| 12:42 PM EST

Global Car Sales Forecasts Fall on Virus Fears

Clearer picture not likely for many weeks
#americas #europe #Renault


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Forecasters are starting to warn about big drops in global car sales this year as China’s coronavirus crisis seeps into other world markets.

Nobody knows how bad it will get. But the chances of the outbreak simply fading away anytime soon appear unlikely. Now analysts are adopting a “not-if-but-when” perspective.

Murky Outlook

Many, including auto industry members, believe a clearer picture will emerge over the several few weeks as the impact on their supply chains begins to play out.

Toyota tells Reuters it doesn’t know whether it will be able to continue normal operations at its 16 factories in Japan after next week because of supply chain issues in China.

Four assembly plants operated in Italy by Fiat Chrysler Automobiles have been threatened by a virus-related delivery issue with Italian electrical devices supplier MTA.

The carmaker obtained a special waiver to collect parts from the supplier’s quarantined plant. But MTA warns that BMW, PSA and Renault plants in Europe will soon be affected unless its workers are allowed to return to work soon.

Yesterday FCA formally noted in a regulatory filing that a coronavirus pandemic would have a “material and adverse” impact on its business results.

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In the meantime, the China Assn. of Automobile Manufacturers says year-on-year wholesales from factories to dealers plunged 19% in January. Dealer orders for electrics crashed 52%.

“Reasonable” Scenario

LMC Automotive notes that several possibilities seem equally plausible at this early stage. But the firm says it would be “reasonable” to assume the crisis will lop 3 million-4 million units off global sales this year.

Before the crisis, LMC expected global volume, which shrank 4% last year, would be flat in 2020. Just last week the firm predicted sales would instead fall by 1.3 million units.

Under what LMC describes as a “relatively innocuous” scenario, outbreaks of the virus would continue through 2020, often in unpredictable ways. The result would be “significant” economic loss caused by quarantines, travel disruptions, production halts and disrupted supply chains.

Not to mention the far-reaching effects of damage to consumer and business confidence.

Moody’s View

Today, Moody’s Investors Service also cut its global sales forecast. The service now expects this year’s volume will drop 2.5% compared with its pre-outbreak estimate for a 0.9% decline. Worldwide sales are likely to expand by only 1.5% in 2021, Moody’s says.

The investor service—which had predicted 1% growth in car sales in China this year—now anticipates a 2.9% decline. The firm also expects that sales this year will remain weak in the US. and decline in Europe.

Moody’s says Japan, with a tiny 0.4% upswing in sales likely this year, will be the world’s only major market to grow this year, according to the revised outlook.

Live Coverage

Our affiliate Gardner Intelligence is tracking the impact of the coronavirus on manufacturing and plans to release a report next week.

In a short video interview with our sister publication MoldMaking Technology, Chief Economist Michael Guckes notes that the outbreak’s impact on some supply chains may not be felt for months.

Detailed specifics about how the crisis may affect particular operations may be next to impossible to pin down right now. But analysts say it’s definitely time to crank up the contingency planning.

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