Adrian Huma, ING Bank: “A return to the pre-crisis car sales level could happen somewhere around 2023”
“The automotive industry has already been facing tough times before COVID. Unprecedented lockdowns due to the global pandemic resulted in a supply and demand shock globally and may further have long lasting effects on the purchasing behavior and the economy, especially with a second wave related measures,” Adrian Huma, Head of Automotive, Transportation and Logistics, Wholesale Banking, ING Bank Romania said during Automotive Forum 2020 powered by Automotive Today and The Diplomat-Bucharest.
“COVID-19 was/is heavily impairing the global light vehicle unit sales for 2020 and beyond. In our opinion, a return to the pre-crisis car sales level would happen somewhere around 2023. In recent years, governments have supported electrification of vehicles. The current slump in oil prices steers the fear that the trend towards electrification stagnates. We find three strong reasons against this: 1.The oil price drop does not equally equate to lower petrol prices. 2.EVs are about to approach breakeven and become more attractive with a larger range. 3.Regulatory pressure on car manufacturers in key markets is not relieved.
Car manufacturers are burning cash and both supply and demand for OEMs’ and auto part suppliers’ products has been heavily disrupted. OEMs’ fixed costs and working capital need to be financed –hence negotiating new credit facilities. Management teams have taken measures to preserve cash, including cutting costs and delaying non-essential capex and R&D. Auto suppliers will suffer knock on effect and need to shore up liquidity, so taking care of their suppliers is critical.”