With the automotive sector in profound crisis, the world’s automotive logistics market is set to contract by 20.4% in 2020, following a decline of about 4% in 2019, according to new research from Transport Intelligence (Ti).
The big market contraction comes as the Covid-19 pandemic decimates manufacturers’ ability to produce cars and squeezes consumer spending power with the world entering its deepest recession in generations.
“The Covid-19 pandemic has clearly had a devastating effect on the automotive logistics market with the effects in both production and vehicle sales clear to see,” said Ti, global market intelligence provider for the logistics and freight industry.
The automotive sector was already facing turbulence due to falling demand, an economic slowdown, the US-China trade-war and Brexit uncertainties, among other forces, Ti analyst Gunjan Thukral noted.
“This year, with the impact of Covid-19 in the mix, the sector is heading towards an unprecedented downward slope making the road to recovery very long,” Thukral said.
Although automakers have restarted production, they face challenges in re-building capacity and ramping up production, considering that automotive supply chains are spread across the world and lockdown measures are at varying stages across different geographies.
The global automotive logistics market is set to contract third year in a row, Ti’s research shows. All sectors of the market—inbound/production logistics, finished vehicles and the aftermarket—will be profoundly affected with contractions in each regional market.
In the Asia-Pacific, the region’s automotive logistics market size is expected to contract by 16.6% in 2020. This follows a down year in 2019 when the market lost 5.9% of its value as falling demand and the first effects of the Covid-19 outbreak were felt in China during the final quarter of the year.
There has been mixed performance so far in 2020, but as a whole the region has fared better than others.
China’s automotive market has seen something of a recovery after sales fell markedly in the first quarter of 2020. In September 2020, vehicle sales were up 12.8% again the previous year and marked six months of consecutive sales growth. Over the first nine months of the year, however, sales figures remained 6.9%, or 17.1 million vehicles, below 2019 levels.
In Japan, May saw sales figures fall more than 40% as measures to combat the spread of Covid-19 were enacted. By September though, signs were more positive, with sales said to be back to close to 90% of 2019 levels for the month.
In South Korea, global sales of the country’s largest vehicle manufacturers saw their first increase of 2020 in September, although it was marginal at 0.9%. As in Japan, tax breaks on domestic vehicle purchases in South Korea have propped up sales, but the incentives are due to end.
In Europe, Ti’s new market sizing data shows a decline of 22.8% in the region’s automotive logistics market in 2020, with all three constituent market segments—inbound, outbound, and aftermarket—expected to see pronounced declines.
In North America, Ti is forecasting a decline of 19.0% in 2020. The declines follow 2019 contractions of 1.8% when overall vehicle sales fell 1.4% to 17 million units. The US is experiencing ongoing Covid-19 outbreaks which are hampering economic recovery. Over the first six months of 2020, U.S. auto sales were down more than 23% compared to 2019, although some positive signs are emerging. Despite Q3 sales declining around 9% year-on-year, S&P cited some stabilization among sales trends.
Image by Niek Verlaan from Pixabay
