UK car market decline will turn attention to company cash reserves, says GlobalData

 Following today’s news that the UK car market was down 44.5% in March as the COVID-19 crisis caused showrooms to close;

David Leggett, Automotive Analyst at GlobalData, a leading data and analytics company, offers his view:

“This is a steeper fall than we saw during the last financial crisis and it underlines the heavy impact on the automotive industry being wrought by the COVID-19 crisis, not just in the UK, but across the world.

“April will likely turn out to be a month of full lockdown in the UK, which would see an even more vertiginous decline versus year-ago levels.

“With the market effectively stalled for a significant period of the year, the outlook for annual new car sales will also be hit in 2020. Even assuming a recovery later in the year, net consumer spending will be well down on pre-crisis levels and the UK car market will struggle to reach 1.7 million units against previous expectations that it would turn out in excess of two million units.

“The severe slump to demand means huge challenges ahead for vehicle manufacturers and suppliers who are struggling with cash flow while the crisis persists, with plants shut and the new vehicle market seized up.

“Company cash positions and rates of burn will come under increasing scrutiny in the coming months.”

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