Production activity in the EU automotive industry fell for the sixth consecutive quarter by 16 percent year on year in the first quarter of the current year. With weakening demand for new passenger cars in Europe and in key export markets such as the US, China and Turkey, the outbreak of the Covid-19 pandemic caused damage to production activity in all EU countries, according to the Economic and Steel Market Outlook 2020-2021/Q3 2020 Report from the Economic Committee of the European Steel Association (EUROFER).
According to the EUROFER report, sales of passenger cars in the EU fell by 55.1 percent in the first quarter this year and by 25.6 percent in March in particular, which is the first month when the effects of the coronavirus pandemic on the market became pronounced. In the given quarter, sales of new commercial vehicles in the EU dropped by 23.2 percent, and demand for new commercial vehicles fell by 47.3 percent across the EU in March, as measures to prevent the spread of the coronavirus lead to the closure of dealerships.
EUROFER stated that huge disruption in the supply chain due to lockdowns and blockages in transport across EU countries have made it very difficult to ensure the supply of materials and components to the industry. It remains to be seen if normal business conditions are restored in the course of the current year. However, assuming that from the third quarter onwards normal business conditions return, EUROFER forecasts that it will take time before new orders translate into new deliveries due to persistent transport and supply chain issues, which will remain in place for some time. In addition, demand for new cars from consumers is expected to remain very weak at least until the macroeconomic picture and consumer disposable income improve.
EU automotive production is forecast to be hit the most by trade-related risks compared to all other steel-using sectors in the course of the current year, with an annual slump of 26 percent predicted, followed by a rebound of 25.3 percent in 2021.