Car Association "Expecting Demand Recovery in Major Markets in the Second Half... Need for Support Systems to Expand Production"

Car Association Surveys Sales Status in Major Markets Including the US and Europe
US April -46.6% → May -29.5% Showing Sales Recovery
"Support Needed Such as Weekly 52-Hour Workweek Exemption to Prepare for Demand Recovery"

In April, Hyundai Motor Company's Ulsan Plant export shipment dock (Photo by Yonhap News)

[Asia Economy Reporter Kim Ji-hee] An analysis has emerged that the world's major automobile markets have entered a recovery phase since May after going through a recession caused by the novel coronavirus disease (COVID-19). As countries prepare to expand production and stimulate demand, sales are expected to further revive in the second half of this year.

According to the sales status survey of major automobile markets (United States, Europe, China, India, Mexico, Brazil, Russia) released by the Korea Automobile Manufacturers Association (KAMA) on the 25th, passenger car sales in the first quarter of this year decreased by 27.5% compared to the same period last year. The sharpest decline in sales during this period was in China, where sales dropped by 81.7% and 48.4% in February and March, respectively. In contrast, the United States and the five Western European countries saw sales hit their lowest point in April, with decreases of 46.6% and 83.8%, respectively. In these regions, economic lockdown measures such as movement restrictions and contact limitations due to the spread of COVID-19 were fully implemented starting in April.

However, from May, as economic activities resumed mainly in major countries, sales began to recover. First, most states in the United States designated automobile sales as essential economic activities and gradually eased movement restrictions from early May, reducing the rate of sales decline. U.S. automobile sales in May decreased by 29.5% year-on-year, with the decline narrowing to about half of the previous month. Production, which had fallen to less than 1% of pre-COVID-19 levels in April, recovered to over 20% in May.

The atmosphere in the five Western European countries is similar. Automobile sales decreased by 83.8% year-on-year in April but the decline eased to the 50% range in May. This is attributed to Germany reopening dealerships at the end of April, followed by France, Italy, and Spain reopening theirs one after another.

Accordingly, U.S. automakers GM and Ford decided to use this year's regular summer vacation period to compensate for the production disruptions experienced so far. FCA also plans to continue production during the summer vacation period, focusing on pickup and sport utility vehicle (SUV) model factories.

European regions such as Germany and France announced economic stimulus measures including new car purchase subsidies in line with the economic reopening. France plans to invest 8 billion euros (approximately 11 trillion KRW) in support for the automobile industry, including subsidies for new car purchases covering internal combustion engine vehicles. Germany also introduced support measures that include expanding subsidies for electric vehicle purchases. Italy is considering providing new car purchase subsidies of up to 4,000 euros per vehicle. Since most of these subsidies began to be paid from this month, sales recovery is expected in the second half of this year.

Jung Man-ki, chairman of KAMA, emphasized, "In response to the economic reopening of major countries, it is necessary to supplement systems to compensate for production disruptions, such as shortening the summer vacation period, temporarily exempting the 52-hour workweek, and relaxing conditions for special extended work hours." He added, "Furthermore, to help companies endure until demand recovers, on-site encouragement for the implementation of existing liquidity measures should be strengthened, and domestic demand stimulation measures such as extending the reduction of individual consumption tax should continue."

This content was produced with the assistance of AI translation services.