US, China auto sectors on divergent paths to recovery

How are auto manufacturers performing amid the coronavirus pandemic? 

These are difficult times, as car companies try to keep plants open while ensuring a safe workplace. Then there’s the question of demand: a combination of economic slowdown and less driving doesn’t bode well for car sales. 

A month ago, we introduced the process by which we’re monitoring auto factories around the world and presented some of our findings.

This blog is an update, with new findings and additional scope. We recently added India, with one of the world’s largest automotive industries, to our coverage. 

Our analysis now includes 57 auto manufacturing facilities located in the US, Spain, France, UK, Germany, Italy, India, China, South Korea and Japan. The companies covered include Volkswagen, Nissan, BMW, Ford, Hyundai, Toyota, GM, Tesla, Kia and others.

The map below shows the sites we cover. For a more interactive experience, check out our Dashboard on Auto Manufacturing Activity.

Ursa’s coverage of auto manufacturing facilities

Ursa’s coverage of auto manufacturing facilities

One of the main takeaways of our analysis is the divergence between the US and China.

The US auto plants appear to have slowed down sharply starting mid-April, reflecting a wave of shutdowns. Despite reports of plants reopening, there hasn’t been any signs of a recovery. 

In China, however, the auto manufacturing sector appears to have experienced a V-shaped recovery. 

Activity fell sharply from January to mid-March. With lockdowns lifted, activity picked up since then. 

The process to determine activity levels at these facilities relies on satellite radar imagery, which can detect the presence of man-made objects, such as cars.

The area being monitored is the lots adjacent to auto plants where finished vehicles are stored, similar to the one pictured below.

FAW-VW plant, Chengdu, China

FAW-VW plant, Chengdu, China

For more information, check out this “How We Use SAR” story map. To normalize the data, we create an activity index, which is explained in more detail here

An index score above 1 indicates the lot(s) is fuller than on average during the time examined. A score below 1 indicates less full than on average.

As mentioned above, the US activity index plunged mid-April. Though it stopped falling late May, the reading remains very low.  

China’s activity index has climbed higher since mid-March, coinciding with news reports of the economy reopening. As of late June, the score is almost on par with the start of the year.

Figure 1 shows the US and China indices.

Figure 1

Figure 1

The US downturn since mid-April has pushed the global auto manufacturing index (a composite of the 57 plants) lower. As of late June, the global index remains depressed (Figure 2).

Figure 2

Figure 2

In Europe, the trends have varied by country. For example, the reading for Germany has increased since May, while indices for Italy and France have kept falling (Figure 3).

Figure 3

Figure 3

As a result, the Europe composite index has been fairly steady since April after a small downturn in March. 

India’s activity index in 2020 through June has been much lower than the first half of 2019. However, that mostly reflects the steep drop Oct - Dec 2019. There was also a dip since May that could be indicative of a second wave of cases.

The activity index combining Japan and South Korea remains lower year-on-year as of late June. (Figure 4).

Figure 4

Figure 4

This analysis is meant to provide a pulse on the varying states of economic recovery around the world, the differences of which can be stark.  

You can view this blog and other material on our COVID-19 Dashboard, which is available to the public.

Ursa is continuously monitoring vital locations around the world using satellite imagery to provide a deeper understanding of the impacts of COVID-19. 

If there’s somewhere you’d like us to take a look, please let us know

Geoffrey Craig