Coronavirus: the global automotive industry in free fall

An assembly line at the Volkswagen factory in Palmela, Portugal (illustration image). REUTERS / Rafael Marchante

Text by: Agnieszka Kumor

Among the main economic victims of the Covid-19 is the automobile market, which has been hit hard. The French market is experiencing a historic fall. Builders will need to be patient. Around the world, the picture is grim.

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New car deliveries plunged 72.2% in March as a whole. And for good reason: the confinement of the population decreed in France two weeks ago prevents almost any sale. Like all businesses classified as “non-essential”, car dealerships are closed. As a result, less than 63,000 cars were registered in March, compared to nearly 226,000 over the same period last year.

The collapse of the global sector

The forecast for the next few months is very bad. This health crisis should have a lasting impact on the automotive industry with less than 20% of sales expected over the year. This collapse affects not only French groups, but also their foreign competitors in France. The German Volkswagen group fell by almost 79%. It is hardly less catastrophic for BMW and Daimler-Mercedes. For the automobile, the picture is grim everywhere. It is not much better in the other large producing countries.

In Japan, the market collapse started six months ago. But where Nissan and Mitsubishi, Renault partners, continue their descent into hell with respectively 32% and 49% decline, Toyota limits the damage with only 3%. Around the world, the month of April promises to be dramatic, with almost all Japanese manufacturers having stopped production altogether. Anyone could leave their feathers there. The agency Moody's forecasts for 2020 a market decline of 21% in Europe, 15% in the United States, 10% in China and 8% in Japan.

Auto production at a standstill

Whether in China, Europe or the United States, factories are closed. Faced with these forced stops, some manufacturers such as the American General Motors began to manufacture parts for artificial respirators . In France, PSA and Renault are participating in the national effort. This is also the case for certain equipment manufacturers, such as Valéo. All these companies will also be deprived of their big annual meeting, the Paris Motor Show, scheduled for October in Paris and canceled by the organizers, at least in its usual form.

There remains the question of restarting factories after containment. Everyone is already thinking about it. In France, we hope for the end of this month of April. The idea, emitted in particular at PSA, is currently facing opposition from unions, in the name of employee health. Discussions are ongoing.

Hope could come from China. In the world's largest automotive market, factories are struggling to restart after more than a month of paralysis. In order to allow car manufacturers severely affected by the pandemic to boost their sales, the central government is currently considering relaxing the quotas on the production of electric cars. This arrangement would however be temporary. At the same time, Beijing could also delay the entry into force of a new law on fine particle emissions by six months . This law pushes Tesla, Volkswagen, General Motors, Toyota, Geely and others to accelerate their production of clean, but expensive vehicles, to the detriment of more profitable thermal cars.

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