Global Automotive Industry Outlook

The global automobile industry is mainly driven by the sale and production of self-powered vehicles such as passenger cars, buses, trucks, and other commercial vehicles. Automobiles enable consumers to commute for long-distance for the purpose of work, entertainment, shopping, etc. The development of roads, increasing the middle-class population, increasing the standard of living is the key factors that are driving the automotive industry. The global automotive industry is currently valued at around USD 250 Billion. It is expected that the worldwide sales to decline 22% this year and fall by 26.6% in the US.

The global automotive market is expected to decline at 22% this year to 70 million units this year. The world’s largest auto market, China is expected to decline at the rate of more than 15% to 21 million this year. In the US many dealership showrooms are disrupted, however, the retailers have decided to sell their vehicles online. Across central and western Europe it is expected to decline at 25% in sales to 14 million sales a year.

Key Players

• Toyota
• Volkswagen
• Ford
• Honda
• Nissan
• Hyundai
• Chevrolet
• Kia
• Mercedes
• BMW

Segmentation Analysis

By Application

• Commercial vehicles
• Passenger Car

By End User

• Aftermarket
• OEMs

By Geography

• South America
• North America
• Europe
• Asia-Pacific
• Rest of the world

The global spread of Covid-19 has emerged as the biggest risk factor for the auto industry for too many years. It is producing various economic, social, political disruptions in various industries. Because of its appearance in China, auto sales fell around 80% in February. Many large events like the Geneva motor got canceled because of this epidemic. The Covid-19 situation has put intense pressure on an already stressed auto industry. Because of the immediate impacts, analysts agree that this crisis will make automakers to revisit their manufacturing and supply chain strategies. Credit rating agency Moody also cuts its outlook for global auto sales to 20% as global outlook worsens due to the Covid-19 crisis.

EV Market is most vulnerable in this crisis because of its dependency on youth and core technology such as batteries. Electric vehicles that are more expensive than their fuel-powered and hybrid counterparts will be in more suffering. As we know EVs are already been a tough sell for average customers. As oil prices are plummeting with the addition of challenges epidemic may bring, could resist potential buyers to buy an EV for a while.  If the recovery in the aviation sector is slow, the demand for fossil fuel and gas will remain depressed and it will cause their prices to remain low, further hampering demand of EVs.

While China is slowly bringing its Covid-19 lockdowns to remain in places across many countries like India, Italy, France, Spain, UK, etc. Most Factories were shut down for months in Wuhan – the epicenter of Covid-19. The same situation is in the demand side. India imposed a nationwide lockdown that causes march sales to dip down by 51% from 12 months ago. With estimated losses worth 2,300 crores a day, SIAM says that automakers are rethinking and may come out with some contingency plans. It is also believed that the actions of countries against Covid-19 and their hospitals’ capabilities will decide the trajectory of recovery for the automotive industry.

Some industry analysts believe that long term prospects for electric vehicles will remain strong as we have seen the electric vehicle development has accelerated in China in the last few months. As manufacturers are looking for driverless delivery systems that would be useful in this type of pandemic situation. There is also another factor that could fuel the EV sales once this crisis ends i.e. the environmental benefits. As we know because of this crisis pollution levels of various countries like China, Italy, India have dropped significantly since quarantines have come into effect. As the effects of crisis start to wane and the industry starts to recover, OEMs have to explore several options to monitor the drop in sales.