Global Auto Sales Won’t Recover Pre-Coronavirus Highs Until 2023.
“Economists worry direct government support will have a limited duration and when the money runs out, economies might slump again and damage vehicle sales”
Hopes the global automotive industry would recover pre-coronavirus sales with a swift, uncomplicated “V” by the end of the year or early next year, are starting to look a bit frail as many of the world’s biggest economies suffer secondary virus outbreaks, and GlobalData reckons full recovery might not be achieved until 2023, that’s a couple of years later than the conventional wisdom.
Optimists might point out that at least this does represent an actual recovery in vehicle sales and a return to normality, because some radical environmentalists have sought to make the sharp contraction in sales a rallying point for the fast elimination of internal combustion engine (ICE) sales and their replacement by CO2 free-at-the point-of-use electric cars
Industry forecasters had expected global sales in 2021 to almost regain 2019 levels, after the virus caused unprecedented mayhem in the first half of 2020.
Global new vehicle sales fell 25 to 30% in the first half, including 15% in China, 24% in the U.S. and 40% in Europe, according to a report in the late summer from Fitch Ratings. In 2019, global sales totalled about 90 million light vehicles – sedans, SUVs and pickup trucks – and are expected to fall to 75 million this year, and rally to 84 million in 2021, automotive forecaster LMC Automotive said then.
The consensus then was that the 90 million level would be in sight by the end of 2012 or early 2022 at the latest.
But leading data and analytics company GlobalData, in a report published Thursday, says global sales won’t recover pre-pandemic levels until 2023.
“The global light vehicle market will grow by 14.6% to a little over 85 million in 2021, compared with pre-virus 2019. The market is projected to return to at least 2019 levels by 2023, but risks remain for the path of the sector’s demand recovery over the next few years,” GlobalData said in the report.
“That 85 million projected for 2021 compares with a previous peak of 94 million light vehicle sales achieved in 2017 and 2018. It is also a long way removed from the over 100 million annual global market being viewed as highly possible just a few years ago,” GlobalData analyst Calum MacRae said.
MacRae said the market recovery this year has been a reaction to an extraordinary event rather than part of the more conventional economic cycle seen in normal times, but he warns that the economic backdrop is set to change.
“From next year and beyond much will depend on the path of major world economies when the recession threatens to become more broad-based with demand impacted by higher levels of unemployment and some permanent scarring from the pandemic. That could put pressure on governments to extend special measures and support for the sector – for example with continued incentives to buy electric cars in Europe,” MacRae said.
Europe’s current recovery is being led by electric vehicle sales boosted by big government subsidies and economic stimulus programs and worries have already been expressed about losing momentum later in the year because of worries coronavirus infections hadn’t halted but merely temporarily delayed. GlobalData didn’t give any precise forecasts for Europe, the U.S. or China, the world’s biggest markets.
Carmakers face the prospect of massive investments to meet fundamental industry shifts, including the rapid development of electric cars, autonomous vehicles, different forms of car ownership and new mobility services. In addition, the global geopolitical backdrop remains uncertain, and risks from events like U.K.’s decision to leave the EU and the imminent U.S. presidential election add to the uncertainty.
Economists worry that direct economic support from governments will have a limited duration and when the money runs out, economies might slump again and damage any attempt to revive vehicle sales.