Coronavirus outbreak to shrink automotive market and hit global suppliers
Coronavirus is expected to hit contract country’s car market by more than 3%
An outbreak of the novel Coronavirus (2019 nCoV) is already having a negative impact on China's automotive industry and has the potential to disrupt the North American auto industry as well, according to an alert published by LMC Automotive.
In the alert, LMC 's base case scenario expects the epidemic to continue into the second quarter of 2020, damaging consumer confidence, delaying purchasing, and impacting China's consumer economy which accounts for more than half of the country's GDP. In this scenario, China's GDP growth rate would drop towards 5% for 2020, with its personal vehicle market falling by 3-5%.
A Feb. 7-13 Reuters poll of 40 economists based in mainland China, Hong Kong, Singapore, as well as Europe and the United States, predicted China’s annual economic growth in the first quarter of 2020 to slump to 4.5% from 6.0% in the previous quarter.
Falling demand for cars, particularly in the Chinese market, has already hit car manufacturers, with Nissan, Renault and Daimler all posting their worst results in a decade.
Additionally, the local automotive supply chain has been affected, with a number of suppliers delaying their post-holiday production.
"Overall, we expect the 2019 nCoV outbreak to hit Chinese sales and production by 3-5% this year, though this is just one of a number of potential scenarios that we have laid out in the alert, and further revisions are certain as more information becomes available in the coming days and weeks," said Jeff Schuster, President, Americas Operations and Global Vehicle Forecasts, LMC Automotive. "This is a very fluid situation and one that warrants heightened attention as it has the potential to significantly reduce Chinese automotive production in 2020."
An outbreak of the novel Coronavirus (2019 nCoV) was first detected in China in December 2019 and has since spread to many regions of the world, having recently been declared an International Health Emergency by the World Health Organization. As some areas of China are still in near-complete lockdown, automakers near the city of Wuhan and the surrounding Hubei Province have extended their Chinese New Year's shutdowns until at least February 13.