As the coronavirus crisis unfolded, spreading from China to the rest of the world in the early months of 2020, things went from bad to worse for the global car industry. What started off as a supply crisis, which temporarily constrained access to parts and raw materials sourced from China, turned into a full-fledged demand shock that saw sales tumble in the face of mass unemployment and financial uncertainty.
As the following chart shows, the world's largest automobile markets suffered significant sales declines in 2020, with the Chinese market furthest along on the road to recovery. According to the China Association of Automobile Manufacturers (CAAM), vehicle sales rose for the ninth consecutive month in December, limiting the overall decline for 2020 to -6 percent. Meanwhile light vehicle sales dropped 15 percent in the United States, while the EU suffered a 24-percent drop in new passenger car registrations in 2020.
Looking at European sales figures in more detail reveals that things were particularly bad in some of the region's largest markets. France, Italy and Spain, all heavily affected by the COVID-19 pandemic, suffered above-average sales declines of 25.5, 27.9 and 32.3 percent in 2020, respectively, while Germany, the EU's largest automobile market that had a good handle on the pandemic for long stretches of 2020, saw registrations drop by "only" 19.1 percent according to the ACEA.