European sales forecast to plunge amid virus shutdowns

Automotive Industry

Source: Automotive News Europe, 2020-03-29

With factories and dealerships closed by the coronavirus crisis, European auto sales could fall by up to 20% this year, representing millions of vehicles, industry analysts and financial ratings services say.

"The global auto industry is expected to witness an unprecedented and almost instant stalling of demand in 2020," said IHS Markit, whose forecasts are used by many automakers and suppliers as a basis for strategic decisions.

IHS said it had downgraded its forecasts across "virtually all regions."  The firm called the coronavirus pandemic "the single biggest risk factor facing the auto industry for many years."

Global sales will fall by more than 12% this year to 78.8m units, IHS forecasts, a downgrade of 10m units from the company’s January forecast.  In comparison, the two-year "peak to trough" decline during the global recession in 2008-2009 was 8%.

Near-term global sales are forecast to fall sharply, followed by a slow recovery.

The company has downgraded its 2020 forecast for Europe (western and central Europe) by 1.9m units, to 15.6m, a decline of 14% over earlier forecasts.

The region "faces months of rolling disruption as the conjoined health and economic crises play out across economies," IHS said.

U.S. auto sales are forecast to be 14.4m this year, a 15% decline, and 2.4m units fewer than prior forecasts.

Another forecaster, LMC Automotive, expects 2020 global light vehicle sales to fall below 77m, a decline of nearly 14m, or 15% below the 2019 level. "The environment remains extremely dynamic," LMC said.

In the worst case, LMC said global sales could fall to 69m. LMC said it had removed about 3m units each from sales forecasts for China, North America and western Europe.

In January, LMC had forecast global sales to be flat from 2019, at 90.1m units.

"A global market, with some growth headwinds from a slowing economy and trade still a risk in the background, quickly changed to a global market in chaos, a situation that is likely to remain for some time," LMC said.

Morgan Stanley said European auto sales in 2020 will be around 12.5m units compared with 13.7m in its earlier prediction. In percentage terms, it now expects the market to fall by 13% compared with an earlier prediction of a 4% drop.

Global sales will fall by 8m in the first half, Morgan Stanley said, representing a nearly 20% drop. It added that a previous forecast that 50% of that loss could be recovered in the second half "now seems unlikely."

Chinese sales will fall by an additional 3m units, or a 15% decline, and the U.S. market will fall by an additional 1m units, Morgan Stanley said.

Europe 20% drop

Scope Ratings, a credit-rating service based in Germany, was the most pessimistic of the forecasters.

It said western Europe sales would fall about 20% for the year — representing some 3m units — a decline worsened by a push to move higher-polluting models at the end of 2019 ahead of new EU emissions targets. That push artificially inflated sales last year, Scope said.

Scope also forecast that in economies dependent on crude oil and natural gas, such as Russia, demand could fall by more than 50% this year. Prices for those commodities have fallen sharply during the coronavirus crisis.

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