Fitch Solutions expects global automotive production to decline -11.5% on-year in 2020 as a result of Covid-19-related lockdown measures and supply chain disruption.

The current crisis has hit the industry harder than the 2008/09 global financial crash. “Even back in the global financial crisis the industry could still operate, so companies could still produce, dealers could still sell,” Fitch Solutions autos research head Anna- Marie Baisden said during a webinar. “What we’re expecting now is... actually more than double the decline during the global financial crisis.”

A second wave of Covid-19 could push the automotive sector recovery into 2022 instead of the mild recovery currently forecast from 2021.

Carmakers have taken on vast credit in recent years to heavily invest in electrification and autonomous vehicles. These are sectors that have not yet provided a return on investment, and now their income has been weakened further. This will spell a difficult operational environment for these companies in 2020-21.

Electric vehicles (EV) will, however, benefit from pollution concerns linked to Covid-19, a respiratory disease. Consumers are seen becoming increasingly cautious of climate change and their carbon footprint post Covid-19. Governments will promote the use of electric cars as these have zero tailpipe emissions and contribute to CO2 and NO2 reduction, Fitch Solutions says.