The experts of British consulting company LMC Automotive has analyzed the situation on the market and, despite serious recession and economic crisis, saw the factors that give reason for optimism. AUTO-Consulting found out the details.
AUTO-Consulting has said that the pace of recovery of the Ukrainian car market look better than the European indicators. According to LMC Automotive, global car production will fall 20 percent to 70 million units. Sales will total about 71 million units with a similar percentage decline. Sales in Western Europe, where production stops and the closed dealerships were the most common and limiting, will likely decline by 26% to 10.6 million units. Global market may take four years or more to return to the levels of 2019, with an estimated total loss of sales by the time the 37 million units.
Alarmed at LMC Automotive also cause excessive automobile power, whose production volume this year is estimated at 50%. To be clear, the experts say that in order for the plant was profitable, the utilization of its capacity should be 80% to 85%. And so the utilization of existing European companies in LMC Automotive see until 2024. Therefore, in Europe, obviously, some production capacity will be reduced to improve the basic stability of the industry. The positive moment here is that automakers have already begun to deal with this situation.
The basis for optimism
What is the basis for the optimism of experts from LMC Automotive? If the pandemic happened 10 years ago, “they say,” it would be a disaster. Now, many people have the opportunity to work remotely. In addition, fortunately, today there are technologies that allow you to have access to vast amounts of information online.
Your current forecast LMC Automotive, gathering information about the virus, the effects of lockouts, the unfolding economic slowdown, as well as issues of supply and demand. After all, it happened at the same time.
In the end, according to analysts LMC Automotive, the automotive market has reached the bottom. In addition, there are several historic markers, for example, the nuclear crisis Fukushima 2014 and tsunami that paralyzed the Japanese industry. They show that recovery can occur in a short time.
Another positive point: in LMC Automotive assume there will be a second wave of the pandemic. 90% of the automobile factories in Europe opened, with a capacity of about 50%, including because of hygiene slows down production processes.
Important factor which is encouraging – pent-up demand for vehicles. It will boost sales in the short term. A massive rejection of public transport can also lead to the emergence of new buyers to showrooms. And the drivers whose vehicles were leased during the lock, you will need to decide whether to take another car to rent, buy it immediately or to transfer to a used car. Stabilizer demand may also be a leasing. Positive steel inventories. They accumulated in the first quarter, closed dealerships, and today “quickly disintegrate in Europe and the United States,” – said in LMC Automotive. “This is evidence that the market consumes as many cars as the industry can produce now.
In addition, the incentives that the automotive industry receives now is much less effort in comparison with incentive programs launched during the recession of 2008-2009. That is, governments should stay reserves “just in case”.
However, managing Director of LMC Automotive Pete Kelly says that “the forecast for the year, stable for at least a month.” Still, the epidemiological situation itself is unstable.
But the Ukrainian market do seem to recover faster than expected. In June the new car market has fully recovered from the effects of quarantine and pandemic, and even resumed sales growth in comparison with the 2019 year. Moreover, June was a record month in terms of sales in 2020 were sold 7138 new cars.
Compared with may, the dealers have increased sales by 22%, but even in comparison with last year’s June was recorded sales growth of 4.7%. thus, the Ukrainian car market returned to growth, which he showed to the quarantine. All told, the 1st half of the dealers managed to realize 36,8 thousand new cars, which is 5% lower than a year earlier.