The Impact of COVID-19 on the Automotive Industry
Analysis of sales volume, production volume, plant closures, and profits and losses
Unlike earthquakes and water damage, which generally affect equipment, the novel coronavirus, or COVID-19, is an infectious disease that can be classified as a disaster for humanity and an unprecedented occurrence for industries in the modern era. This report analyzes how COVID-19 has affected the global automotive industry and automakers up to this point.
Looking at the total number of vehicles sold worldwide, the cumulative total from January to August this year was only 45.58 million vehicles, indicating a significant drop year-over-year (y/y) of about 13 million vehicles (sourced from MarkLines vehicle sales data). By major country/region, Western Europe and Southeast Asia fell by more than 30% y/y, while South Korea and China, which suppressed the spread of the infectious disease early, suffered less damage. By automaker, Renault-Nissan fell sharply by 29% y/y. On the other hand, BMW, Hyundai/Kia, and Daimler have experienced losses of only roughly 20%.
Due to the closure of plants and the suspension of operations by many automakers, production volume fluctuated more than sales volume. Particularly in April, Western Europe, North America, and Southeast Asia were in the midst of plant closures, preventing production from being conducted in these regions. Production in Japan and South Korea also approximately halved in May, while production and sales in China recovered greatly.
In Europe and the U.S., the number of infected people increased rapidly with widespread and long-term lockdowns in place, forcing GM and VW to close almost all plants for about 1 to 2 months from the middle of March. From April to July, Toyota partially suspended operations at specific plants and production lines, taking into consideration the supply and demand of each vehicle and the outbreaks of COVID-19 infections.
As for the impact on the profit and loss of each automaker, Ford and Nissan, which had already been experiencing a slump in their business performance, suffered a marked deterioration in their operating profit margins, resulting in a cumulative deficit of nearly minus10% from January to June this year. On the other hand, Toyota and BMW, which have brand power and implemented cost reductions, as well as Hyundai/Kia, which had minimal damage in its domestic market, maintained operating profit margins at a low level.
Renault-Nissan-Mitsubishi Alliance: Progress of the Mid-Term Plan (Part 2) (Sep. 2020)
China Market H1 2020: Sales of New Vehicles Fall to 10.23 Million Units (Jul. 2020)
European Market: Accelerating electrification through government measures (Jul. 2020)
Hyundai Motor Group: increasing electrified vehicle lineup with 44 models in 2025 (Jun. 2020)
Daimler: Priorities are to invest in electrification, curb total investment, and preserve cash (May 2020)
ASEAN: Thailand and Indonesia aim to be regional EV hubs, CASE businesses growing (May 2020)