World July 2020: Sales down -6.8% to highest SAAR since January, China drives recovery, Latin America stalls

Latin America is the worst-hit new car market globally in July, with Chile down -63.6%.

LMC Automotive has now released its internal Global Light Vehicle (LV) sales for July 2020, showing a single-digit year-on-year decline for the first time since February. According to LMC, July global sales are down -6.8% to 6.679.540 units vs. 7.167.573 in July 2019, that’s a loss of just under 500.000 units for the month vs. 1.4 million in June. The YTD global tally is now down -24.6% (vs. -27.7% last month) to 39.400.732 vs. 52.246.029 over the same period in 2019, a ghastly loss of over 12.8 million vehicles over the past seven months. As it was the case last month, LMC warns that although lockdown measures have generally been loosening, a risk of deterioration or a major second wave of infections remains present. An important element to keep in mind too is that the speed of recovery has been encouraged by pent-up demand accumulated during lockdowns, and this actually masks the current underlying level of market strength. In turn this could mean that even in the absence of major second wave, sales could also naturally peter out towards the end of the year.

One of the main interests of LMC Automotive reports, and the reason why we are relating them on here, is the availability of a Seasonally Adjusted Annual Selling Rate (SAAR) for each region. Globally, the SAAR has seen fluctuations not witnessed since World War II over the First Half of 2020: from 88 million in January to 65 million in February, 57 million in March, 49.04 million in April (a 22-year low), 61.25 million in May and 75.6 million in June. The global July SAAR stands at 85.73 million, meaning we are now at the highest level since January which wasn’t affected by the pandemic. The year-to-date global 2020 SAAR now stands at 69.26 million vs. 66.23m last month and 64.33m in May, down -23.3% on 2019 actuals of 90.32 million (vs. -26.6% in June). Our Live COVID-19 Dashboard has LMC’s global forecast for 2020 at 71m units, alongside 2020 forecasts for 15 major markets.

Looking at the detail by region, June positives China (+13.2%) and South Korea (+7.9%) are now joined by Eastern Europe (+17.6%) lifted by a surreal month in Turkey (+387.5%). As the rest of the world ends lockdowns, China now accounts for 30% of world sales in July, only slightly higher than the 28% it commanded in 2019 but receding on 34% in June, 41% in May and 49% in April. China’s July SAAR leaps to 30.7 million, its highest since September 2017, with the average selling rate in the three months to July far exceeding the pre-pandemic Q4 2019 level. Western Europe (-5.7%) and Canada (-5.5%) see their decline thaw to single-digits. In contrast, LMC has the USA down -11.2% vs. -16% in our update which displays an average of all analysts’ estimates, with fleet sales down -28.7% and retail down -8.4%. Japan (-13.2%) is in a similar situation. Last month we felt it was important to add India which was then the worst performing main market in the world at -47.2% but even though the sanitary situation has continued to worsen there, the Indian car market has stabilised (-1%). This leaves Latin America as the worst affected region in the world, resuming a position it also held in May, with Argentina down -40.4%, Mexico down -31.2% and Brazil down -29.7% according to LMC. We have also reported Chile down -63.6% in July.

Previous month: World June 2020: Shaky recovery continues (-18.1%), 12.5 million sales lost in past 6 months

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