Ferrari Roma
Virus Hit European Car, SUV Sales Will Dive More Than 10%.
“It’s assumed the financial system does not collapse, there are no bank failures, negative growth for around 3 months, but then the economy regains its footing at a lower level”
As late as last week, forecasters were clinging to the notion European car and SUV sales would drop a modest 5% in 2020, despite the increasing mayhem being generated by the coronavirus.
But latest data is pointing to a much more serious decline, with Professor Ferdinand Dudenhoeffer, in a report for the University of St Gallen, Switzerland, saying his best case scenario sees sales in Western Europe diving over 10% in 2020 to 12.7 million from 14.3 million the previous year, with the market not recovering to 2019 levels until 2030.
Dudenhoeffer, in a report for the university’s Institute for Customer Insight (ICI), didn’t offer a worst case scenario.
“Even with the very optimistic scenario that the epidemic calms down significantly in a three-month period and “normal” life returns, there are significant cuts expected for the European car market,” Dudenhoeffer said.
He said even without the coronavirus, he’d expected sales to fall to 13.7 million, but the coronavirus had cut an extra million from the total.
“With these calculations it is assumed that the financial system in Europe does not collapse, that there are no bank failures, that there is negative growth for around 3 months, but then the economy regains its footing at a lower level,” Dudenhoeffer said.
He pointed to Italy as being the worst affected market, down about 16% in 2020.
Earlier Monday, Fiat Chrysler Automobiles (FCA) suspended Fiat and Maserati output through March 27 at Italian plants at Melfi, Pomigliano, Cassino, Mirafiori, Grugliasco and Modena. Plants in Serbia and Poland would close too.
Even Ferrari stopped
Later luxury sports carmaker Ferrari also stopped output in Italy until March 27.
In the report, Dudenhoeffer said sales in Germany, Europe’s largest market, would fall 14% to 3.1 million in 2020, but the steep drop was connected to 2019’s powerful performance. Without the coronavirus effect, German sales would have shrunk by 300,000 anyway.
Britain was emerging with little damage so far, despite Brexit, he said.
“The next few years will be extremely damaging for car manufacturers, and especially suppliers. (U.S. president) Trump’s customs wars (in China) have severely damaged the German auto industry. Donald Trump has destroyed important economic assets through the customs wars. This is an important reason for the losses and “moderate” results of important companies in the German auto industry in 2019. After the market slump in 2020, we will only see a slow recovery, overcapacity must be reduced,” Dudenhoeffer said.
European auto companies already had an uphill struggle on their hands, as they fought to meet increasingly stringent European Union (EU) carbon dioxide emissions rules which insist on an average fuel economy of 92 miles per U.S. gallon by 2030. This is costing huge amounts of investment, and will likely also incur balance sheet- threatening fines for those failing to meet the targets. Companies like Germany’s Mercedes, BMW, Audi and Porsche are having to stop sales of hugely profitable gas guzzlers to meet these targets, and that threatens bottom lines. Meanwhile, the development of electric and autonomous cars is also very expensive.
No CO2 grappling in U.S.
There is still a threat to European, mainly German exports to the U.S. from possible increased tariffs. Meanwhile, U.S. manufacturers, at least in the home market, don’t have to grapple with Europe’s self-inflicted wounds in the form of harsh fuel economy targets.
Dudenhoeffer said despite his “optimistic” scenario, times will get hard for some European manufacturers.
“Even with an optimistic assessment, we have to expect some devastation of parts of the European auto industry, but to the coronavirus shock, Trump’s customs wars and the switch to electric mobility,” Dudenhoeffer said, with naming the likely candidates for disaster.
Later on Monday, Groupe PSA said it will close all its factories in Europe until March 27.
These plants are – Mulhouse (France), Madrid (Spain), Poissy, Rennes, Sochaux (France), Zaragoza (Spain), Eisenach, Rüsselsheim (Germany), Ellesmere Port (United Kingdom), Gliwice (Poland) Hordain (France), Vigo (Spain), Mangualde (Portugal), Luton (United Kingdom), Trnava (Slovakia).
Groupe PSA includes the Peugeot, Citroen, DS, Vauxhall and Opel brands.
PSA and Fiat Chrysler have agreed to merge, and completion is expected early next year.
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