Automotive Industry Update: Coronavirus Impact

Automotive industry production forecast to register slow recovery

The global automotive industry’s production value is forecast to decline by 3.4% in 2020 to reach USD4.6 trillion. In the baseline scenario, the industry is forecast to start recovering in 2021.

The automotive industry initially felt a supply shock which disrupted supply chains and production, and eventually was forced to halt production completely amid restrictive government measures. In total, global car production volumes in Q1 2020 are estimated to have declined by 5.9 million units due to halted production.

Even as car factories gradually resume their production, recovery is likely to be delayed due to supply chain disruptions. Car manufacturers are likely to continue facing shortages of critical components until Q4 2020 when suppliers are expected to solve infrastructure, transportation and employee safety issues. Moreover, it will take time for the car companies to restore depleted inventory levels. Currently car dealerships face shortages of inventory which would hurt sales in case consumer demand recovers.