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Disaster in the auto industry: global car sales will plunge 20%


The coronavirus has precipitated the automotive sector to bottom out and it does not seem that its situation can be reversed in the remainder of the year. Analysts consider that the automobile business will worsen the figures that were registered in the 2009 crisis and will sink by about 20%, up to 73 million units. In 2019 there were 90 million, according to a report by the rating agency Moody's.

Covid-19 has become the final blow for a sector that was not going through its best moment and that was preparing for a more timid demand. Sales collapsed as the virus spread across the globe, causing factories and concessionaires were forced to close.

In the first eight months of 2020, global car sales have accumulated a drop in the 40.6%, which translates into 524,706 vehicles, as indicated by the Spanish Association of Automobile and Truck Manufacturers (Anfac), Faconauto (dealers) and Ganvam (sellers). For Vittoria Ferraris, an expert at S&P Global Ratings, the crash is "an unprecedented shock for the global industry"

The registration data for August, the most recent update, corroborated the crash. In the eighth month of the year, the figure suffered a year-on-year drop of 18.9%, after a decrease of 5.7% in July.

Therefore, it is likely that in the remainder of 2020 the work of suppliers and production plants will operate at a suboptimal capacity and at less efficient levels.

From S&P Global Ratings they have anticipated that a significant part of car producers will end the year with a debt load greater than its beginning and that, therefore, profitability and adequacy of cash flow of companies will be weaker in 2021 than it was in 2019.

The risk of recession has been accentuated by the uncertainty surrounding the transition to 'clean' mobility or zero emissions, or in other words, the introduction and profitability of electric cars.

Car manufacturers are facing this new challenge, in which they will have to comply with the limitations of carbon dioxide, in a scenario that was not expected, but in which a strong investment to improve existing technology and develop future.

The combination of these three factors (the slowdown in the sector, the coronavirus and the ecological transition) has led experts not to trust that there will be a rapid recovery of the industry, despite the evidence that generates optimism.


The current crisis in the sector has pulverized the data of the Great Recession of 2009. Between 2007 and 2009, car sales decreased by 11%, nine points less than expected this year. In addition, the industry would recover with a rise of 19%, reaching its highest level of sales in 2010. Until 2017, the automobile business has continued to grow at an annual rate of 4.5%.

However, such an abrupt recovery is not coming this time. Both Moody's and S&P Global Ratings agree that its pace will be prolonged, with increase around 9% in 2021; 7% in 2022 and slowing down in 2023, without regaining the 2018/2019 levels.

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