Global passenger vehicle (PV) sales declined by nearly 7% YoY in July, despite regions showing varied signs of month-on-month recovery from COVID-19 induced lockdowns. Overall, cumulative YTD global PV sales are down by 25% YoY through July.
While most regions are certainly seeing signs of improvement, it remains difficult to ascertain the actual market situation. Pent-up demand remains the most important contributor to recovery, which may be covering up a lower intrinsic level of market demand. As a result, Counterpoint Analysts continue to hold onto their 2020 annual outlook of nearly 20% decline over last year, with global PV sales estimated at around 71 million units.
China
The Chinese PV market continues to make a V-shaped recovery, with July volumes climbing 16% from a year earlier, a fourth consecutive month of improvement, stepping up sales to a higher gear from nearly 7% YoY growth in June. While July PV sales in China rose to 2.1 million vehicles, on a YTD basis cumulative volume have dropped 13% from last year's 12.4 million vehicles.
Sales of new energy vehicles (NEVs, i.e. battery-powered electric, petrol and electric hybrid and hydrogen fuel-cell vehicles) in July ended 12 consecutive months of YoY declines, with a 20% uptick to nearly 98,000 units. This sale spike possibly demonstrates that NEV OEMs and customers are now at terms with the lowered government subsidies since last year. Counterpoint estimates NEV sales at over 1.1 million vehicles in 2020, a decline of 11% from last year. Continuing to lead the pack of fully electric vehicles, Tesla sold 11,000 vehicles in July while BYD took the lead position in total NEV sales, delivering over 14,000 units.
With China's economy still recovering, and the possibility of a second wave of the virus still looming, Counterpoint is holding to its earlier base case forecast of nearly 22 million PV units for 2020, an almost 15% decline from previous year.
United States
Sales in the US continue to drift with the pandemic having a prolonged impact on the country's economy. July PV sales volume, though up versus June, is down nearly 19% YTD compared to the previous year. Fleet sales too continue to remain weak, with July volumes falling by nearly 30% of the volumes reported in June.
COVID-19 continues to spike in key US states, including California, Texas and Florida, resulting in curbs on movement of citizens and strong headwinds for the country's PV sales. All this while the industry continues to reel from the effects of earlier lockdowns and “shelter in place” directives that had closed thousands of dealerships in March, April and May.
Counterpoint analysts are holding to their earlier forecast for the US — a 24% annual decline for 2020, estimated at around 13.4 million units.
Europe and United Kingdom
PV registrations in Europe dropped 5.7% in July, with government incentives and lifting of lockdown restrictions having stimulated sales demand back to near pre-pandemic levels. However, from a year-to-date perspective, Europe is tracking an overall decline of 36% for the same period last year. Counterpoint analysts estimate Europe sales to fall by almost 26% this year to 13.6 million vehicles, with key factors like lowered government subsidies and possible resurgence of COVID-19 lingering.
In the UK, PV sales rebounded in July as dealers reopened with easing of coronavirus lockdowns, even as battery electric vehicle sales continued to surge. Based on sales data released by the Society of Motor Manufacturers and Traders (SMMT), British new car registrations rose by almost 11% YoY in July to nearly 175,000 units. July is the first full month of business in the UK after car dealerships were allowed to reopen.
Notwithstanding the signs of a slight bounce-back, Counterpoint analysts remain cautious. European and UK consumers are still wary about buying high-ticket items like cars, given the uncertainty over the economy.
Rest of World
India's domestic auto industry may have turned the corner in July, with monthly declining trends flattening out. For the first time in several months, the Indian auto industry reported a single-digit decline of 1% in passenger car wholesales, with 198,000 units being shipped last month compared to 200,500 units in the same period last year. July shipments are likely the low point of a V-shaped recovery as Indian states increasingly ease lockdown measures and more dealerships open in key urban centres. The industry still needs to demonstrate a sustainable demand trend, at least over the medium term. As OEMs in India continue to resolve challenges with the supply chain, they will also need to procure buffer stocks of material to protect themselves against future lockdown disruptions.
Japan's PV sales continue to improve, with a relatively moderate 14% YoY decline in July, compared to a 45% YoY decline in May. Consumers are preferring purchase of smaller-sized vehicles to avoid crowded public transportation. Sales of Mini Vehicles (engine size smaller or equal to 660 cc) currently account for nearly 40% of total car sales. However, with the recent sharp rise in new COVID-19 cases, and possible enforcement of movement restrictions, the recovery in sales is expected to slow down.
In South Korea, the selling rate has slowed down from an all-time high in June, with the first phase of a temporary excise tax cut on passenger vehicles expiring at the end of the month. The market, however, continues to perform reasonably well, with sales having increased YTD by nearly 8%. Sales in H2 2020 are expected to be sustained with an anticipated announcement of the second phase of the temporary excise cut, which has proven to have been a key factor in stimulating demand recovery in Q2 and Q3.
Revised Global Automotive Outlook
While varied signs of a fragile recovery continued to emerge in July, Counterpoint Research remains cautious and is holding to its earlier global automotive sales outlook of around 72 million units for 2020, an over 20% decline from 2019.
