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The COVID-19 virus (coronavirus) epidemic is spreading rapidly,
with a growing number of countries around the world announcing
drastic measures to slow down the infection rates. Key European
countries are intensifying already-implemented restrictions, while
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 prevailing auto demand
conditions in light of these containment directives,
alongside incoming news on measures taken by individual OEMs,
especially announced plant shutdowns and limitations on dealer
activities.
The global spread of the coronavirus pandemic has emerged as the
single biggest risk factor facing the autos industry for many
years. The coronavirus crisis piles intense additional pressure on
an already-stressed autos industry and the latest IHS Markit
forecast release includes downgrades across virtually all regions.
While Greater China is slowly bringing facilities back online, the
focus shifts from an issue of supply (production) to demand as the
broader impact of the coronavirus outbreak widens. Key forecast
downgrades include Greater China, Europe and North America,
although virtually every territory faces the prospect of some
degree of demand distortion in the coming months.
The global auto industry is expected to witness an unprecedented
and almost instant stalling of demand in 2020, with global auto
sales forecast to plummet more than 12% from 2019, to 78.8 million
units, according to the latest IHS Markit forecasts. This
represents a downgrade of 10 million units compared to
pre-coronavirus IHS Markit forecasts made in January 2020. A fall
of 12% for 2020 would be considerably worse than the two-year
peak-to-trough decline of 8.0% during the global recession in
2008/2009.
On a global basis, we project a sharp reduction in near-term
growth followed by a slow recovery. Risks are heavily skewed to
downside; especially how low the market could go and for assessing
recovery prospects. Market prospects are mixed, with emerging
glimmers of hope for China, though vulnerable to the risk that the
virus flares up in the coming months. Government action is key to
both controlling the virus and providing support and stimulus
packages to help economies through the healing process.
IHS Markit expectations for Mainland China have
been downgraded by 2.3 million units for 2020, with light vehicle
sales forecast to post 22.4 million units for the year, down almost
10% year over year. China is expected to show signs of bottoming
out through the second half of 2020, but we caution that the scale
of the economic slowdown will likely lead to some destroyed
demand.
Europe* is now gripped by a full-scale
coronavirus crisis with demand conditions worsening by the day. The
region faces months of rolling disruption as the conjoined health
and economic crises play out across economies. Europe autos demand
for 2020 is set at 15.6 million units, down by 13.6% over 2019.
This represents a volume downgrade of 1.9 million units versus
pre-coronavirus settings.
The IHS Markit forecast for the US market is
reset on a sharp consumer-led recession for 2020, with announced
monetary and planned fiscal policy measures probably not enough to
save the auto market from a looming demand slump. IHS Markit
forecasts 2020 US auto sales to be 14.4 million units, down by at
least 15.3% year over year. For the US, our volume downgrade is 2.4
million units for 2020 from prior forecasts.
Our analysts are continuing to monitor the situation as it
evolves, and we will provide further updates in the days and weeks
to come.
*Note: Europe is defined as Western Europe & Central
Europe
Posted 25 March 2020 by Colin Couchman, Executive Director, Global Light Vehicle Sales Forecast, S&P Global Mobility
