Ever since the COVID-19 coronavirus took over the world, it has forced the vast majority of us to quit, be fired from or reduce the hours of our work. That subsequently means we can’t earn anything/as much as we normally would, although some governments are providing generous payouts for those eligible. It’s also meant that businesses have had to shut down or take a dramatic drop in sales too, sparking fears of a global recession once the pandemic subsides.
Or at least, that’s the thinking of poor people, because, for those with bank accounts that resemble phone numbers, not a lot has changed. That is at least, according to sales figures from Ferrari, which has seen an increase in its stock price of 21 per cent since March the 23rd.
Compare that to stock prices of Ford and General Motors – which owns the Chevrolet and Cadillac brands to name a couple – which have seen drops of 43 and 36 per cent respectively, and you can see that it’s the peasants of the world that have a stronger wish for the coronavirus to bugger off.
Ferrari hasn’t reduced the price of its vehicles to entice customers during the current financial climate either. Instead, Fiorano is seeing a surge in demand that more than outweighs the current supply. Some prospective customers have been told they’ll need to wait at least a year until they can get behind the wheel of their dream motor.
The upside of that long wait time is that the coronavirus should have shifted, and several people may have realised they can work from home, thus reducing traffic on the road and therefore freeing up more space to let the horses gallop, am I right?
Of course, the automotive industry as a whole can’t post such good news, as IHS Markit, a global market analysis provider, says the global pandemic is going to cause an unprecedented challenge for the automotive industry, and one that is potentially worse than the global recession of 2008/09.
It predicts that not only will worldwide car sales drop by around 12 per cent in March 2020 compared to March 2019, to 78.8 million units (10 million less than the forecast made in January 2020 before the virus hit), but that global demand will fall as well, once the virus has shifted.
As Wired says, global car events such as the Geneva and New York Motor Shows, have been cancelled because of the virus and factories have been closed temporarily. However, the publication also cites Navigant Research principal analyst Sam Abuelsamid as saying the automotive industry is in a better position to weather this current situation than it was during the global recession.
“They mostly have a reasonable cash balance, and the Detroit automakers in particular have done a lot of restructuring, including buying out a lot of older white-collar employees as they try to shift toward new skill sets to support electrification, automation, and mobility.”
The pandemic could also have a negative effect on electric vehicle sales, as not only are they already proving to be a hard sell to many consumers, but the pandemic has caused oil prices to tumble which in turn makes fuel cheaper to buy at the pumps. This will likely persuade consumers to continue to invest in non-electric cars, especially if many go down the route of buying used.
Abuelsamid adds, “There remains a significant price premium for an EV compared to an internal-combustion vehicle, and cheap gas only extends the payback time.”
The one factor in support of electric vehicles however, is that the coronavirus has had a positive knock-on effect for the climate of the planet, with pollution levels dropping significantly in major cities. Now would be the best time to invest in EVs to continue that positive trend.