Europe’s Virus Infected Car Sales Fall Nearly 60% In May.
“dependent on various scenarios such as 2nd corona wave which could once again shutter key production and distribution networks”
European car sales perked up a little bit in May after April’s near- death coronavirus-induced experience, while forecasts for the rest of the year and longer term are still causing furrowed brows for investors in the automotive industry.
Sales in Western Europe fell 57.3% in May, which translates into an annual selling rate of 6.3 million, compared with the catastrophic 2.8 million the previous month, LMC Automotive said.
Sales of cars and SUVs fell 89% in Britain, 72.7% in Spain, 50.3% in France, 49.6% in Italy and 49.5% in Germany, LMC Automotive said. LMC expects sales for the year to fall 26% to 10.58 million and looks for other governments to join Germany and France with incentive schemes to persuade nervous buyers to open their wallets.
LMC’s forecast for 2020 is very close to its previous month’s attempt.
Berlin-based analyst Matt Schmidt expects only a 20% fall in sales for the year but is worried this might be derailed by a second wave of the coronavirus
“The general consensus across industry forecasters’ is that the market will experience a 20% fall during 2020 compared to previous year levels. However, this is dependent on various scenarios such as a second corona wave in the closing months of the year which could once again shutter key production and distribution networks as witnessed during March and April,” Schmidt said.
LMC is a bit nervous about forecasts too.
“The modest improvement in last month’s (sales) results versus April comes alongside the easing of lockdown measures. We expect selling rates will be on a generally upward trajectory over the second half of the year, supported by lockdown measures easing and vehicle plants resuming activity,” LMC analyst Jonathon Poskitt said.
Upside and downside
“However, there are clear upside and downside risks. On the upside, the implementation of incentive schemes by governments could create a boost to consumer demand, though, schemes announced so far, do not appear to have the transformative impact on vehicle sales we saw during the Great Recession. On the downside, a second wave of coronavirus cases and the deployment of strict lockdown measures could have grave consequences for automotive sales activity,” Poskitt said.
Looking to the longer term, consultancy Alix Partners doesn’t expect global auto sales to return to recent-peaks in 2017 until after 2025.
On Thursday, Germany raised the incentives to buy electric cars and cut the sales tax on more fuel efficient gasoline and diesel cars, but increased taxes on gas guzzling SUVs and sports cars.
The measures were part of Germany’s 130 billion euro ($150 billion) stimulus package designed to pull the country out of the coronavirus-induced economic slump.
The buying incentives for electric cars were raised to an effective 9,000 euros ($10,000), but with a price ceiling of 40,000 euros ($45,000).
France has also introduced an 8 billion euro ($9 billion) plan to boost its auto industry including incentives for electric cars of up to 12,000 euros ($14,000).
Britain is expected to follow suit, but so far no details have emerged about the shape and extent of the plan.