Global auto industry to shrink by 2.5pc in 2020; Geneva Motor Show cancelled due to coronavirus scare
The latest victim of the coronavirus outbreak is the Geneva Motor Show, which was slated to commence next month. Reports say that the global auto industry will recover from the aftereffects of coronavirus only in 2021.
The global auto industry is expected to shrink by 2.5 percent in 2020. The rating agency Moody’s has reduced the global auto sales forecast for 2020 in the wake of the coronavirus outbreak and new emission norms.
New data released by Moody’s is better than the 4.6 percent drop experienced in 2019. However, the new 2020 figures are 0.9 percent lower than its initial projections.
The global automobile sector is expected to recover only in 2021 with a projected growth rate of 1.5 percent.
Interestingly, earlier this week, Moody’s had projected that Indian auto sales will rise by 0.5 percent in 2020. It expects this rebound to take place due to stimulus measures and discounts on new cars that do not comply with the upcoming BS-VI emission norms.
On the other hand, China, which is a major auto component supplier for the world, is suffering due to the coronavirus (COVID-19) outbreak. As a result, ancillary companies in the country have been disrupted due to factory closures.
It is also the world’s largest automobile market. A reduced demand in the domestic market has also been instrumental in reducing global volumes. Moody’s predicts that both passenger and commercial vehicle volumes in China are expected to be reduced by 2.9 percent in 2020. Before the outbreak of the virus, the rating agency had predicted a modest one percent growth in automobile sales in China.
Unfortunately, the outbreak has started spreading to Europe, taking a toll on the automotive industry in the continent. The 90th edition of the Geneva Motor Show, the world’s biggest and prestigious auto show, has been cancelled. It was scheduled to start on March 4, 2020.
The financial consequences for all those involved in the event are significant and will need to be assessed over the coming weeks.
This announcement comes in light of the Swiss Federal Council’s decision that no events with more than 1,000 people are allowed to take place until March 15, 2020.
As of now, coronavirus is estimated to have infected over 82,000 people worldwide, and has led to the death of over 2,800 people, with a rapid increase in reported cases as the virus spreads the globe.
(Edited by Saheli Sen Gupta)