How the coronavirus could affect automotive sector

The health crisis and its economic impacts are expected to be felt beyond China, which is a major source of global automotive industry profitability

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How the coronavirus could affect automotive sector. Source: shutterstock.com

According to GlobalData experts, the authorities focus mostly on how the coronavirus affects human health, although they should also be concerned about the economic impacts that could come out.

Travel and leisure sectors, as well as associated service and goods suppliers, are being impacted in the beginning. However, other industries such as automotive will potentially be affected by lower demand and disruption to manufacturing schedules and supply chains.

China is by far the world’s largest car market and the overall demand trend was downwards even before this latest crisis – the country’s 2019 vehicle market was down by 8.2% to 25.8 million units – with the expectation of a further decline in 2020
David Leggett, Automotive Editor at GlobalData

The outbreak of the virus could put on hold the vehicle purchases in the following months, thus bringing the market down. Along with that,  foreign vehicle makers, particularly those with joint ventures in the Wuhan area, will be likely to pull their foreign staff out of China operations.

Companies with major manufacturing operations in Hubei include Groupe PSA, Renault, Nissan, and Honda. The days after the Chinese lunar new year holiday will be key in terms of assessing the impact on manufacturing operations and worker absentee levels.

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