With the Coronavirus quickly spreading in China, data and analytics company GlobalData says the automotive sector is vulnerable to the impacts associated with the issue.
“We are still at an early stage in this crisis and the authorities’ focus is obviously on direct human health impacts, but we’re beginning to get a feel for how the economic impacts could pan out,” said David Leggett, Automotive Editor at GlobalData, in a company news release.
While travel and leisure sectors are sure to be impacted by the issue, along with associated service and goods suppliers, the auto industry has the potential to be impacted as well. The virus could result in a decreased demand for vehicles, and it could lead to the disruption of OEM schedules and supply chains.
“The outbreak could cause vehicle purchases (in China) to be put on hold in the coming months, taking the market down further,” said Leggett. “Manufacturers may reduce planned output levels when it becomes clearer how the market has reacted to the crisis and what, if any, support Beijing may offer the sector if the resulting economic slowdown looks sharp.”
He also said foreign vehicle makers, at least in the short-term, may consider pulling their staff out of China — OEMs like Groupe PSA, Renault, Nissan and Honda.
The virus has spread to other countries as well, including Canada where one case has already been confirmed and the other is pending as of January 28. For now, the impact on the auto sector does not appear to stretch as far as North America, but Leggett hints that the extent of the virus’ impact could be far reaching.
“Investors are already showing signs of nervousness over this health crisis and its broader economic impacts, which will potentially be felt well beyond China, which is a vital source of global automotive industry profitability,” said Leggett.
