Car sales in the EU plummeted by 76 percent in April 2020

In the corona crisis, the car market in the European Union almost came to a standstill. In April, only around 271,000 new cars rolled onto the streets.

The corona crisis has caused a historic decline on the European car market. In April, 270,682 new cars hit the streets in the EU, 76 percent less than a year earlier, as the European manufacturers’ association ACEA said in Brussels on Tuesday. This is the largest monthly decline since records started.

The reason was the almost complete standstill of both car production and the car trade to contain the pandemic. The situation is likely to ease somewhat in May as most countries relax the restrictions imposed. Industry representatives and consultants consider an economic stimulus program necessary to boost demand again.

Sales fell most sharply in April in the countries of Southern Europe that were particularly hard hit by the corona virus. In Italy and Spain, new car sales slumped by around 97 percent. In Scandinavia, on the other hand, where restrictions on public life were less severe, sales only fell by around a third. In Germany it shrank by almost two thirds.

The VW group, with all its vehicle brands, saw a 72.7 percent decline among German manufacturers in April. At Daimler, the drop was still slightly larger at 78.8 percent, while the drop at BMW was 65.3 percent compared to the same month last year. The French automakers Renault and PSA each lost around 80 percent, the Italian-American automaker Fiat Chrysler even almost 90 percent.

According to experts, the easing in many countries will not yet be reflected in higher sales figures. “The fact that the car dealerships in many countries have now opened has a certain stabilizing effect,” says Peter Fuss from the management consultancy EY. “But it doesn’t mean that customers flock to the showrooms again.”

Many people are worried about their job or are already unemployed. Fuss also expects a major drop in commercial registrations, as the drop in sales is forcing many companies to save.

In view of the poor consumer climate, a quick decision on an economic stimulus program is necessary, Fuss said. In his view, there should be a purchase bonus to boost car sales. This requirement, which is also represented by the industry itself, is controversial.

Critics believe that the effect – like the scrappage bonus immediately after the financial crisis – would fizzle out and only postpone the problems until next year, since planned car purchases would be preferred anyway. The current discussion about a purchase bonus means that potential buyers are waiting.

High excess capacity

Fuss estimates that the boom in electric cars, whose registrations rose in many countries thanks to state aid in the corona crisis, should be slowed down. “In this segment, however, it is primarily the interruptions in production and the resulting delivery bottlenecks that are slowing down new registrations.”

There are still a large number of orders for many e-models. In the medium term, the economic crisis will also have an impact on orders for electric cars, but is likely to be less severe than for volume models.

Fuss assumes that the crisis will continue to exacerbate the automotive industry and its many suppliers: “The industry will have to deal with massive excess capacity in the medium term, because we will continue to struggle with the economic aftermath of the crisis in the coming year – even if the pandemic then should be over. “

Car sales worldwide are currently falling rapidly. In the United States, where the viral crisis is just unfolding, sales fell by 47 percent in April. According to the German Association of the Automotive Industry, sales of passenger cars there declined more than those of light commercial vehicles, which include the popular pick-ups in America.

In Brazil, where the virus is also rampant, sales slumped by 77 percent. The only bright spot is China, where the car market is now recovering after the corona crisis.

Author: Nabeel K

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