That the corona crisis is hitting the automotive industry hard is clear. How hard new car sales figures are falling, however, is unclear. Several research firms and analysts publish their predictions, all of which are negative.
IHS Market, for instance, predicts that the number of vehicles sold in Europe will fall by 1.9 million units to a total of 15.6 million units. This represents a drop of around 12%. Germany's Scope Rating is more negative and expects European car sales to fall some 20% by 2020. In absolute numbers, this equates to 3 million fewer vehicles.
Credit rating agency Moody's shares Scope Rating's view and expects a 21% drop in European car sales. Morgan Stanley is more positive and expects carmakers in Europe to sell about 12.5 million cars in 2020. This is 8.8% lower than the 13.7 million units previously forecast by the rating agency.
2 billion euros of damage per week
How big the damage is for car manufacturers is shown, among others, by an interview of Volkswagen top executive Herbert Diess with German ZDF. Diess estimates the economic damage caused by the corona virus for Volkswagen to be around €2 billion a week. "Outside China, we currently earn nothing," the top executive said.
Market analyst Ferdinand Dudenhöffer warns in Welt am Sonntag that the German car industry may face a surplus of 1.3 million cars a year. Falling demand has reduced the need for production capacity. Car manufacturers are therefore reducing it; Dudenhöffer predicts that Germany will produce 3.8 million cars this year compared to 4.7 million units in 2019. Cutting this capacity is estimated to put some 100,000 jobs in the German automotive sector at risk.
Production stops
PSA Group recently announced plans to reopen its European plants after they closed on 16 March. On Monday, for instance, the company wanted to restart transmission production in Valenciennes, France. However, this plan met resistance from unions, which called the risk to workers too great. The lockdown in France was recently extended until 15 April.
Some other carmakers are actually expanding their production halt. Toyota, for instance, announced it will close its European plants until at least 20 April. Renault is halting production in all its plants except China and South Korea. FCA already announced late last week that it would extend the production stop at its plants by a week. Volkswagen is halting production until at least 9 April.
Author: Wouter Hoeffnagel
