LMC Automotive cut its global auto sales forecast for new vehicles by 4%, in light of the COVID-19 outbreak, and warned there could be additional downside risk. The revised forecast includes about a 2% reduction in LMC’s previous U.S. new-vehicle forecast, to 16.5 million.
Worldwide, LMC shaved its new-vehicle forecast to 86.4 million, down 3.7 million from its pre-corona-virus forecast for 2020, including declines for major markets such as China, South Korea, Western Europe, and North America.
The new forecast would be a decline of 4.4% from 2019, and it would make 2020 the lowest year for new-vehicle sales since 2013, LMC said.
“The COVID-19 outbreak is causing unprecedented distress across multiple markets,” the revised forecast said, leaving open the possibility of further reductions. “A moderate pandemic could worsen the outlook by another 2 million to 3 million units globally for 2020.”
The outbreak is likely to slow global economic growth to 2%, from a previous forecast of 2.5%, LMC said. Specific effects on the auto industry include supply-chain disruptions and higher logistics costs, if air freight is used, the firm said.
U.S. new-vehicle sales in 2019 were 17.1 million, down 1.2% from 2018. The U.S. sales record was about 17.6 million, in 2016. The slowdown in U.S. auto sales since then has been gradual. In fact, 2018 auto sales unexpectedly increased in the U.S. market – but only slightly, by less than 1 percent.
Jeff Schuster, president, global vehicle forecasts, at LMC, said in the revised forecast it’s still early days for the COVID-19 outbreak, so supply-chain issues “could push the market further into negative territory.”
Even without the virus outbreak, forecasters were already worried about high new-car prices and lower replacement demand in the U.S. market, since new-car sales through 2019 exceeded 17 million units five years in a row.
In a late-February forecast, before LMC lowered its prediction for the full year, Schuster said, “Uncertainty seems to be the buzz word for the auto industry right now.”