With the recent passage of “phase one” of a trade agreement between the United States and China and the ratification of the United States-Mexico-Canada Agreement (USMCA), 2020 was supposed to be a transitional year for the global auto industry. Analysts had expectations that sales in the sector had bottomed out and that growth in China would support the world market, reversing recent negative sales trends and getting back to a trajectory of growth. But the worldwide spread of the coronavirus disease has become one of the greatest tests to the complex global supply chains created by auto manufacturers over the past 30 years and could lead to another downturn in global sales.
Coronavirus ground zero
When a dangerous new virus was spreading in the Chinese city of Wuhan and the Hubei province, the auto industry found itself at the center of the outbreak. The Hubei province is home to many major car manufacturers and in 2018 produced 1.7 million cars, accounting for almost 9% of China’s automobile output that year, according to Bloomberg Intelligence.