The COVID-19 Pandemic Changed the Global Automotive Map... China Smiles While the US and Europe Cry

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The global landscape of the automobile market is changing due to the novel coronavirus infection (COVID-19) crisis, the Wall Street Journal (WSJ) reported on the 7th (local time). The pace of economic recovery after lockdown measures to prevent the spread of COVID-19 has varied across major automobile markets such as China, the United States, and Europe, leading to mixed fortunes.

According to the report, new car sales in China sharply dropped from 1.614 million units in January to 224,000 units in February, but have since shown an upward trend. New car sales increased to 1.022 million units in March, 1.5 million units in April, 1.634 million units in May, and 2.28 million units in June. During the same period, the U.S. approached the January level before the COVID-19 outbreak but did not increase rapidly. New car sales in the U.S. fell from 1.13 million units in January to 708,000 units in April, then slightly recovered to 1.1 million units in June.

Europe showed the slowest recovery in the automobile market. New car sales in Europe were 1.135 million units in January but dropped significantly to 292,000 units in April, then slightly recovered to 624,000 units in May. With automobile manufacturers in Germany, Italy, and other countries showing weakness, Europe is the weakest among the three regions.

This phenomenon is also confirmed in the second-quarter regional new car sales performance of German automaker BMW. The total new car sales in the second quarter were 484,397 units, of which nearly half, 212,617 units, were sold in China. In the U.S. and Europe, 56,245 units and 151,869 units were sold respectively. While sales in China increased by 17% compared to the previous year, sales in the U.S. and Europe decreased by 40% and 46%, respectively.

The automobile industry had been struggling with declining demand and rising technology costs even before the COVID-19 outbreak. The pandemic further impacted manufacturers' cash liquidity. The stock prices of General Motors (GM), Ford Motor Company, and Fiat Chrysler Automobiles (FCA) each fell by 30% this year, and their market values shrank to about one-third of Tesla's.

Jonathan Forsythe, an analyst at LMC Automotive, a global automobile industry market research firm, forecasted that China's new car market will shrink by 11% to 22.8 million units this year, while the U.S. will decrease by 22% (13.3 million units) and Europe by 24% (15.7 million units).

The WSJ stated, "This is a different picture from just one year ago. At that time, global manufacturers such as Volkswagen and GM, which had significant operations in China, were struggling due to declining market demand," adding, "Since the outbreak of COVID-19, China has become the first country to show a different direction."