Calum MacRae, Automotive Analyst at GlobalData, comments:
“We are seeing a short-term decimation of vehicle demand globally and prospects for automotive companies - vehicle makers and suppliers - have deteriorated this year which is reflected in downbeat investor sentiment.”
In March 2020, the global light vehicle sales were 39.4% off year ago levels at 5.27 million, with first quarter sales down 27% on last year indicating the issues the sector is likely to face in Q2.
With the exceptions of the airline and tourism, automotive has been one of the worst-hit industrial sectors.
The automotive sector in total, for the companies GlobalData track, has lost an average 30.6% of its market capitalization in the first quarter.
MacRae concludes:
“Even if demand does recover as lockdowns ease, the sector is expected to face the potential problem of not being able to keep up with demand once vehicle stocks are depleted.
As the sector’s vehicle assembly plants slowly come out of hibernation it is clear that with the new safety protocols in place it will be sometime before they are capable of producing to capacity if the demand is there.
For the automotive sector the short-term outlook is inescapably bleak.”
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