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14/07/2020
A year to forget

The year 2020, will probably be remembered as the most difficult ever for the automotive industry, as the challenges posed by the coronavirus pandemic is unprecedented. Truth be told, even before the current emergency, the situation in the car market was far from reassuring, consistent with a stagnating economic scenario. In our country, for example, after a negative 2019, the number of new registrations in January 2020 

Gennaro Speranza – Econometrica

The year 2020, will probably be remembered as the most difficult ever for the automotive industry, as the challenges posed by the coronavirus pandemic is unprecedented. Truth be told, even before the current emergency, the situation in the car market was far from reassuring, consistent with a stagnating economic scenario. In our country, for example, after a negative 2019, the number of new registrations in January 2020 scored an unflattering -5.9%, while in February the decline was even worse (-8.8%).

The impact of the virus was just another blow to the sector, not only in our country but also around the globe. In March, car registrations in Italy fell by 85.4% to 28,326 new registrations, a level comparable to the early part of the 60s, when the process of mass motorization in Italy was taking its first steps. April data could only get worse. The almost total lockdown of commercial and production activities brought the volumes of new car sales to wartime figures. The drop was a good 97.5%. Forecasts for the coming months are for a similar or greater drop as long as the emergency lasts. Unrae estimates for 2020 a decrease of 300,000 to 600,000 cars compared to last year, when about two million new cars were registered. The drop in the car market in 2020 will in any case be very severe and will depend both on how the emergency will be dealt with in the coming months and on the measures that will be taken to boost demand once the emergency is over.

The coronavirus earthquake did not spare the production side of the business, forcing car giants to review their schedules and temporarily close factories due to restrictions and security measures taken by local authorities to control the spread of the disease. In March (latest available data) the production index of the Italian automotive industry fell by 55.8% compared to March 2019, with a -62.6% and a -48.7% in the production of vehicles and components respectively. The automotive service sector also suffered the spread of the pandemic, with many car repair activities being forced to slow down or close entirely. A survey carried out by the Autopromotec Observatory in April on a sample of garages, shows that as many as 95% of them confirmed a sharp decline in business volumes, while only 5% reported a normal level of activity and a mere 1% indicated high levels of business volumes.

In short, the year 2020 will go down in history as the watershed between "cars before and after the coronavirus". The data that we have quoted so far confirm that the aftermath of the lockdown is far from over, and that the market crisis is likely to become a long wave that is bound to be felt also in the coming months. The impact of the crisis is already devastating and may be even worse as it affects an entire supply chain, the automotive industry, which boasts massive investments and high fixed costs in terms of employment and facilities, representing, on its own, about 11% of the national GDP.

 

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