DesRosiers Automotive Consultants (DAC) will publish a series of updates in which the company will keep track of the impact of COVID-19 on the automotive market.
“Following the development of the virus in Canada and its impact on the auto market will be an ongoing process over the coming weeks and months, in which we fully expect the data and our perspectives to change and evolve,” said DAC in the first of its series updates. “DAC is obviously a data driven company and, in this regard, we have few data points to go on at this time.”
DAC said it examined the Canadian data from the SARS (Severe Acute Respiratory Syndrome) epidemic. It concluded that the patterns seen then versus what they see now with the novel coronavirus are not comparable — or rather, “bear little resemblance.”
That leaves the company with the current data from China and Italy to sift through, as a starting point for its analysis.
“Here again data is limited with Chinese sales falling approximately 80 per cent in February, year-over-year,” said DAC. “In Italy the pace of the sales fall-off has been sharp and accelerating. The first week of March saw a sales decline in Italy of approximately 15 per cent.”
That number grew to 50 per cent in the second week of March, and last week sales were estimated to have declined approximately 90 per cent YOY, according to DAC.
To address what a more challenging environment will mean for the Canadian auto sector, the company plans to focus on three main questions: how long the virus/economic closures last? How deep will the economic downturn be during those months? What will the recovery curve look like?
“Clearly there are no easy answers to any of these questions,” said DAC. “From an automotive market perspective, we have modelled the sales outlook for the remainder of the year and have formulated a number of scenarios in regard to future sales in the coming months.”
A number of scenarios were produced for new light vehicle sales for the remainder of 2020, and those scenarios are expected to be revised based on new data. So far the “baseline” scenario indicates a decline for new vehicle sales of approximately 25-30 per cent for the year. A “less severe” scenario shows a drop of approximately 10-15 per cent. And a “more severe” scenario shows a steeper decline of more than 60 per cent.
“While most economic models show a stabilization in key variables by Q3, our outlook indicates the recovery being largely delayed in automotive until 2021,” said DAC. “To be sure there will be pent-up demand that will need to be satiated, though we see other economic priorities ranking above automotive in consumers’ minds in Q3 and Q4 2020.”
DAC’s outlook for other auto sectors, such as the aftermarket and the used vehicle market, is not the same as its outlook for new vehicle sales. Insights for those areas will be provided in future updates.
