Ecomotive - Archive

Automotive crisis and long term repercussions

Paolo Castiglia

The automotive supply chain appears in dire straits: overall, industrial production in the sector is down by 4.2%, the seventeenth consecutive negative result.

This according to preliminary data collected by Anfia among manufacturers. Furthermore, figures depict an ongoing decline in car production, although, for the first time in 2019, this decline is not double-digit: in November, in fact, production was down 2%. Not too bad considering that November 2018 dropped by 27% compared to November 2017.

Looking at commercial vehicles, December 2019 saw some rather poor results in new registrations volumes: 1,990 medium-heavy duty trucks (-12%), 23,622 (-8%) in the year; 1,055 heavy duty trailers and semi-trailers (-17.5%), 14,494 (-8%) in the year. Lightweight trailers scored the only positive result with 933 (+7%), 16,344 (+3%) in the year. Looking at geographical locations, authorities in Northern Italy issued 13,854 registration certificates (-5.7%), 59% of the total, in the Central part of the country these amounted to 3,852 with a decline of 9% while the South and Islands, with 5,916 certificates experienced the largest contraction, -11%.

In short, the trend is negative and the situation is not expected to improve either, with negative expectations linked to economic uncertainties that are bound to affect road transport.

A little encouragement came from light commercial vehicles which, however, closed December 2019 with a decline: according to estimates developed and distributed by Unrae’s Study and Statistics Centre, which represents foreign manufacturers, in December 2019 the market for vehicles with a total weight on the ground up to 3.5 tons registered sales for 19,884 units, a decrease of 3% compared to the 20,497 in the same month of last year. What remains positive though, is that with 188,378 units sold, 2019 recorded an increase of 3.6% over 2018. We should recall, however, that 2018 recorded a 6.4% drop over the previous year.

What is, then, the overall scenario: "As expected - explains Michele Crisci, president of Unrae - the complicated and uncertain path of the new rule on tax credits in favour of purchasing capital goods is still damaging the commercial vehicle market. If the contraction of the last quarter were to continue in the new year, in 2020 sales would drop to 174,000 units, over 10% less than in 2017".

"And even after its laboured approval - continues Crisci – we still need to fully evaluate the impact the new standard will have on the market, as it is still ambiguous in some points". "In addition to lower advantages compared to what was guaranteed by the hyper-amortization scheme, the bureaucratic burden imposed on companies will be further aggravated - he concludes - resulting in a measure that, rather than favouring a rapid renewal of the now obsolete and dangerous (for the citizens as well as the environment) national commercial fleet, it will likely postpone the decision by many operators to replace their aging vehicles”.

All this weighs heavily on the entire economy of our country, since, according to the latest available ISTAT surveys, relating to the year 2017, the motor vehicle manufacturing sector employs about 71 thousand people in Italy, with a turnover of 51.8 billion euro and investments in the region of 1.5 billion euro. Direct employment in the automotive sector was over 175 thousand in 2017. If we also consider indirect employees, the number rises to 274 thousand, with a turnover of 105.9 billion euro, investments of 3.3 billion euro and expenditures in wages and salaries in the region of 9.3 billion euro.

There is much concern, therefore, about this production downfall, which could jeopardize a strategic economic sector for the country, at a time when trade tensions and a declining global demand are starting to take their toll.

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