Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Global Light Vehicle Sales to Decline to 70.3 Million in 2020 due to COVID-19 Impact
21 April 2020
Global light vehicle sales are forecast to be down 22 percent to
70.3 million units this year in the wake of COVID-19, according to
the most recent analysis from IHS Markit (NYSE: INFO). Likewise,
regional forecasts have been impacted substantially, and impacts
are being felt as facilities across key regions remain closed,
while recovery gets underway in others.
These forecasts are informed by the latest update of the IHS
Markit global economic forecast update issued by the Economics and
Country Risk team, which indicates a 2020 global real GDP growth
hard and fast into "real" recession, down about 3 percent, with a
very sharp reduction in near-term demand/supply followed by a slow
recovery.
"The unexpected and sudden nature of the impacts of the pandemic
are hitting the autos sector hard, with unprecedented levels of
uncertainty around prospects for meaningful global recovery," said
Colin Couchman, executive director, global autos demand forecasting
at IHS Markit. "Market fortunes are expected to be mixed, as
delayed and destroyed demand interacts with massive global supply
disruption," he said.
Mainland China Recovery Underway, albeit
Tentative
Though most factories in China are back to work, IHS Markit
forecasters caution that it will take time for plants to fully
recover, especially as revised COVID-19 working practices make it
virtually impossible to rebound to previous operational capacity,
among weakened demand conditions. Mainland China is expected to
have a sales decline of more than 15.5 percent year over year, to
21 million units, with concerns on secondary impacts from the
global contagion, which could further disrupt the recovery. While
nearly all dealers across mainland China are back to work, and
there are signs of an encouraging uptick in showroom traffic,
consumer confidence remains fragile. So far, 12 cities have
introduced various incentives to spur sales, including New Energy
Vehicle subsidies, scrappage incentives and increased license plate
quotas. As in other parts of the world, the industry awaits clarity
on any prospects for government-sponsored auto incentives.
Regional Impacts Developing as Situation Continues to
Evolve
Regional impacts will vary as the virus runs its course and
consumer confidence is tested. As of now, IHS Markit predicts a
disorderly and jagged recovery profile across the world, as
governments, consumers and businesses struggle to interpret
prevailing market conditions. Key regional insight on the key auto
markets follows:
United States
The US light vehicle market is expected to decline 26.6 percent
from 2019 levels to 12.5 million units this year, according to the
latest IHS Markit forecasts. This is on the heels of a rough first
quarter as COVID-19 began to impact key states and stay-at-home
orders have prevented dealers from a traditional sales effort with
shuttered showrooms. While online sales are allowed for most
states, declines have been substantial, though inventories remain
high. April and May sales are forecast to be historically low,
according to IHS Markit analysis, as forecasters assume
restrictions will continue in much of the country. In comparison,
the lowest monthly selling pace in recent history was an 8.8
million unit reading, realized back in December 1981.
Europe
Across western and central Europe, IHS Markit forecasts a 24.9
percent drop in light vehicle sales, to 13.6 million units for the
year. European markets will experience mixed recovery cycles, based
on local restrictions and guidance, together with varied economic
support and stimulus provision.
COVID-19 lockdowns remain in place across Europe, especially in
Italy, Spain, France, and the UK with dealerships shuttered. The
timetable for ending lockdown restrictions varies, with some
countries considering extending provisions, while others have
revealed cautious exit strategies. Markets to watch for grassroots
of recovery include Germany, Denmark, Austria and the Czech
Republic.
Production Expected to Reflect Demand
Levels
Global light vehicle production is expected to drop 21.2 percent
due to COVID-19 - an 18.8 million unit decline over 2019, according
to the latest IHS Markit forecasts. The biggest disruption is
expected to hit in the first half of the year, with output in Q1
expected to be down by 24 percent year over year and in Q2 by 44
percent as lockdown measures intensify. The balance of the year is
forecast to ease, but overall, the second half of the year is
expected to be down by nearly 8 percent, compared to an overall
decline of 35 percent in the first half.
Much of China has now returned to work and more than half of
vehicle manufacturing facilities were reported to be at full
capacity at the end of March. However, the pace of production has
been adjusted to align with inventory and demand levels. April
forecasts reflect extended downtime, staggered resumption patterns
and ongoing supply chain description across the region.
Across Europe, the return to work is varied, with some auto
manufacturers making preparations for a gradual return to
production beginning this week, and some already underway - though
component supply remains critical to restart operations. In some
countries, for example France and the United Kingdom, government
advice currently prevents any meaningful activity until the
beginning of May at the earliest.
In North America, IHS Markit forecasts reflect shutdowns in
production from mid-March through early May, at a minimum. In those
nine weeks, an estimated 2.75 million units will have been lost,
with risk of further extensions on the horizon as the virus
continues to impact various regions around the country.
US production across 14 states accounts for 66 percent of total
North American light vehicle production with 46,000 vehicles
produced every day before the outbreak. Concern surrounds the
state-by-state ending of stay-at-home orders that could result in a
patchwork of factories returning to work. Due to the tightly
integrated supply chain across the US and throughout North America,
restarting of vehicle assembly requires coordination across the
states along with neighboring Canada and Mexico.
Japan continues to display heightened downside risks as the
state of emergency takes hold; until now OEM operations have
typically been subject to short, frequent downtime actions, often
tailored to individual assembly lines or vehicle programs. As the
domestic situation deteriorates and exports are severely reduced,
the actions could become more widespread.
"Overall, as manufacturing begins to recover, workforce safety
measures will be key and will impact production levels as OEMs
define a new normal for their work environments, keeping social
distancing in mind," said Mark Fulthorpe, executive director,
global automotive production forecast, IHS Markit. "We might expect
varied return to work cycles and shift patterns, as well as
stronger health guidelines, including checks for those returning to
work."