Japanese Automakers Stand to Lose $1.6 Billion From Coronavirus: Analysts
Coronavirus outbreaks are shrinking sales expectations around the globe, but it’s Asia that has the most to lose. We’ve already seen rolling reports of the Chinese market’s virus-related decline — an affliction that’s spilling over into neighboring regions as more people fall ill and others stay home to avoid contagion. Employees, parts, and customers are all in short supply.
Goldman Sachs now predicts global sales will decline 3.5 percent in 2020. It’s a considerably more foreboding estimate than the 0.3-percent contraction predicted just last month, and the decline is presumed to hit Japan the hardest — after China, of course.
Waning demand is expected to evaporate 170 billion yen ($1.6 billion) from the country’s top automakers, according to Automotive News.
“Even if production resumes along the lines we are assuming, recovery will hinge on end-user demand in China,” analyst Kota Yuzawa wrote in the report. “While these figures tend to be highly volatile, automakers are clearly facing challenges from both a production and sales perspective.”
From Automotive News:
The spread of the illness, which has shut down factories in Hubei, China’s fourth-largest vehicle-manufacturing hub, has had a ripple effect across the global auto industry. Toyota Motor Corp., Nissan Motor Co., Honda Motor Co., Mitsubishi Motors Corp. and Mazda Motor Corp. rely on parts from the country even if they assemble vehicles elsewhere.
All told, the five manufacturers will build 580,000 fewer cars from January through April compared with Goldman Sachs’s previous estimate. Among them, Toyota is estimated to run at 94 percent of the bank’s prior projection during the period, while Honda will be at 16 percent, and Nissan at 47 percent.
Last month, the government-backed Chinese Association of Automobile Manufacturers estimated sales declines of around 40 percent in the January-to-March period from a year earlier, with production volumes falling by up to 60 percent. With Chinese auto sales down 83 percent in the third week of February, the reality could be quite a bit worse than initial estimates suggest. It all hinges on how quickly China can wrangle the virus and get things back to normal.
Japan is considering temporary legislation on March 12th that would enable the government to declare a state of emergency if necessary; it already plans to restrict travel from China and South Korea ( also hit hard by COVID-19) for a period of several weeks. The country recently formed the New Coronavirus Countermeasures Automobile Council to help automakers prevent the spread of the virus while contending with component shortages.
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- Darren Mertz In 2000, after reading the glowing reviews from c/d in 1998, I decided that was the car for me (yep, it took me 2 years to make up my mind). I found a 1999 with 24k on the clock at a local Volvo dealership. I think the salesman was more impressed with it than I was. It was everything I had hoped for. Comfortable, stylish, roomy, refined, efficient, flexible, ... I can't think of more superlatives right now but there are likely more. I had that car until just last year at this time. A red light runner t-boned me and my partner who was in the passenger seat. The cops estimate the other driver hit us at about 50 mph - on a city street. My partner wasn't visibly injured (when the seat air bag went off it shoved him out of the way of the intruding car) but his hip was rather tweaked. My car, though, was gone. I cried like a baby when they towed it away. I ruminated for months trying to decide how to replace it. Luckily, we had my 1998 SAAB 9000 as a spare car to use. I decided early on that there would be no new car considered. I loathe touch screens. I'm also not a fan of climate control. Months went by. I decided to keep looking for another B5 Passat. As the author wrote, the B5.5 just looked 'over done'. October this past year I found my Cinderella slipper - an early 2001. Same silver color. Same black leather interior. Same 1.8T engine. Same 5 speed manual transmission. I was happier than a pig in sh!t. But a little sad also. I had replaced my baby. But life goes on. I drive it every day to work which takes me over some rather twisty freeway ramps. I love the light snarel as I charge up some steep hills on my way home. So, I'm a dyed-in-the-wool Passat guy.
- Paul Mezhir As awful as the styling was on these cars, they were beautifully assembled and extremely well finished for the day. The doors closed solidly, the ride was extremely quiet and the absence of squeaks and rattles was commendable. As for styling? Everything's beautiful in it's own way.....except for the VI coupe....it's proportions were just odd: the passenger compartment and wheelbase seemed to be way too short, especially compared to the VI sedan. Even the short-lived Town Coupe had much better proportions. None of the fox-body Lincolns could compare to the beautiful proportions of the Mark V.....it was the epitome of long, low, sleek and elegant. The proportions were just about perfect from every angle.
- ToolGuy Silhouetting yourself on a ridge like that is an excellent way to get yourself shot ( Skylining)."Don't you know there's a special military operation on?"
- ToolGuy When Farley says “like the Millennium Falcon” he means "fully updatable" and "constantly improving" -- it's right there in the Car and Driver article (and makes perfect sense).
- Master Baiter New slogan in the age of Ford EVs:FoundOnRoadDischarged
It will hit all makers and suppliers proportionally. No one gets a free pass. The only advantage goes to those who can take advantage of any economies of scale they are afforded, and the fortune of those with facilities and suppliers in places where governments take aggressive containment actions. Additionally, correctly predicting the correct product mix and availability for any pent up demand on the other side of this, will serve them well. PS Wishing everyone good health. :-)
Many experts were predicting a recession even before this virus hit. This is a massive piece of uncertainty that throwing money around will not fix. We just need to make sure we keep ourselves healthy and hope that the healthcare system is made ready for "moderate" case scenario.