LMC: Pandemic, Recession Spell 20-percent Production Drop in 2020

This year stands to become one of those big “blip” years if predictions by industry forecaster LMC Automotive pan out.

The firm now expects global vehicle output to drop “more than” 20 percent as a result of both the coronavirus pandemic and ensuing recessions born of state-mandated lockdown orders.

As reported by Reuters, LMC sees the global auto industry cranking out roughly 71 million vehicles, down from 90.3 million in 2019. The auto industry accounts for about 5.7 percent of the world’s economic output and 8 percent of trade, so the impact on GDPs across the globe won’t be negligible.

The world currently finds itself in a strange situation, with some auto-manufacturing countries having largely recovered from their respective outbreaks, and others still with a ways to go. North America and most of Europe remains under lockdown orders imposed in mid-to-late March, with assembly plants in this continent not expected to come back online until early to mid May. It’s entirely possible those orders might lift, only to come back into effect if another viral wave hits in the fall.

Supply chains are in disarray, and factories in relatively virus-free locales have to contend with reduced demand from customer bases in hard-hit regions. We’ve seen that already in Asia. Then there’s the economic damage and loss of consumer spending power from temporary layoffs that became permanent.

Globally, the worst month of this pandemic — in terms of auto production, that is — will be April, LMC says. The firm adds that its 20 percent figure could rise, depending on which way outbreaks go in various countries, and it feels North America and Europe’s recoveries are “unlikely to be rapid.”

It’s not all doom and gloom, though LMC’s report, which foresees an uptick towards normality by the end of the year, still cautions that its numbers are “likely to be revised down.”

[Image: General Motors]