The scale of this pandemic has yet to fully materialise, but what is known with certainty is new car sales in Ireland were down 96% in April, 72% in May and 28.4% in June when compared year on year with 20191, and it is difficult to believe there will not be casualties as we emerge from this crisis.

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In the first 4 months of 2020, figures show that Global Car Sales were down 29.2%2, and now as economies slowly emerge from lockdown, whilst manufacturing production is slowly grinding up through the gears, slower rates of production are expected, with social distancing measures being introduced in plants all over the world. The Financial Times in May quoted Moody’s rating agency predicting a 30% slump in global sales this year3.

In France, Renault (who recently agreed a €5bn line of credit with the French government) together with Nissan with whom they share an alliance, have both taken the opportunity to plan to drastically cut their fixed overheads and head count4. Predicted combined reductions totalling some €5.5bn to be achieved in reduced overheads, and some 15,000 job losses in Renault alone were announced in late May.

In Germany, depending on whose figures you rely upon, anywhere between 2 to 3 million jobs are reliant upon the German car industry with staff either employed directly, in the supply chain or supporting jobs. New car figures for May in Germany are down 50% of last year despite the showrooms being open for all of May.

In addition, exports were much weaker according to the VDA, the German Association of the Automotive industry with some 105,100 cars exported in May, down 67% on last year.

The Financial Times reported in May, that it came as a surprise to the once powerful car lobby – the VDA, when the German government were not convinced to step in to specifically assist the motor industry as they did in 2009 by introducing a scrappage scheme (“Abwrackprámie”) and instead the government would only agree to “discuss measures to stimulate the economy”.
Perhaps the after effects of Deiselgate5 (which cost VW €31bn and rising) is still ringing in the ears of Chancellor Merkel and her government.

It is also estimated that German car manufacturers will spend some additional €40bn in the next three years on battery-powered technology, which will significantly affect overall profits, this combined with a expected continued fall in demand across all car sectors is a worrying trend.

Hertz, one of the largest car rental firms entered chapter 11 in the USA & Canada at the end of May citing the impact of covid 19 being sudden and dramatic. Whilst they continue to trade during this restructuring process, ten thousand jobs or 26.3% of its workforce have already been cut. The company confirmed it possessed $1bn in cash to support its on-going operations but it also is carrying debt of some $19bn at the time of entering chapter 11.