[Liquidity Crisis in Cars] Overseas Sales Down 20%, April Feared Even More

Five Major Automakers' Overseas Sales Down 20.9% Year-on-Year
"Concerns Over Global Car Market Falling Below 80 Million Units This Year"

Hyundai Motor Ulsan Plant Yard (Photo by Yonhap News)

[Asia Economy Reporter Kim Ji-hee] Last month, the total overseas sales of the five domestic automakers fell by more than 20% compared to the previous year, breaking the 450,000-unit mark. This is the lowest overseas sales performance for March in 11 years since 2009. While domestic sales, which had sharply declined in February amid the rapid spread of the novel coronavirus infection (COVID-19) in Korea, have somewhat recovered, the shock of the 'global shutdown' is still considered to be in its early stages.

According to the industry on the 2nd, overseas sales of the five domestic automakers (Hyundai Motor, Kia Motors, GM Korea, Renault Samsung, and Ssangyong Motor) in March this year totaled 446,801 units, down 20.9% from March last year. Sales of Hyundai Motor and Kia Motors decreased by more than 100,000 units compared to the same period last year, and Renault Samsung's sales shrank by more than half to 3,088 units year-on-year. As major global automobile markets were directly hit by COVID-19, overseas sales have returned to levels seen 10 years ago.

The bigger problem starts this month. The industry widely expects that the full-scale 'sales shock' will intensify from April, as the spread of COVID-19 shows no signs of slowing and shutdowns of major automaker and parts factories in key countries continue. The global market research firm IHS Markit forecasted in its report released at the end of last month, titled 'Impact of COVID-19 on Automotive Demand in Major Global Regions,' that global automobile sales this year will decrease by 12% compared to the previous year. This forecast was lowered by about 10 million units from the projection made just before the COVID-19 outbreak, estimating sales at 78.8 million units.

The outlook for the United States, one of the world's three largest automobile markets, is also bleak. JD Power in the U.S. projected that automobile sales in the U.S. could decrease by up to 2.8 million units by July. There is also a grim forecast that if the impact of COVID-19 continues after the first half of the year and the U.S. and Europe fall into recession, new car sales in these countries could sharply decline by 15% and 14%, respectively, compared to the previous year.

Senior Research Fellow Lee Hang-gu of the Korea Institute for Industrial Economics and Trade said, "In developing countries such as India, the impact of COVID-19 began to intensify since mid-last month, so the decline in April could be even greater." He added, "I had expected global new car sales this year to fall below 90 million units, but now, depending on how long COVID-19 lasts, whether the annual sales fall below 80 million units has become a critical issue."