July global automotive sales show ‘broad but fragile’ recovery

London – Vehicle sales fell by 6.8% worldwide in July, as the world's auto markets show signs of a broad-based, but fragile recovery from coronavirus lockdowns, according to a new report from analyst firm LMC Automotive.

The global selling rate for the month rose to 86 million vehicles, continuing an increase that started in mid-April as some countries eased restrictions on movement and commerce. But sales were still down by 25% through July; most analysts are predicting an annual decline of no less than 20% for total sales of around 70 million. 

At the end of June, LMC was expecting a 20% decline in global annual sales, to 70 million, and production, to about 71 million units. 

LMC said, however, that it was difficult to assess the real state of the market. "One important aspect of the speed of selling rate recovery has been pent-up demand, which itself masks the current underlying level of market strength," LMC said.

Registrations in western Europe fell by 5.7% in the month, with incentives and scrapping plans helping the market return to pre-pandemic selling rates. At the same time, sales in eastern Europe rose by 17% for the month. Western Europe showed the largest loss for the year of all markets tracked by LMC, with a decline of 36%.

LMC forecasts that sales in western Europe will fall by 24% this year to 10.85 million vehicles. In contrast, sales in western Europe have been stable since 2016, fluctuating between 13.95 million and 14.3 million. That is a slight improvement from the end of June, when LMC forecasted a 26% drop.

Another analyst, French-based Inovev, said last week that sales in all of Europe would fall from 25% to 35% this year, with key factors including the extent of government subsidies and the progression of COVID-19.

Strong rebound in China

China continued its "V-shaped" recovery, LMC said, with wholesale deliveries up 13% in July versus a 6.6% gain in June as factories cancelled summer breaks to catch up on production. The July selling rate reached 31 million vehicles, the highest since September 2017. The selling rate for May, June and July was higher than the rate in the last quarter of 2019, LMC said. Chinese sales remained in the red for the year, however, down 15%.

LMC predicts light-vehicle sales will fall by 9.5% in China, with particular risk for automakers at the bottom of the sales table and EV startups. The top 10 players increased their total market share to 60% this year from 50% in 2016.

Japan and South Korea also performed relatively strongly, with Japanese sales falling by 14% compared to a low point in May of minus 45%, although a recent rise in COVID-19 cases threatens the recovery, LMC said. South Korea sales benefited earlier in the year from a cut in the excise tax; that cut was reduced at the end of June, hurting the selling rate somewhat but keeping it at a high level at 1.8 million units per year, although below May’s all-time high of 2.3 million. 

For the year, South Korea sales are up 8%, as the country was able to contain the spread of the virus without long and painful lockdowns.

Sales in the US fell by 11% but prices increased by an average $393, with dealer cash incentives unchanged, LMC said. The market is down 22% for the year.