The automotive sector is in profound crisis, both cyclical and secular and the specialised logistics companies that serve the sector have been having a challenging year too.
New research from Transport Intelligence reveals the extent of the challenges the automotive industry, and by extension the automotive logistics market faces. Globally, the automotive logistics market will contract by 20.4% as the Covid-19 pandemic decimates manufacturers’ ability to produce cars and squeezes consumer spending power with the world entering its deepest recession in generations. All sectors of the market – inbound/production logistics, finished vehicles and the aftermarket – will be profoundly affected with contractions in each regional market.
The Covid-19 pandemic has clearly had a devastating effect on the automotive logistics market with the effects in both production and vehicle sales clear to see. The pandemic came at a time when the global automotive market was already seeing falling demand, especially for internal combustion engine vehicles.
The finances of many of the vehicle manufacturers are severely damaged in a manner that is not fully reflected in their cash-flow positions. Component suppliers are in an even worse position. The level of uncertainty in the sector is remarkably high and this must have implications for all logistics providers involved in automotive production and sales.
Ti’s research shows the global automotive logistics market is set to contract for the third year in a row. While the decline was around 4% in 2019, it is forecasted to decline by more than 20% this year. All segments – Production logistics, Finished Vehicles logistics and Spare Parts Logistics – are impacted negatively in every region.
“The automotive sector was already facing turbulence due to falling demand, an economic slowdown, the US-China trade-war and Brexit uncertainties amongst other forces. This year, with the impact of Covid-19 in the mix, the sector is heading towards an unprecedented downward slope making the road to recovery very long,” Ti Analyst, Gunjan Thukral, noted. “Although automakers have restarted production – with automotive supply chains spread across the world and with lockdown measures at varying stages across different geographies – re-building capacity and ramping up production is yet another challenge facing the sector.”
Source: Transport Intelligence, October 15, 2020.
Author: Transport Intelligence
To read more about the outlook for automotive logistics growth for 2020, split geography and by inbound, finished vehicle and aftermarket, download Ti’s latest whitepaper – Automotive Logistics – A Market In Crisis.
To access Ti’s full datasets on the automotive logistics market please take a look at Ti’s GSCi database.