British Car Sales Dive Nearly 45% in March.
“demand will be stimulated by government programs, but if this doesn’t happen, significantly higher declines can be expected”
British car and SUV sales plunged nearly 45% in March, in data reported Monday, slightly worse than Germany’s reported 38% drop in the month last week, although not nearly as bad as France’s 72% shortfall compared with the same month last year.
Sales in Britain in March fell 44.4% to 254,684, according to the Society of Manufacturers and Traders.
Expect a renewed clamor from the European automotive industry for government help from perhaps cash for clunkers schemes, as factories stay silent because of coronavirus shutdowns.
French consultancy Inovev said the crisis is the worst to face the industry since World War 2.
“There is an extremely severe decline in production, with a total stop in many countries. There will be a severe decline in demand, as consumers will –
–Have much less money to spend on non first-necessity goods. Cars are considered by most people as a first necessity good but replacing their current one will not be a first necessity.
–Have deep fears that the “coronavirus crisis” can rebounce, even after it is stopped, or new diseases can outbreak at any time.
–Take new habits, with new ways of working and leisuring.”
Inovev expects governments to be forced into unprecedented peacetime action, such as trade protectionism.
Forget normal levers
“Normal levers of the economic system cannot work. States will be led to take after-war measures, as was the case in Europe after WW2 with the Marshall plan, such as nationalizations, debt write-offs, management of borders. These actions cannot be anticipated today and it is therefore very difficult to construct consequently close-to-real forecast,” Inovev said.
Germany’s Center of Automotive Management (CAM) expects sales in Western Europe to dive 21% in 2020 to 12.5 million, while sales in the U.S. will drop 3 million to 14 million.
“In our base scenario, on the one hand, the main burdens caused by the coronavirus crisis with restrictions placed on public life and the automotive industry will be limited to between 6 to 8 weeks (in Europe). It is assumed that demand will be stimulated by various government incentive programs, but if this doesn’t happen, significantly higher declines in demand for cars can be expected,” CAM’s Professor Stefan Bratzel said.
But forecaster IHS Markit is much less pessimistic. In a report last week, it reckoned Western and Central European sales will slide only 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 predicted 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.