 have been reduced by 2.3 million units, predicting light vehicle sales to fall to 22.4 million units, nearly a 10% year-over-year drop. Though the market may start stabilizing in the second half of 2020, the economic slowdown might result in some lost demand.
Europe is grappling with a severe coronavirus crisis, with demand conditions worsening daily. The region faces prolonged disruption as health and economic challenges unfold. Auto demand in Europe for 2020 is forecasted at 15.6 million units, a 13.6% decrease from 2019, representing a downgrade of 1.9 million units from pre-coronavirus expectations.
In the US, the market forecast has been adjusted to reflect a significant consumer-led recession in 2020. Even with announced monetary and planned fiscal measures, the auto market is unlikely to avoid a substantial demand decline. US auto sales for 2020 are projected at 14.4 million units, at least a 15.3% year-over-year decrease, marking a 2.4 million unit reduction from previous forecasts.
