The extent of the impact COVID-19 has had on the global automotive industry has been revealed, with many of the largest car makers experiencing trouble with large-scale supply chain disruptions and retail shutdowns so far in 2020.

According to leading data and analytics company GlobalData, several global automakers, including BMW, Ford, Volkswagen and General Motors (GM) witnessed a decline in sentiments during Q4 2019, based on their earning transcripts released during February and March 2020.

BMW and Volkswagen were two of the most affected brands, with sentiments declining by 30 per cent and 15 per cent respectively over the Q4 period, with concerns such as the inability to source parts from China and the growing spread of the virus across the globe blamed for the decline.

Speaking on the decline in sentiment, Aurojyoti Bose, Lead Analyst at GlobalData, said the integrated nature of the supply chain was making it difficult for any car maker to avoid being majorly impacted.

“The automotive industry has a highly integrated supply chain network, in which disruptions have rippled across the industry in every region. Shortages of parts from Europe and China has affected plants in Latin and North America as well,” said Bose.

Bose also revealed that the drop in sentiment in Q4 2019 has translated to poor sales reports in Q1 2020 for most brands, including BMW, Ford and GM.

“BMW has seen the impact of the outbreak on its sales with its Q1 2020 sales volume declining by 20.6 per cent due to drop in sales in China, Europe and the US. Similarly, Ford and GM, who released their results and transcripts in February 2020, initially did not expect such a massive impact on the industry. However, Ford in April 2020, said it expects a US$600m pre-tax loss and US$2bn net loss in Q1 2020 due to the coronavirus.”

With sales figures continuing to decline, Fiat Chrysler and Honda are preparing to resume manufacturing operations by May as they look to accelerate out of the pandemic, while Toyota, Volkswagen and Renault have already begun resuming their European operations.

However, Bose believes that while this is a good sign, there is still along way to go until car makers start getting back on their feet.

“Though most of the factories in China have resumed operations, it will take time for the industry to recover with lockdowns still in place across several countries and the companies will have to wait to regain the lost fortunes. It would also be noteworthy to see how many of these automakers emerge intact out of the crisis.”

Source: GlobalData | Sentiments crash for several global automakers, says GlobalData

28 April 2020