Consultancy LMC in a wide-ranging, thoughtful presentation this morning on the auto industry post pandemic concluded that some negative effects are long term and permanent. While perhaps a starting conclusion to many analysts who view the recovery is akin to the deep U-shaped curve that the Global Financial Crisis of 2008-09 followed, the argument is compelling in AutoInformed’s view. LMC says globally this is a K-shaped curve. There are winners and losers. (Trade to Plunge as COVID-19 Upends Global Economy, COVID-19 Chaos as LMC Automotive Cuts Global Light Vehicle Sales Forecast by 3.7 Million Units)
Light vehicle demand presents a complicated and mixed global scenario with ongoing hits from social distancing LMC notes. The Oxford-based group warns those who think the pandemic impact will largely dissipate, in typical British understatement, “could be incorrect.” (Good and Bad? January US Light Vehicle Sales Down -3%)
Projections for 2020 Global Light Vehicle sales ended at 77.7 million units, down -14% from 2019 and with a stronger recovery than expected initially. LMC previously said that 2021 is poised to continue the recovery, with volume projected at 86.5 million units, up 11% from 2020. AI thinks while the past isn’t a 100% sure predictor of the future, the new – perhaps more virulent strains of the Covid virus, the nationalistic fights over vaccines, the emergence of fascism and sedition in the US, and stricter and ongoing social controls in most major market are huge risks. Significant shares of the public in the U.S., France, Germany and the UK say their lives have changed because of the COVID-19 outbreak, according to a new Pew Research Center survey.
Some noteworthy data points LMC presented today include temporary support measures – incentives, inventory replenishment, fiscal policy boosts – are “stuttering” but still evident to some degree in 2021.
LMC’s best estimate now is that the microchip shortage will be manageable, but the first half of 2021 could be impacted. (Do you think? Look at the competing demands from consumer electronics as people are sheltering in place – editor). Full year volume should not be hurt.
The idea of car ownership in a number of surveys has become significantly more popular during the pandemic. However, the abandonment of mass transit leads to more traffic congestion, more CO2 and promotes global warming.
Countering this: the BEV – battery electric vehicle – step change in 2020 “looks like a sustained expansion that will take years (20?) to mature to high BEV market penetration. (Electric Vehicles – a Virus That Can’t Be Controlled?)