The international automotive markets faced a challenging year in 2019, with China, Japan, Korea and India all failing to match the sales and production levels of 2018. China reported its second year of declining vehicle sales and production, with 2019 showing a 9.2% reduction in car production to 21.360 million, even prior to the coronavirus (Covid-19)’s arrival in the country in January 2020.
Prior to the outbreak of the epidemic, original car output in China was forecast to decline by a further 10% in the first quarter of 2020 compared with the same period in 2019, but this has now been extended to the first half of 2020, with many car plants still inactive after a nationwide shutdown to control the spread of the virus. There have additionally been significant disruptions to the automotive supply chain. Analysts say that car sales could take many months to recover.
A similar picture is emerging in South Korea, which reported a 15% decline in vehicle production for 2019 to 3.957 million units, due to a slowdown of exports and domestic demand. Production declined by a further 27% to 251,575 units for January 2020, and further significant reductions are expected in the first half period.
Japan, Asia’s second largest vehicle producer, saw car production holding up in 2019 with just a 0.2% decline to 9.215 million units. However, Japan’s domestic vehicle sales dropped by 2.6% year-on-year and a 11.7% decline in sales to 360,103 units was reported for January 2020. Around 50% of Japan’s car output is exported. The Indian car market failed to match the good results achieved in 2018, with a total of 3 million units sold – down 13% year-on-year.
In the USA, the light vehicle market (cars and light trucks) ended 2019 with just under 17 million units (-1.3%), which is the first time the US market has missed the 17 million mark since 2014. Passenger car sales fell by 11% whilst the light truck market, which now accounts for 72% of the market as a whole, rose by 3%. In Canada, vehicle sales for 2019 declined by 3.6% to 1.914 million units.
In Europe, a total of 15.8 million passenger cars were sold in 2019, around 1% more than the previous year. However, the results varied in the large-volume European markets. Germany saw an increase of 5% in new car sales to a total of 3.6 million units, but recorded a drop of 9% in car production to 4.7 million units. France’s car sales dropped by 2%, Italy saw no gains, Spain reported a drop of 5% and the UK a drop of 2%. The UK recorded a drop of 14.2% in car production in 2019 to 1.303 million units, and production fell by a further 2.7% in January 2020 to 126,516 units – the lowest monthly total in 9 years.
2020 looks set to be a difficult year for the global automotive industry and its suppliers because of market uncertainty caused by the coronavirus. The structural PM part sector supplies around 70% of its output to the automotive sector, and any significant declines in demand will inevitably impact PM companies, particularly those in Asian markets.
Many global car companies have already reduced production in the first quarter of 2020 because of a lack of components from China, and whilst some Chinese car plants are said to be restarting operations after a nationwide shutdown, analysts state that any hits to the supply chain will take months to recover from.
The one bright spot in the global auto market is Brazil, which saw a 2.3% increase in vehicles produced in 2019 to 2.944 million units, of which 2.449 were passenger cars.