Coronavirus Impact on European and North American Auto production

The COVID-19 virus (coronavirus) epidemic is spreading quickly through-out the Western world. Major European countries have announced drastic measures to slow down the infection rates and the United States is starting to implement more aggressive measures in various areas.

Over the last few weeks, IHS Markit has been evaluating and analyzing announced vehicle assembly plant shutdowns (and impacted daily production rates) in direct response to the containment directives of national and provincial governments around the world, together with measures taken by individual OEMs.

As such, throughout the week every major European OEM has announced a shutdown of their assembly operations for on average 13 working days. Some already plan to close for 21 days, and others for just 8 working days. It is not clear at this time if this will be enough, and production will resume after these announced periods.

In order stay on top of the situation, IHS Markit is tracking developments on a daily basis and quantifying the implications of these OEM-announced standstills on the light vehicle market. As of today, the tracker shows that these European shutdowns will cause a reduction of over 880,000 units alone in the announced period of time. With over 256,000 units, Germany is hit the hardest at the moment, followed by Spain with 140,000 and France 100,000 units. And even if production does only halt for the announced periods of time, the assembly ramp-up phase that follows will cause further impacts.

In North America, we are seeing a similar picture emerging. On 18 March, several automakers in North America also announced their plans to pause production in reaction to COVID-19. At the moment, the announced average downtime is just 6 working days, but looking at the individual plants, the range is between two and 18 days, across the region. Similar to the European situation, it is hard to say if the announced shutdown periods will be enough or if extended periods are most likely to come.

From a volume loss perspective, IHS Markit is currently tracking a reduction in production during this timeframe of an estimated 478,000 units, of which 336,000 are coming from the US operations alone; as well as 77,000 units in Mexico and 64,000 units in Canada as of today's analysis.

We are also monitoring developments in South America, where plant closures are developing as well. The containment measures are just starting and will be getting bigger quickly. As of today, we are tracking closures between 8 and 15 days, resulting in a first output reduction of around 80,000 units in Brazil and Argentina combined.

Our analysts are continuing to monitor the situation as it evolves and we will provide further updates in the days and weeks to come.

Posted 20 March 2020 by Henner Lehne, Vice President – Global Vehicle Forecasting, Automotive, IHS Markit