Global Top 10 Countries Sales Forecast (Q1 2020)

Global light vehicle sales forecast in 2020 is 76.61 million units, the worst y/y decrease on record

2020/04/23

*An updated version of this forecast report will be released every quarter.

According to LMC Automotive's sales volume forecast (as of Q1 2020), global light vehicle sales in 2020 are expected to fall by 15.2% to 76.61 million units.

The outbreak of the coronavirus disease (COVID-19) and government measures to contain it have had a strong effect on the market, pushing it downwards. In 2020, a significant decline in sales is inevitable in all top 10 countries.

 



Commentary

China
With COVID‐19 now a global pandemic, China’s PV market is exposed to greater uncertainty and downside risks. Our outlook for LV sales growth was cut from ‐7% to ‐12%. Under a scenario in which the COVID‐19 outbreak is fully contained and brought under control by Q2, we anticipate a recovery in Light Vehicle demand in Q3 2020. This should be followed by a rebound in the final quarter of this year and into next year, leading to growth of 12% for 2021 overall.

USA
We anticipate that the impact of the coronavirus in the economy will slow down sales in 2021: we forecast that 15.49 mn Light Vehicles will be sold, up by 9% YoY. Sales are likely to start rebounding in 2022, with the economy fully recovered and more Generation Y consumers reaching the “sweet‐spot” for a first new vehicle purchase.

Japan
For 2020, sales are projected to fall by 9.5% to 4.64 mn units, not only due to the stronger‐than‐expected impact on demand from the consumption tax increase, but also to the acceleration of the COVID‐19 pandemic since end‐February. We currently assume that the effects of the pandemic will continue through to the summer and only begin to fade toward year‐end. The biggest concern will be the damage to the economy and, in turn, the potential impact on vehicle demand.

Germany
From the previous issue of this report, we have made a significant cut to the 2020 Light Vehicle forecast to account for the impact of the COVID‐19 pandemic. The market is now expected to drop well below 3.2 mn units (‐19% YoY). Given the unpredictability of the situation, the risk to the outlook is firmly on the downside and closely linked to the duration of the containment measures. The current base assumption is that the situation should ease over the course of the second half of the year, allowing selling rates to pick up. We may see some delayed sales boosting rates when the situation finally improves, although the large‐scale fall in economic activity points to a much weaker market this year.

India
For 2020, sales are now forecast to hit a decade‐low of 2.81 mn units (‐20% YoY), following a 12% contraction in 2019. Based on this forecast, we expect sales to shrink by 61% and 54% YoY in April and May 2020, respectively. Even though we anticipate an upturn in demand in H2 2020, the risk to this forecast is on the downside. Together with the virus pandemic, the fragile banking sector presents a further serious concern for the economy and automotive financing.

UK
Since the previous edition of this report, we have made a major downward adjustment to the UK Light Vehicle forecast for 2020, to account for the impact of the coronavirus‐associated lockdown measures. The market is now forecast to decline by 17% to just over 2.2 mn units this year. This forecast is contingent upon the containment measures being lifted over the coming months and a resulting pickup in selling rates. This V‐shaped recovery may yet prove optimistic, however, particularly if the lockdown is extended or reinstated later in the year, following a secondary virus outbreak. Were this to be the case, the sales outturn would fall below our current estimate.

France
The COVID‐19 pandemic overshadows the sales expectations for 2020. We anticipate heavy hits to consumer confidence, private consumption and economic activity generally. With the closure of dealerships, amid lockdown measures, and a collapse in demand for big‐ticket items like vehicles, we expect Q2 2020 sales to plummet. In terms of the number of COVID‐19 cases, France is heavily exposed over the coming months, hence our very cautious near-term view of the evolution of selling rates. For the full year, we forecast a heavy market contraction to just 2.2 mn units. This is particularly notable for a market that we felt was at its medium‐term trend levels. Stable economic growth is expected to support market activity in the coming years, notwithstanding the turbulence we are currently witnessing. We anticipate a fairly rapid recovery in 2021 and our medium‐term forecast is for a PV market of circa 2.2 mn units/year from around 2022 onwards, given the slow growth in vehicle density and fairly balanced scrappage rates. However, there is some scope for LCVs to continue to improve over the forecast.

Brazil
While sales fell by 3.3% YoY in January, they grew by 1.1% YoY in February. Although the federal government has not declared any lockdown to avoid the spread of the coronavirus, preliminary data shows that March sales plummeted by 21.9%, to 156k units. The health ministry estimates that COVID‐19 cases will peak in Brazil only in May, which will impact Light Vehicle sales for an extended period. Some governors have implemented stay‐at‐home orders, and in São Paulo the governor has extended the closure of its DMV until late April, so there will be no registrations for almost a full month in the state that represents most of the country’s sales. We now forecast that 2020 will end with 2.04 mn units sold.

Italy
Given the rapid spread and severity of the COVID‐19 pandemic in Italy in recent weeks, and the ensuing nationwide lockdown to contain the virus, we have made a sizeable cut to the Italian Light Vehicle forecast for 2020. We now estimate full‐year sales at just over 1.6 mn units, compared with 2.1 mn last quarter, representing a 22% decline from 2019. The risk is skewed to the downside, however, with further cuts in prospect should the lockdown measures be extended beyond the next few months. And the danger of secondary outbreaks, once the measures are lifted, would put the country back under lockdown.

Russia
Having trimmed the Light Vehicle sales forecast significantly for 2020 (as well as reducing our 2021 forecast), we have made a much smaller adjustment to medium‐ and long‐term forecasts, on the assumption that the oil price largely returns to the trajectory previously assumed and that economic growth picks up again. The Russian government has pledged to support the economy via substantial infrastructure spending, so there should be scope for a period of stronger growth. Deferred replacement demand should support market recovery once conditions for consumers become more benign, but the resumption of a rapid growth trend still looks to be some years away.

 

Global light vehicle sales forecast by country (Top 10 countries)

2017

2018

2019

2020

2021

2022

Total

95,170,157

94,447,623

90,325,451

76,614,700

85,929,790

91,704,046

China

28,608,980

27,748,559

25,476,412

22,378,901

25,027,163

26,655,124

USA

17,154,042

17,230,970

16,991,474

14,216,527

15,493,107

16,529,955

Japan

5,164,249

5,201,809

5,128,475

4,639,124

4,981,589

4,895,875

Germany

3,711,312

3,720,315

3,910,934

3,175,375

3,534,989

3,670,656

India

3,697,283

4,001,391

3,523,118

2,806,306

3,271,274

3,516,194

UK

2,909,889

2,733,220

2,685,613

2,241,690

2,593,653

2,752,057

France

2,540,649

2,620,873

2,678,879

2,232,886

2,572,634

2,684,740

Brazil

2,178,648

2,478,837

2,668,415

2,035,035

2,476,955

2,594,172

Italy

2,156,937

2,084,097

2,094,644

1,628,495

1,799,959

2,106,722

Russia

1,595,667

1,800,577

1,759,318

1,550,802

1,739,296

1,982,414

Other/RoW

25,452,501

24,826,975

23,408,169

19,709,559

22,439,171

24,316,137


Source: LMC Automotive "Global Automotive Sales Forecast (Quarter 1, 2020)"
(Note) 1. Data indicate figures of only small-size vehicles, including passenger cars and light commercial vehicles with a gross vehicle weight of under 6 tons.
          2. All rights reserved. Reproduction of any data will require permission of LMC Automotive.