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December 2020 | Platform

What can we expect from the automotive sector at the end of 2020

•    Before the end of the year, the Chinese car market is expected to accelerate its recovery
•    Europe, due mostly to increasing mobility restrictions, forecasts 20% to 15% decrease in global sales

This atypical and complicated year 2020 is about a month to end. Through it, the automotive business has been forced to handle meaningful transformations and this sector asks itself: what is in store for the last quarter of the year? The “Autoparts from Spain” initiative, supported by SERNAUTO (Spanish Automotive Supplier Association) in collaboration with ICEX España Exportación e Inversiones identifies the last forthcoming changes headed by the automotive sector towards the end of this year.

China recovery and emerging new opportunities for the European automotive sector

According to estimates done by that Chinese Association of Car Manufacturers (CAAM), 2.54 million vehicles where registered in October, an 11% more compared with same period last year. After a 4.4% increase in April, right after the Covid-19 first wave, the Chinese market has not stopped growing. Experts and analyst alike agree on this steady progress of this market in next months, which will push up the world’s car market.

Data on Spanish suppliers’ exports to China during the second quarter 2020 show it: 3.6% inter-annual rate increase, reaching the €154 million figure. Besides, South Korea, with a 30% increase and Australia with a 25% one, also reflect a slow recovery of economies in Oceania and South Asia.

Sector's speedy race towards a digital and sustainable mobility

Prior COVID-19, this sector was already immersed in an intensive transformation process, heading to a more decarbonized economy, facing challenges of digitalization, connectivity and automation. All of them, under the sustainability premise. However, during this health crisis’ months and the remaining month of 2020, we will see how this process has taken off.

“In Germany we will see how a restructuration of the automotive supplier sector will be demanded to keep up with their future automotive trends (electrification, digitalization and autonomous driving): new products, qualified staff for new tasks and a big hand of investment in I+D” States Mario Buisán, commercial and economic counselor at the Spanish Embassy in Berlin

Last month’s slight increase of automotive sales in Europe  (in comparison to previous months)

In Europe, due mostly to increasing mobility restrictions, different results are expected compared to the Asian market. According to S&P Capital consulting, a 20% to 15% decrease is forecasted in global car sales.

Regarding the automotive component sector, “a decrease in billing of around 20 to 30% is estimated in Spain, figures never seen before in six decades of history and presence of automotive component manufacturers in our market” states José Portilla, CEO of SERNAUTO.

However, the Spanish automotive component exports in the second quarter of 2020 reached €5,024 million.  In comparison with this year’s first quarter, sales have shown a slight recovery in markets such as: Portugal (+6.4%), Italy (+4.8%), Poland (+1.1%), Czech Republic (+6,4%), Slovakia (+3,9%), Slovenia (+18,6%) or Baltic Countries.

The German market reflects an equal contraction in the component manufacturer sector. “However, thanks to stimulus packages carried out in Germany for the sector in the last months (measures to avoid staff cuts such as the “Kurzarbeit” regulation or training plans to update employees so they can take new tasks) a slight increase is expected in the last quarter of the year. Then, despite an expected 5.8% GDP recession in 2020, a strong recovery is foreseen in 2021, which might represent a GDP growth of 4.4% “ adds Mario Buisán.

First consequences of Brexit sector

Brexit is another challenge grilling this sector in the last months, since the UK is one of the main commercial partners for the European automotive main actors. German manufacturers see their relations being endangered with their main export destination for their vehicles, which is also the fourth main destination for Spanish automotive supplier sales. In fact, the Spanish sector has experienced a strong export decrease, 36.1%,  to that market in 2020 second-quarter compared to the same period In 2019.

Mª Begoña Llamazares, AutopartsfromSpain Platform Coordinator and Head of Market Segment at SERNAUTO

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