April Auto Sales Could Plummet 80% in Europe.
Europe, sales will show an unprecedented slump of over 80%. For the USA sales will drop by at least 60% in April”
Sales of cars and SUVs dived more than 50% in coronavirus inflicted Western Europe in March, outpacing the U.S. fall of nearly 40%, and forecasters expect even worse numbers in April, although they still cling to expectations that all will be well after a “V” shaped recovery.
Western Europe, which includes all the big markets like Germany, Britain, France, Italy and Spain, will be even worse this month, possibly down by 80%, while U.S. April sales will fall “only” 60%.
LMC Automotive said Western Europe sales fell 52.9% in March to 774,280 compared with the same month last year, bringing the annual selling rate down to 6.6 million, off 22.1%. This included falls of 85% in Italy, 72% in France, 44% in Britain and 38% in Germany.
U.S. sales fell 38.6% to 983,174, not quite as bad as the 41.4% plunge in February 2009 after the financial crisis.
“The (U.S.) results for April and May are set to be even more dismal, bringing full year Light Vehicle sales to 14.2 million units. This compares with our forecast of 16.5 million in early March. The unprecedented and unpredictable nature of the current health crisis means that we cannot rule out further revisions to this forecast,” said LMC forecast Augusto Amorin in a report.
Norddeutsche Landesbank Girozentrale analyst Frank Schwope said Western European sales will almost stop this month.
“In our opinion, since Germany will experience a major standstill in public life at least until April 19, but also for Europe, sales will show an unprecedented slump of over 80%. For the USA sales will drop by at least 60% in April,” Schwope said.
German chancellor Angela Merkel has said restrictions on free movement and business closures, in effect in Germany since March 22, would remain in place until at least April 19, a week after Easter Sunday.
LMC Automotive said there has never anything like this before.
“A fall of this proportion is unprecedented in what is, generally, a mature, stable region. The spread of coronavirus COVID-19 now dominates regional woes, with widespread government-imposed lockdowns, and subsequent plant closures, having profound effects on both the demand and supply side of the automotive industry,” said LMC analyst Jonathon Poskitt in a separate report.
And here comes the positive bit – expect a “V” shaped recovery in the second half of 2020.
“The initial weak start to the year for (sales), related to a pull forward into December 2019, has been dwarfed by the devastating impact of the spread of COVID-19. Our base case assumes a V-shaped recovery once the spread of the virus across the region is brought under control, with selling rates picking up through the second half of 2020,” Poskitt said.
LMC now says in 2020 Western Europe’s car and SUV sales will be down 18.3%, after a 0.7% increase in 2019.
“The annual forecast for 2020 is currently pencilled in at 11.7 million units, but with extended or further lockdowns through the year, the market could fall well below levels seen during the Eurozone Crisis’s 11.5 million in 2013,” Poskitt said.
Expect a renewed clamor from the European automotive industry for government help from perhaps cash for clunkers schemes, as factories stay silent.
U-shaped? Hopefully Not “L”
Not everybody expects a smooth, “V” shaped recovery. French consultancy Inovev said car buyers after the crisis may feel replacing cars may not be high on their list of priorities. Others may fear the coronavirus might well return to turn economies and work life upside down. It also fears the initial damage caused by the coronavirus shutdown might prompt a return to trade protectionism, nationalization and general government interference.
Forecaster IHS Market is much less pessimistic. It reckons Western and Central European sales will slide 13.6% in 2020 to 15.6 million, but recover by 4.2% in 2021, 4.3% in 2022 and 1.4% in 2023.
For the U.S., IHS Markit predicts a worst case scenario of 11.64 million for 2020 compared with 17.08 million in 2019, with a recovery bringing its 3 scenarios close together in 2022 at close to 16 million.