Magna International posted sales of $ 12.959 million in the first half of 2020, a decrease of 37.5% year-on-year.
Consumer confidence, which is a significant driver of new vehicle sales, deteriorated significantly in the second quarter of 2020 as a result of the Covid-19 pandemic.
Overall, global consumer confidence levels saw a record drop in the second quarter compared to the first quarter, due to factors such as deteriorating job prospects and increased anxiety about personal finances.
Regionally, consumer confidence deteriorated in each of Magna International’s major geographic regions: North America, Europe and China.
Going forward, key factors that may further affect the recovery in consumer confidence include Covid-19 infection and death rates, as well as the ongoing economic impact of the pandemic on household finances, particularly to as government support programs decline.
New light vehicle sales in the company‘s two largest markets, North America and Europe, deteriorated in the second quarter of 2020 compared to the first quarter, due to mandatory stay-at-home orders and other measures aimed at reducing the spread of Covid-19 inhibited consumers’ ability to purchase vehicles.
However, during the second quarter, new light vehicle sales in both North America and Europe showed signs of recovery, continuing through July.
Second quarter new light vehicle sales in China recovered from the sharp decline in the first quarter.
During the second quarter of 2020, Magna International’s major production markets in North America and Europe experienced declines in vehicle production compared to the second quarter of 2019 which, in both percentage terms and absolute volume, outperformed with You grow the worst comparable quarterly declines experienced during the financial crisis of 2008-2019.
Based on Magna International’s expectations at the beginning of the year, the company estimates that reduced volumes in the quarter resulted in lost sales of approximately $ 5.5 billion and adjusted Earnings Before Interest and Taxes (BAII) were adversely affected. for approximately 1.2 billion.
For the six months ended June 30, 2020, Magna International estimates that such lost sales amounted to approximately $ 6.6 billion and adjusted EBIT was negatively impacted by approximately $ 1.45 billion.