The COVID-19 outbreak is causing unprecedented distress across multiple markets.
“Whether you believe there is a public overreaction or that COVID-19 is actually a public health crisis headed for pandemic status, there is no denying the expected negative impact it will have on the economy and auto industry, said Jeff Schuster, President, Global Vehicle Forecasts at LMC. “Volatility will remain with us until there is evidence of containment globally and the lasting effect could spill into 2021. The US outbreak remains at an early stage of development, so additional challenges for the industry, including supply chain issues, could push the market further into negative territory.”
Executive Summary: The rapid international spread of coronavirus COVID-19 outside China is adding another layer of stress to the global automotive market, following the outlook already turning negative as the virus crippled vehicle demand in China in February.
The economic outlook is wavering, with the risk of a global recession somewhat higher than a matter of weeks ago. Global economic growth in 2020 is now expected to be at 2.0%, down from the early 2020 forecast of 2.5%.
The COVID-19 outbreak is causing unprecedented distress across multiple markets. Given the increasing threat and expected disruptions, global Light Vehicle sales are now expected to contract by 4.4% from 90.3 million units in 2019 to 86.4 million units in 2020, the lowest level since 2013. A moderate pandemic could worsen the outlook by another 2-3 million units globally for 2020.
The risk could be further magnified by supply chain disruptions that have yet to fully emerge. At a minimum, there will be higher logistics costs if air freight is used to mitigate manufacturing downtime.
We are still in the early stages of understanding the full impact but expect it to get worse before it gets better. We continue to monitor the situation in real-time as further downward risk remains high,” said Jonathon Poskitt, Director Global Sales Forecasts at LMC.
Revisions of Key Markets
- China Light Vehicle sales have already been heavily impacted, and it remains the most affected market, making up half of the global volume reduction. Our latest assumption for 2020 is for a decline of 7% from 2019, to 23.7 million units. China does appear to be working past the worst of the outbreak, as the country begins to restart operations and return to normal, a process that is expected to take a few months at a minimum. This process also carries some risk of restarting outbreaks.
- Other important markets in the Asia-Pacific region have seen forecasts reduced, including South Korea, given the scale of outbreak and quarantine measures. Sales in Asia-Pacific, less China, have been cut by nearly 600,000 units, to 15.0 million units, and are projected to contract 4% for 2020.
- Western Europe is expected to experience growing disruption from the outbreak, with Italy placed in lockdown and containment efforts likely to expand elsewhere, potentially spreading to Eastern Europe. Volume in Pan-Europe has been cut by 600,000 units to 20.5 million units, a decline of 4% from 2019.
- Iran had already been facing significant economic challenges, but the outlook has been clouded further by the outbreak. We have reduced vehicle sales by an additional 200,000 units to 686,000 units.
- Risk in the US makes up most of the pullback in expectations across North America. We have cut the US forecast by nearly 300,000 units to 16.5 million units, a decline of 3% from 2019, making three of the last four years negative.
LMC Automotive
LMC Automotive is a leading independent and exclusively automotive focused provider of global forecasting and market intelligence in the areas of vehicle sales, production, powertrains and electrification. The company’s client base from around the globe includes car and truck makers, component manufacturers and suppliers, financial, logistics and government institutions. LMC Automotive is part of the LMC group. LMC is the world’s leading economic and business consultancy for the agribusiness sector. For more information about LMC Automotive, visit www.lmc-auto.com.
COVID-19 Chaos as LMC Automotive Cuts Global Light Vehicle Sales Forecast by 3.7 Million Units
The COVID-19 outbreak is causing unprecedented distress across multiple markets.
“Whether you believe there is a public overreaction or that COVID-19 is actually a public health crisis headed for pandemic status, there is no denying the expected negative impact it will have on the economy and auto industry, said Jeff Schuster, President, Global Vehicle Forecasts at LMC. “Volatility will remain with us until there is evidence of containment globally and the lasting effect could spill into 2021. The US outbreak remains at an early stage of development, so additional challenges for the industry, including supply chain issues, could push the market further into negative territory.”
Executive Summary: The rapid international spread of coronavirus COVID-19 outside China is adding another layer of stress to the global automotive market, following the outlook already turning negative as the virus crippled vehicle demand in China in February.
The economic outlook is wavering, with the risk of a global recession somewhat higher than a matter of weeks ago. Global economic growth in 2020 is now expected to be at 2.0%, down from the early 2020 forecast of 2.5%.
The COVID-19 outbreak is causing unprecedented distress across multiple markets. Given the increasing threat and expected disruptions, global Light Vehicle sales are now expected to contract by 4.4% from 90.3 million units in 2019 to 86.4 million units in 2020, the lowest level since 2013. A moderate pandemic could worsen the outlook by another 2-3 million units globally for 2020.
The risk could be further magnified by supply chain disruptions that have yet to fully emerge. At a minimum, there will be higher logistics costs if air freight is used to mitigate manufacturing downtime.
We are still in the early stages of understanding the full impact but expect it to get worse before it gets better. We continue to monitor the situation in real-time as further downward risk remains high,” said Jonathon Poskitt, Director Global Sales Forecasts at LMC.
Revisions of Key Markets
LMC Automotive
LMC Automotive is a leading independent and exclusively automotive focused provider of global forecasting and market intelligence in the areas of vehicle sales, production, powertrains and electrification. The company’s client base from around the globe includes car and truck makers, component manufacturers and suppliers, financial, logistics and government institutions. LMC Automotive is part of the LMC group. LMC is the world’s leading economic and business consultancy for the agribusiness sector. For more information about LMC Automotive, visit www.lmc-auto.com.