Impact of COVID-19 on the Global Automotive Coolant Market
With the continuous spread of the novel coronavirus worldwide, automakers are taking extreme measures in the form of plant closures to halt the spread of COVID-19. The situation remains fluid as more European companies suspend work, and the US automakers extend shutdown periods.
The regional impacts of the pandemic outbreak are highly variable, but as it spreads, the current status in the harder hit areas provide a glimpse of what may be witnessed in the near future. China saw a 79% drop in the automotive market in February 2020. As a result, Chinese auto manufacturers have petitioned the government to stimulate the market through subsidies, tax breaks, and temporary reductions in regulations on emissions. In Europe, many of the largest automotive groups, including Volkswagen, Fiat Chrysler Automobiles N.V. (FCA), and Groupe PSA, have shuttered most plants across the continent, effectively halting the entire supply chain for the time being. The production losses due to factory shutdowns amount to at least 2,068,832 motor vehicles so far, which includes passenger cars, vans, trucks, buses, and coaches. The original equipment manufacturers’ (OEM) production in the US has ground to a halt, with the “Big 3” OEMs (Ford, FCA, and GM), have agreed to temporarily halt production. On the retail side, OEMs are focusing on driving sales through financing incentives and other consumer-friendly offerings.
In response to these impacts, according to the National Automobile Dealers Association (NADA), the forecasts for the US light vehicle sales in 2020 have been reduced to 14.5 million units, compared to 17 million units in 2019, with further reductions possible if the pandemic is not controlled.
Ford shut down all European and North American production on March 19, with an intention to reopen facilities and restart production on March 30, though the company on March 31 delayed that goal indefinitely. However, it plans to start ventilator production at one of its US facilities on April 20. Production of Ford vehicles and engines across the Americas and Europe is expected to resume on May 4 at the soonest.
Volkswagen, on 31st March, announced the extension of the production shutdown at its German factories owing to the decline in demand for vehicles and continuing challenges in the supply chain. However, on 27th April, the company reopened the world's biggest car factory at Wolfsburg in Germany.
global automobile sales, million units (2014–2022)
Amidst the COVID-19 outbreak, investors and manufacturers are pulling back the production and reconsidering investments. This is expected to act as a key headwind for the growth of the global automotive coolant market. The halt in production of vehicles, as well as the temporary closure of service shops and retailers, the demand for coolant is hampered. The pandemic is expected to have a negative impact on the global automotive coolant market in the short-term (2020–2021). However, the long-term growth of the market is expected to remain positive.
Source: OICA and MRFR Analysis