The Korean auto market has not suffered from the lockdown
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The Korean auto market has not suffered from the lockdown
- South Korea has been relatively unaffected by the coronavirus, as health security measures were put in place there very quickly. Another consequence of the good management of this crisis was that no lockdown was imposed in Korea, unlike China, Europe and the United States, which prevented the local automotive market from collapsing as in these countries due to plant and dealerships closures.
- The graph below on the right shows that the Korean market did not decline in April-May 2020, since it exceeds the pre-crisis level and even the month of June saw a clear catch-up which compensates the figures of January-February which were a little weak. Thus, over the first 7 months of 2020, the Korean market (passenger cars and light utility vehicles) is growing by 6.9%.
- However, the automobile production in Korea has not been able to prevent a decline in its volumes. The decrease observed in January-February 2020 (-29.6% and -27.6%) and especially in April-May (-23.1% and -38.1%) is explained rather by a lower external demand than by a drop in sales on the national land. The April and May lockdown months were indeed particularly difficult in Europe and the United States, which caused a collapse of sales in these regions, including those of Korean models.
- However, since June 2020, the Korean auto production has returned to its last year level and the coming months should confirm this trend. Over the first seven months of 2020, the production volume in Korea fell by 21.1% compared to -36.7% in Europe, -29.4% in the United States, -28.5% in Japan and -11,6% in China.
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The Chinese utility vehicle market grew in 2020
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The Chinese utility vehicle market grew in 2020
- While the Chinese passenger car (PC) market has fallen by 18.4% over the first seven months of 2020, due to the coronavirus crisis which has led to several weeks of lockdown, with however a clear improvement observed since May last (+ 7.2% in May, + 2.1% in June, + 8.9% in July), the Chinese market for utility vehicles (UV) grew by 14.4% over the same period. From April, the Chinese UV market exceeded its pre-crisis levels (+ 31.6% in April, + 47.9% in May, + 63.2% in June, +59, 4% in July).
- This significant growth can be explained by the fact that the 2018 and 2019 years suffered from economic tensions between China and the United States which had caused a drop in world trade and a drop in growth in China itself. This growth decline in China had significantly reduced China's demand for utility vehicles. We are therefore now witnessing a sharp increase in demand, supported in particular by public investment.
- With 650,000 more units registered between April and July 2020, the UV market in China reached a level never reached during this period. However, if these this trend reflects an anticipations of purchases supported by public investments, it is possible to see a backfire effect in the last 2 months of 2020 or at the beginning of 2021.
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Hyundai announces the creation of a new brand: Ioniq
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Hyundai announces the creation of a new brand: Ioniq
- The Hyundai division of the Korean group Hyundai-Kia has announced the creation of a new brand dedicated to its 100% electric vehicles (BEV): Ioniq.
- Since 2016, Ioniq has been the name of a Hyundai model available in hybrid (HEV), plug-in hybrid (PHEV) and 100% electric (BEV) versions. In fact, it is the first model available worldwide in these three versions. It is rare for a carmaker to create a new brand for its electric cars, but we have already encountered this scenario in China, where some carmakers have done so, even if it means moving then to a range with thermal and electric motors.
In Europe, German carmakers, for example, have not created a dedicated brand but simply formalized a lineup, EQ at Mercedes, i at BMW, E-Tron at Audi or ID at Volkswagen.
In Europe, German carmakers, for example, have not created a dedicated brand but simply formalized a lineup, EQ at Mercedes, i at BMW, E-Tron at Audi or ID at Volkswagen.
- Ioniq will therefore debut from 2021 with the Ioniq 5, a C segment SUV. Will follow in 2022, the Ioniq 6, a D segment sedan and in 2024 with an Ioniq, a D segment SUV. These three models will be based on a platform named “E-GMP”. As a result, the current BEV Ioniqcould be discontinued when the new brand is launched, in order to not overlap the models. The objective of the Hyundai-Kia group is to sell 1 million BEVs from 2025, including 560,000 for the Hyundai division, under the Ioniq brand. Consequently, the group has set itself the objectives of selling 440,000 BEVs under the Kia brand and possibly Genesis from 2025.
- The strategy of the Hyundai-Kia group is actually quite unclear, with both the creation of a brand dedicated to BEVs (Ioniq), but the conservation of BEVs models within the Kia brand (and possibly Genesis).
- Hyundai-Kia is already facing difficulties with its luxury brand Genesis, which is not yet meeting the expected success (75,000 units in 2019 against 88,000 in 2018). This brand is largely left behind by Lexus, Infiniti or Acura. The success of the Ioniq brand is consequently far from guaranteed, even if Hyundai announces the launch under this brand of three new models in four years, in a growing market.
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Global sales (PC + LUV) declined by 23% over 7 months 2020
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Global sales (PC + LUV) declined by 23% over 7 months 2020
- Global vehicle sales (passenger cars and utility vehicles) fell by 23% over the cumulative first seven months of 2020, due to the coronavirus crisis that affected many countries during the first half of this year.
- At the end of June 2020, the decrease was 26.2% which shows that we gained more than three points in July which records a worldwide decrease of only 2% compared to July 2019. The improvement is in progress.
- If the global auto market is stable between August and December 2020 compared to the same period in 2019, the decline over the year would be around 13%. If the global automotive market records a decline comparable to that of July 2020 over the next five months, the decline over the year would be around 14%. There is therefore a good chance that the year will end with a decline of less than 15%.
- Regarding the global automobile production (passenger cars and utility vehicles), it has fallen by 29% over the cumulative first seven months of 2020, which shows that there is still a significant gap between production volume and sales (around 6%), demonstrating that sales from stock are continuing today and that restocking has not yet started. At this rate, the drop in production over the year could reach around 20%, unless restocking takes place in the coming months.
- Depending on the extent of this restocking (if it occurs), the drop in global automobile production over the year 2020 could be between -15% and -20%.
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Turkey is one of the few countries to see its car market increasing in 2020
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Turkey is one of the few countries to see its car market increasing in 2020
- Turkey is one of the few countries to see its automotive market increasing in 2020 compared to 2019, this market having increased by 58.9% over the cumulative first seven months of 2020. Turkey is indeed just starting to slowly recover from several years of crises.
- In 2019, the market had collapsed (-20.4%) due to an economic crisis raging in the country and was followed by a political crisis, which began a year earlier (the Turkish market had already fallen by 32, 7% in 2018 compared to 2017).
- In 2020, and since June, there has been a strong increase in registrations (without talking about catching up), with an increase of 58.9%. The Turkish market is coming back and is therefore approaching its pre-crisis levels, meaning the levels of 2016 and 2017.
- Which carmakers have benefited the most from this catch-up? The PSA group is the carmaker that has benefited the most from the revival of the Turkish market, with an increase of 144.6% compared to last year, overtaking the FCA group which produces locally (45,178 sales compared to 39,785 in the first seven months of 2020). This situation could encourage PSA to produce locally, thanks to its merger with FCA. Other successful carmakers, the Ford group saw its sales increase by 75% and the Volkswagen group by 74%. Renault-Nissan remains the leader of the Turkish market, with 64,648 units over seven months of 2020, ahead of Volkswagen and PSA.
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