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Covid 19 Insights PDF
Covid 19 Insights PDF
Covid 19 Insights PDF
Impact on the
Automotive Industry
Four Step Approach to Assessing Impact of COVID-19 on New Vehicle Sales
105 …and growth rate 105 …but at preshock 105 …and at lower
100
(same slope) 100
growth rate (slope) 100 growth rate (slope)
6 6 6
Growth overshoots Lost output during recession is Loss in output perpetuates
4 on rebound 4 permanently lost, but no perpetual loss 4
GDP 2 2 2
growth
(%) 0 0 0
-2 -2 -2
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
Classic economic shock leading to an intertemporal Shock that breaks a growth trend, even as the Shock that perpetually breaks a part of the growth
displacement of demand; growth resumes on growth trend remains the same; the cause is model; a structural impact that shifts the output
original output path typically a financial recession or major policy error path lower and establishes a lower growth rate
Source: BCG Henderson Institute’s Center for Macroeconomics. BCG’S COVID-19 AUTOMOTIVE DEMAND MODEL
Our Simulation Is Based on Four Archetypes of the Crisis
1 ARCHETYPE
Contained V path 2 ARCHETYPE
Deep V skewed on U 3 ARCHETYPE
U path 4 ARCHETYPE
L path
125 125 125 125
GDP LEVEL
▪ Positive surprise in virus properties ▪ Virus properties stay or worsen ▪ Virus properties linger into 2021 with Consistent repeated shock:
▪ Rapid catch-up in mitigation measures ▪ Mitigation efforts are slow / unsuccessful continued fear of mutation ▪ To labor – potentially facilitated by a
Macroeconomic
and their effectiveness and have to be extended ▪ Mitigation efforts are intense, yet repeated deadly pandemic
▪ Significant monetary and fiscal response ▪ Household & business confidence falls & ultimately unsuccessful ▪ To capital – potentially facilitated by
▪ Household and business spending stays remains depressed (08/09 crisis) ▪ Mitigation effort have to be sustained for inability to invest as in the past
largely in tact ▪ Rebound through governmental support an extended period ▪ To productivity – potentially facilitated
▪ Few businesses fail, unemployment in investments, business sector and ▪ Household & business confidence collapses by a break in the capacity to learn
recovers from initial dip households and remains depressed
▪ Financial system begins to show cracks
▪ Government backed incentives and cheap ▪ Confidence remains low & consumers ▪ New vehicle sales remain ▪ Disruption to auto supply chains
credit spur quick recovery continue to defer major purchases depressed as market moves into
Auto
▪ Short-term crisis impact: ~3 months ▪ Short-term crisis impact: ~6 months ▪ Short-term crisis impact: ~9 months ▪ Short-term crisis impact: >12 months
▪ Macroeconomic impact: ~9 months ▪ Macroeconomic impact: ~18 months ▪ Macroeconomic impact: ~24 months ▪ Macroeconomic impact: >24 months
▪ GDP drawdown: ~2.0 p.p. ▪ GDP drawdown: ~5.0 p.p. ▪ GDP drawdown: ~6.0 p.p. ▪ GDP drawdown: ~7.0 p.p.
Unlikely archetype COVID-19 crisis is most likely in the range of these archetypes Unlikely archetype
Source: BCG analysis. BCG’S COVID-19 AUTOMOTIVE DEMAND MODEL
Note: p.p. = percentage points.
Archetypes per Region Are Combined into Scenarios
Optimistic
scenario 1 Contained
V path 1 Contained
V path 1 Contained
V path
Most likely
scenario: I 2 Deep V
skewed on U 2 Deep V
skewed on U 2 Deep V
skewed on U
Most likely
scenario: II 2 Deep V
skewed on U 3 U path
3 U path
Pessimistic
scenario 4 L path
4 L path
4 L path
01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12
20 20 20 20 20 20 20 20 20 20 20 20 21 21 21 21 21 21 21 21 21 21 21 21 20 20 20 20 20 20 20 20 20 20 20 20 21 21 21 21 21 21 21 21 21 21 21 21
2020 2021
Most likely Forcast: ~61.8 ~62.6 Pessimistic 2020 2021
Forcast: ~61.8 ~62.6
scenario: II Adjusted total: ~47.8 ~58.9 scenario Adjusted total: ~37.0 ~51.6
~-14.0 ~-3.7
(23%) (6%) ~-24.8 ~-11.0
(40%) (18%)
01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12
20 20 20 20 20 20 20 20 20 20 20 20 21 21 21 21 21 21 21 21 21 21 21 21 20 20 20 20 20 20 20 20 20 20 20 20 21 21 21 21 21 21 21 21 21 21 21 21
Source: IHS Markit, light vehicle sales forecast, January 2020; BCG analysis. BCG’S COVID-19 AUTOMOTIVE DEMAND MODEL
Note: IHS forecast data with limited coronavirus effect was used as a basis for scenario development.
The Response to COVID-19 Requires a Comprehensive Approach
1 Situation monitoring
Governmental-action Consumer and
COVID-19 monitoring
monitoring customer monitoring
2 Crisis management
Staff engagement Stakeholder engagement (such as,
Contingency planning Tight financial steering Takeover defense
and communication state, union, and supervisory board)