Cross-sector study shows auto industry as a Covid recovery leader

Analysis by GlobalData, a leading data and analytics company, suggests the auto industry is emerging as a relatively strong performer in the pandemic recovery.

GlobalData has created sector activity indices (derived from company data) and undertaken an analysis from across 18 industries, comparing pre-pandemic activity levels with those up to the second quarter of this year.

According to this wide-ranging analysis, the automotive sector’s level of overall activity* in Q2 of this year was running well above pre-Covid levels (measured at Q4 2019) and ahead of most other industrial sectors measured (see below chart).

Activity levels in the automotive sector were 33.1% higher than they were at the end of 2019, before the pandemic decimated economies across the world. This means that, of the 18 sectors included in the analysis, the automotive sector ranks second in terms of its latest value for Covid-19 activity recovery.

A further analysis undertaken of listed companies’ stock prices also shows the automotive sector as the top sectoral performer, even ahead of tech stocks.

GlobalData analyst David Leggett said: “It has been a tough and unprecedented period, of course, for all industries – including automotive. However, we have seen a pretty strong recovery in automotive which set in last year when economies re-opened and vehicle demand quickly came back on stream, to the benefit of top and bottom lines at both vehicle manufacturers and suppliers – who have also been keeping cost bases well under control.

“Moreover, bright prospects for electrified vehicles in the context of a green hued recovery have also lifted prospects and sentiment for the sector.

“However, the pandemic is far from over – illustrated in recent setbacks in southeast Asia – and the global semiconductors shortage is acting to constrain new vehicle sales. Long waiting lists for new cars have, though, kept transaction prices and margins high.

“It’s perhaps a case of autos being in a relatively good position, but still needing to be very cautious on prospects which are ultimately tied to what happens to the global economy. Major uncertainties remain.”

* Activity levels are expressed in the form of an index derived from company level data on hiring, deals, stock prices and sentiment analysis of news reports and financial filings.

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