Sharp market falls will underpin calls for auto industry support, says Globaldata

Following the news that the French car market was down on last year by 72% in March;

David Leggett, Automotive Editor at GlobalData, a leading data and analytics company, offers his views:

“The dramatic French car market decline for March illustrates the depth of the crisis faced by the automotive industry – especially in Europe – in the short-term. With retail networks effectively closed, the short-term outlook is bleak.

“Similarly, sharp sales falls are expected in other national car markets impacted by lockdown measures. The annual fall in Italy for March will be almost 90%, as the country was in lockdown for most of the month. As things stand, April will see new car sales across much of Europe grind to a halt.

“When the worst of the crisis has passed, attention will turn to support measures aimed at reinforcing economic recovery. Some 1.1 million Europeans are directly employed in automotive manufacturing in Europe, with millions more livelihoods dependent on the supply chain and the economic multiplier effect.

“Past experience shows that scrappage policies can help to stimulate new car purchases and kick-start demand to boost orders and get factories working again.  They could well be on the policymakers’ agendas later in the year. Also, I would imagine that tough new regulations for average CO2 targets in Europe could be looked at again in these extraordinary circumstances. Apart from anything else, automakers can argue that shuttered plants and a much lower level of new vehicle sales and subsequent usage will have helped to reduce their net CO2 impacts this year.

“Policymakers will be very wary of anything that drags further on companies’ bottom lines or risks reducing activity and employment levels further.”

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