A Dark Period Also for the Automotive Sector

The production of vehicles and components and their distribution are among the many commercial and industrial activities that were forced to stop during the COVID-19 emergency. This situation will have a negative impact on both market and industry, forcing all forecasts concerning the automotive sector to be revised downwards. In Italy, according to the data provided by ANFIA (National Association of the Automotive Industry Chain), strongly negative signs for both market and production are likely to be recorded for the first half of the year at least.

On April 1st ANFIA (National Association of the Automotive Industry Chain) published the final 2019 data of the automotive market. As far as motor vehicles are concerned, the trade balance registers a negative sign, mainly due to the strong penetration of foreign manufacturers in the Italian market, which for cars is 76% in 2019, unlike the car markets in France and Germany, where the penetration of foreign manufacturers is much lower.
As regards automotive components trade, the value of exports fell by 2.3% compared to 2018. At EUR 21.97 billion, it is worth 4.6% of total Italian exports, while imports are worth EUR 15.44 billion (3.7% of total imports) and fall by 2.1%. According to data provided by ISTAT, the index of industrial production in the automotive sector shows a trend decrease of 9.6% in 2019 (with monthly decreases since July 2018). In the annual average of 2019, orders in the automotive sector fell by 9.9%: orders from the domestic market fell by 13% and those from foreign markets by 5.8%. Sales fell by 7.8% (11.7% for the domestic market and -2.4% for foreign markets). As regards orders for automotive parts and accessories, the 2019 index shows a decrease of 7.6%, mainly due to the domestic market (-13.3%), while demand from abroad shows a smaller decrease (-2%). The turnover index decreased by 5.4%, with a decrease of 11.8% for the domestic market and an increase of 0.9% for foreign markets.
As far as demand is concerned, the market of new cars in Italy closed 2019 with a slightly positive sign, +0.3%, mainly thanks to the good performance in the last four months, up 8.5%, which compensates for the 3% drop in the first eight months. But, already in the first two months of 2020, car registrations were 7.3% less than in the first two months of 2019…

February 2020 marks the end of “normality” also in the automotive sector

More or less normal data before the COVID-19 pandemic broke out. On January 30, 2020 the World Health Organization (WHO) declared the Covid-19 outbreak in China “International Public Health Emergency”.
After one month, on February 28, the WHO raised the threat of the coronavirus epidemic to the world to a “very high” level.
Italy is the first European country where the virus has spread on a large scale, as well as being the first country to adopt measures to combat its spread. Among these measures, in addition to limiting the mobility of people, the blocking of many commercial and industrial activities, those considered “unnecessary” during the emergency. The activities related to the automotive sector are among them, both from an industrial point of view (production of cars and components) and from a distribution point of view, with car dealers closing down. This situation cannot fail to have a negative impact on both market and industry, forcing all forecasts concerning the automotive sector to be revised downwards. In Italy, according to the data provided by ANFIA, strongly negative signs for both market and production are likely to be recorded for at least the first half of the year.

March data: a sharp turndown for the entire sector

According to data published by the Ministry of Infrastructure and Transport, in March the Italian car market totalled 28,326 registrations, down 85.4% compared to the same month in 2019. While the data recorded in the first two months of the year had already shown a decrease of 7.3% compared to the same period of 2019, for the January/March quarter there was a 35.5% decrease. “The automotive supply chain is facing an unprecedented situation, in the context of the heaviest economic crisis since the Second World War in which the pandemic has thrown us – said Paolo Scudieri, Chairman of ANFIA. The numbers of the car market in March speak of the gravity and exceptionality of this moment. We are suffering from a double trauma. Offer is suffering due to the blockage of production plants: for the EU enlarged to the United Kingdom, ACEA has estimated a loss of over 1.2 million vehicles for 16 days of closure, of which 78,000 in Italy, not counting the very strong impact on components. Demand, on the other hand, is suffering from consumption inhibition due to the closure of the sales network. From now on, we have to reckon with the enormous concerns of consumers about the impact of the crisis on employment – remember that the automotive production chain alone employs over 270,000 people in Italy – as shown by the climate of confidence that fell further in March, after the drop in February. Comparison with March 2019 is therefore completely impractical. “What is most urgent at the moment – continued Scudieri – is to give concrete help to companies to overcome the impasse and get ready for the gradual reopening of activities, while at the same time structuring a broader recovery plan for the entire sector – as other countries are doing – for which the current crisis is part of an already challenging industrial transition. Immediate action is needed to support liquidity so that companies can cope with the collapse in demand and turnover…”.
Scudieri also stressed the importance of supporting research, development and innovation activities, the driving force behind the growth of the country system, as well as investments in capital goods.

Consumers and businesses’ confidence are failing

According to the ISTAT survey, the consumer confidence index (base 2010=100) fell sharply in March, from 110.9 to 101.0. The Iesi index (business confidence) also fell from 97.8 to 81.7. In terms of consumer confidence, moreover, with regard to durable goods, including cars, the current opportunity to purchase is down compared to February (from -49.1 to -85.9). Unfortunately we have not been able to provide encouraging data on this page, but this crisis will pass and, with the appropriate and necessary help, our companies will make it through. Everything will be fine.