A sudden drop in miles traveled by car in the US triggered by wide-spread social isolation measures will have immediate ramifications for gasoline demand. IHS Markit analysis finds that US gasoline demand could fall by as much as 4.1 million barrels per day (MMb/d) during the COVID-19 response period. The four-week average US gasoline demand for the week ending 6 March 2020 was 9.1 MMb/d, according to the US Energy Information Administration (EIA).
The magnitude of gasoline demand decline will be much greater than the impact of the 2008 recession and could be further protracted depending on how effective social distancing measures are at controlling the spread of the COVID-19 virus.
Further, according to the latest IHS Markit forecasts, the global auto industry will exerience an unprecedented and almost instant stalling of demand in 2020, with global auto sales forecast to plummet more than 12% from 2019 to 78.8 million units.
This represents a downgrade of 10 million units compared to pre-coronavirus IHS Markit forecasts made in January 2020. A fall of 12% for 2020 would be considerably worse than the two-year peak-to-trough decline of 8.0% during the global recession in 2008/2009.
IHS Markit downgraded its expectations for Mainland China by 2.3 million units for 2020, with light vehicle sales forecast to post 22.4 million units for the year, down almost 10% year over year. China is expected to show signs of bottoming out through the second half of 2020, but the scale of the economic slowdown will likely lead to some destroyed demand.
Europe is now in a full-scale coronavirus crisis with demand conditions worsening by the day. The region faces months of rolling disruption as the conjoined health and economic crises play out across economies. Europe autos demand for 2020 is set at 15.6 million units, down by 13.6% over 2019. This represents a volume downgrade of 1.9 million units versus pre-coronavirus settings.
The IHS Markit forecast for the US market is reset on a sharp consumer-led recession for 2020, with announced monetary and planned fiscal policy measures probably not enough to save the auto market from a looming demand slump. IHS Markit forecasts 2020 US auto sales to be 14.4 million units, down by at least 15.3% year over year. For the US, our volume downgrade is 2.4 million units for 2020 from prior forecasts.
The magnitude of gasoline demand decline will be much greater than the impact of the 2008 recession—and could be further protracted depending on how effective social distancing measures are at controlling the spread of the COVID-19 virus.—Jim Burkhard, vice president, IHS Markit
Following a deceleration of electric vehicle (EV) sales growth in 2019, IHS Markit expects EV sales to stagnate in 2020 and likely into 2021. A faltering global auto market will have a big hit on sales of EVs.
EVs also face another headwind with the low price of oil prices, making them less competitive in terms of fuel cost savings vis-à-vis their internal combustion engine counterparts. Global climate ambitions, however, are unlikely to be downgraded and will continue to support the path ahead for EVs over the longer term.
Over the longer term, the global response to COVID-19 could have significant structural effects on mobility patterns around the world. A key variable will be to what extent the remote working patterns established in the response period will become entrenched in the future. The longer-term impact on personal mobility choices—whether a boon for the personal car or mobility services—remains unclear, the company said.