Global Car Sales Forecast to Fall by 13.5 Million Units
Car sales are likely to shrink by 3.1 million units in North America this year—and by 13.5 million worldwide—because of the coronavirus pandemic.
So says LMC Automotive. The firm’s latest outlook predicts global deliveries of light vehicles will plunge to 76.6 million units in 2020 from 90.1 million last year.
Only two months ago, LMC was anticipating flat worldwide sales this year. Now we have what the firm describes as a rapidly deteriorating economic backdrop and a market in chaos.
To put some perspective on the sales gap being created by the virus: If LMC is correct, the contraction this year will be more than twice the volume lost in 2007-2009 during the Great Recession.
LMC figures that China, Europe and North America will lose 3.2 million, 3.3 million and 3.1 million sales, respectively, this year. The firm estimates that India, whose economy went into a three-week lockdown yesterday, will see passenger car sales plummet almost 20%.
Where to Next?
Could the numbers get even worse? There are plenty of reasons why they might, LMC says. the firm points out that the pandemic is still growing, unemployment is certain to skyrocket and unresolved trade issues are still…unresolved.
LMC is modeling a worst-case scenario in which the pandemic stretches well into the second half of 2020. If that happens and the outbreak has a rebound late this year, the global car market could shrink more than 20%. That would drag down worldwide volume by year-end to 69 million units.
But there’s another way of looking at the calamity we’re in now.
It may not feel like it at the moment, but the auto industry is in far better shape to cope with the crisis than it was going into the Great Recession. For one thing, LMC notes, the world’s economic policymakers have been able to accomplish in a few weeks what it took a couple of years to do during the financial crisis.
The resulting monetary and social support packages may be less than perfect. But they should help pave the way for a faster rebound.
Economies that get knocked down by an unexpected disaster do have a way of roaring back as soon as they get the chance, as the past 11 years of steady growth in the U.S. have illustrated. This crisis will take time to resolve, but resolved it will become.
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