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The Link Between Car Sales and the Economic Crisis in the European Union at the Time of the Covid-19 Pandemic

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  • Laszlo
  • Torok

Abstract

Purpose: Car production is one of the most important bases of the European Union's economy. The present study examines the negative effects of the Covid-19 pandemic on the new car market in the European Union in the first half of 2020. Design/Approach/Methodology: First, the economic and emotional elements of buying new cars are presented. The methodological part presents the data on new cars sold and the decrease in GDP during the period under review. It then examines, using a correlation calculation, how strong the relationship is between GDP as a dependent variable and new car sales as an independent variable. Findings: The analysis confirms the hypothesis that the European Union economy is highly dependent on emissions from the automotive industry. Using data collected for research, the study also confirms that the outbreak caused panic in the new car market. The study sees this as evidenced by the fact that the median value calculated from the decrease in new car sales per member state is more than three times higher than the value of GDP decline in the member states. Practical Implications: The experience of previous crises demonstrates that these crises have the potential to fundamentally change consumer behavior and that these changes persist in consumers. This is likely to be the case after the Covid-19 pandemic. People working in the automotive sector have to be prepared for these changes. Originality/Value: Due to the high economic weight of the European Union's car industry, it is impossible to reach the pre-crisis level of EU GDP without rehabilitating the sector

Suggested Citation

  • Laszlo & Torok, 2021. "The Link Between Car Sales and the Economic Crisis in the European Union at the Time of the Covid-19 Pandemic," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 11(1), pages 68-77.
    • Handle: RePEc:ers:ijfirm:v:11:y:2021:i:1:p:68-77
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    More about this item

    Keywords

    Covid-19; European Union; GDP; car sales;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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