Due to the COVID-19 pandemic, congregating in public spaces has become a risky endeavor. As a result, people aren’t exactly eager to visit car dealerships, and this is expected to significantly impact auto sales.
- The global spread of COVID-19 is the single biggest risk facing the automotive industry, according to a forecast released by IHS Markit.
- The company expects a notable dip in U.S. auto sales for 2020.
- IHS Markit also expects sales to decline in China and Europe.
COVID-19 concerns have caused many people to stay away from public spaces, and this is expected to negatively impact auto sales. (Photo: Jordan Hopkins/Unsplash)
Dip in the road
IHS Markit is a research firm that provides analysis and guidance regarding the automotive industry. In looking at global car sales, the firm expects COVID-19 to create an almost instantaneous stalling of demand. The company predicts that worldwide car sales will come in at 78.8 million units in 2020. This represents a 12-percent decline relative to 2019’s numbers. IHS Markit notes that during the global recession of 2008 and 2009, auto sales fell by 8 percent from peak to trough — a less severe dip than the one that’s expected for 2020.
In the U.S., the company predicts auto sales to clock in at 14.4 million units in 2020. This represents a 15.3-percent decline compared to 2019’s figures. IHS Markit expects mainland China to report auto sales of 22.4 million units in 2020, down almost 10 percent from 2019. In Europe, car sales in 2020 are expected to reach 15.6 million units. This represents a 13.6-percent decline compared to 2019’s numbers.
Electric vehicles (EVs) will likely be especially vulnerable. In many cases, they’re costlier than their gas-powered counterparts, and this may make them less attractive options if consumers reduce their spending due to the economic problems caused by the virus. Another factor that could hurt EV sales is the price of gas. Gas prices have dropped significantly in recent weeks. In the past, low gas prices have caused buyers to turn away from EVs in favor of cars and SUVs with combustion engines.
WHY THIS MATTERS
COVID-19 will likely deal a cruel blow to auto sales. But it’s important to remember that situations like this can create opportunities for buyers. Many dealers are offering great bargains in an attempt to get buyers back on the lots. If you’ve been thinking about getting a new EV, this could be a good time to make a vehicle purchase.