Today, it was reported that nearly 2,000,000 Coronavirus (COVID-19) cases have been confirmed globally.
The virus began back in late December of 2019, in Wuhan, China. In a short few months, it has become a pandemic that could reach proportions as epic as anything the world has ever seen.
The outbreak has affected various industries throughout the world, but none more than the automotive industry. Coincidentally, where the virus started, is also home to the largest automobile market in the world. Wuhan itself is known as a “motor city.”
It may seem odd that a widespread illness could affect such a large industry, but it’s happening as we speak. Manufacturing companies across the world have closed their doors indefinitely in an attempt to halt the spread of the virus.
Retail sales of passenger
vehicles were down
92% for February…
The shutdown of hundreds of automobile production facilities is creating a lack of cars throughout the world (not that people are buying anyway). Even extremely popular auto shows and exhibits across Europe and the United States have cancelled their events due to the outbreak. The Geneva Auto Show, one of the largest automobiles displays in the world, has cancelled its 2020 show after the Swiss government banned gatherings of more than 1,000 people.
NBC News reported that “global auto sales could drop by more than 2.5 percent”. As each day passes, that percentage continues to grow larger.
J.D. Power says units sold could reach near-recession levels of 12.1 million cars.
Things are far worse directly in China. Retail sales of passenger vehicles were down 92% for February compared to the same month last year. Companies like Volvo, Toyota, Hyundai, and General Motors are having to shut down production plants, which is causing a steady decline in retail sales. When production of new vehicles stops, those vehicles are not available to the global car industry.
The stay-at-home orders that cities in many different countries are under creates an even larger dilemma for the auto industry. If people can’t leave their homes, they certainly aren’t going to be on the lookout to buy a new vehicle.
Recently, as a response to the lack of buyers walking into car dealerships, dozens of car manufacturers began offering 7-year 0% interest loans on all their 2020 models. This tactic seems to be bringing a few more people into dealerships, but the financial effects COVID-19 has had on the auto industry will last far longer than the virus.
If the spread of the Coronavirus does not slow down soon, sales and percentages will continue to take a nosedive, which could force some manufacturers to close their doors permanently.