A data and analytics company says the “alarming” drop in global light-vehicle sales experienced in January 2020 was driven by the coronavirus (COVID-19).

According to GlobalData, 6,2 million light vehicles were registered around the world in January, the lowest monthly figure since January 2012.

The emergence of the coronavirus in China in December 2019 was behind the drop, said GlobalData, adding consumers in that country and other exposed regions had employed “strict outbreak-control measures, with many barricading themselves at home”.

“This has created a knock-on effect for both vehicle sales and production, with dealerships devoid of customers and factories at a standstill with no one to operate them,” the company said.

Mike Vousden, automotive analyst at GlobalData, said the drop was “positively disastrous” in China.

“Sales in the world’s single largest vehicle market sank 33,1 percent compared with January 2019 to just 1,66 million units. Adding insult to injury is the fact that January 2019’s figure was already eight percent down on the same month in 2018, following a decade-long period of strong increases,” Vousden said.

Anecdotal reports are already indicating that sales declines are likely to accelerate into February, said GlobalData. Domestic sales were said to be down 96 percent in the first week of February compared with the same period one year earlier.

“The longer-term effects are difficult to quantify but it is likely that sales growth will continue to be stunted throughout the rest of 2020, even if the spread of COVID-19 can be contained,” Vousden added.

“This is because many of the components that go into building vehicles all over the world are produced in China, in factories that are currently standing still because it is too risky for workers to return. The auto industry is poorly prepared for such supply chain shocks because many operations run on a ‘just-in-time’ basis, with very limited numbers of stockpiled parts.”

Vousden said other large markets were also impacted.

“Turning to the other two ‘triad’ markets – North America and Europe – we can see similarly concerning figures. North America’s January 2020 sales sank by 3,6 percent to 1,32 million compared with January 2019 – a notably faster rate than the modest 0,8 percent yearly decline seen one year earlier. Europe’s January 2020 sales of 1,44 million units are a 5,8 percent decline on January 2019.”

Vousden said “considering the market’s general weakness in 2019, the emergence of COVID-19 couldn’t have come at a worse time”.

“Automakers and suppliers must prepare for lower sales, lower profits and disrupted supply chains throughout the coming year,” he concluded.

Original article from Car