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Counterpoint Research https://www.counterpointresearch.com Technology Market Research Tue, 22 Sep 2020 12:28:48 +0000 en-US hourly 1 https://www.counterpointresearch.com/wp-content/uploads/2017/06/favicon_counterpoint-150x150.png Counterpoint Research https://www.counterpointresearch.com 32 32 Oculus to Bring Lifelike Immersion to Mass Market https://www.counterpointresearch.com/oculus-to-bring-lifelike-immersion-to-mass-market/ Tue, 22 Sep 2020 10:13:38 +0000 https://www.counterpointresearch.com/?p=33457 With the launch of Quest 2, Facebook continues the shift in its VR focus to the standalone type of headset […]

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  • With the launch of Quest 2, Facebook continues the shift in its VR focus to the standalone type of headset design, combining the Oculus Link technology for consistent PC VR gaming experiences.
  • Oculus Quest platform alone had generated over $150 million in content revenue.
  • With a starting price of $299, Quest 2 is expected to outpace its predecessor and contribute millions of sales.
  • On September 16, Facebook launched the second generation of Oculus Quest. The new standalone VR headset is powered by the Qualcomm Snapdragon XR2 platform, which is dedicated to creating ultimate VR experiences. It makes a significant leap in computing performance across CPU, GPU and AI capabilities. Compared to its predecessor, the Oculus Quest 2 comes with a Fast-Switch LCD Display, supporting up to 90Hz display refresh rate and 50% more pixels, a redesigned 6-DoF touch controller, and a 256GB onboard storage option.

    Exhibit 1: Quest Specification Comparison

    Despite the performance upgrades, Facebook has managed to bring the hardware price down. With the standard edition being introduced at $299, the Oculus Quest 2 is expected to quickly gain traction. Since the launch of its first standalone design, or Oculus Go, back in May 2018, Facebook has been focused on building a strong user base for Oculus by introducing affordable VR headsets. The Quest family, thanks to its competitive pricing, the comfort of wearing, and ease of playing, has become the major driving force behind the user growth and now is at the center of the Facebook VR ecosystem.

    Exhibit 2: Oculus Sales Estimates During Each Initial Rollout Period

    Oculus Sales Estimates During Each Initial Rollout Period


    During the first year after its launch, the Oculus Quest saw its sales far ahead of Oculus Go. Meanwhile, Oculus ecosystem developers were able to rake in over $100 million. With the worldwide lockdowns due to the COVID-19 pandemic, consumer spending on Oculus Quest content increased significantly. The revenue in Q3 2020 alone is expected to reach $50 million, greatly inspiring content creation around the Quest platform.

    Facebook plans to stop producing the Oculus Rift S in 2021, it is focusing on development of standalone type of VR headsets just like the Quest 2, which will leverage Oculus Link for consistent PC VR gaming experiences. With more production capacity shifting to the Quest 2 in 2021, it will outpace the previous Oculus gadgets and set a new high during October 2020~October 2021.

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    US Smartphone Recovery Continues in July; Key Entry Devices are Launched https://www.counterpointresearch.com/us-smartphone-recovery-continues-july-key-entry-devices-launched/ Mon, 21 Sep 2020 18:40:05 +0000 https://www.counterpointresearch.com/?p=33447 The US market continues to see sell-through volumes recover after the tremendous slow down seen in April and May due […]

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    The US market continues to see sell-through volumes recover after the tremendous slow down seen in April and May due to the COVID-19 pandemic. The US market sold through through 11.5 million smartphones in the month of July. This is a 2% month-over-month and an 8% year-over-year expansion. The strong comeback was due to some pent-up sales from lockdowns. Also, July is usually a month of vacations and less store traffic. With COVID-19 still affecting travel, many people stayed home. Smartphones have proven to be even more valuable during the pandemic.

    Some key takeaways during July include:

    • There were limited market share changes in July. LG was an exception. It was helped by a couple of key launches in July — LG Velvet 5G and LG Aristo 5.
    • T-Mobile and AT&T have aggressively rolled out low-band 5G — both now have over 200 million POPs (T-Mobile over 250 million POPs). US carriers want 5G in place in as many metros as possible prior to Apple’s 5G launches.
    • Verizon is looking to reduce the inventory of iPhone Pro and Pro Max prior to the new generation of iPhones in October — $850 credit with trade-in for new subscribers or $350 for upgraders. Such new upgrade promos have not been seen over the past 18 months. Look for Q4 to be a very big upgrade quarter — potentially back to above 7% of the base.
    • Online sales have moderated from its high of 33% of sales in April. Many channels have streamlined and improved online purchasing experience, however, with stores re-opening sales have been shifting back towards offline channels.
    • Apple has successfully sustained momentum with volumes driven by the iPhone 11 and iPhone SE despite the growing anticipation of its Fall launches. Most of our July checks show the general public replaces their iOS device if a replacement is needed. It is not until late August or September until consumers actively hold off a purchase anticipating the new generation of iPhones or cost erosion of legacy iPhones.

    For complete details of July and insights of 3Q2020 sales, see https://report.counterpointresearch.com/posts/report_view/CountryReport/2100

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    Survey: 60% in Spain to Cut Budget for Next Smartphone https://www.counterpointresearch.com/survey-60-in-spain-to-cut-budget-for-next-smartphone/ Mon, 21 Sep 2020 13:33:35 +0000 https://www.counterpointresearch.com/?p=33416 45% of the respondents will cut down their budget for the next smartphone by more than 10%. Nearly 60% of […]

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    45% of the respondents will cut down their budget for the next smartphone by more than 10%.

    Nearly 60% of the respondents will wait longer than usual for the next smartphone purchase.

    Smartphone manufacturer origin does not hold significance for nearly 70% of the respondents.


    San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – September 21, 2020

    In Spain, the concern over COVID-19 has pushed people to cut their budget for the next smartphone, according to the latest Consumer Lens study conducted by Counterpoint Research, which also finds that many have been forced to put on hold their next smartphone purchase. However, the origin of the smartphone is not much of a concern when making the purchase decision.

    In the survey, 60% of the respondents said they would cut their budget for the next smartphone purchase. Out of these, 73% will cut their budget by more than 10%. In terms of the price bracket for future smartphone purchases, 49% of the respondents with a budget of $271 or above plan to slash it by more than 10%. This pattern is similar across genders. Nearly 70% of the respondents from the 25-34 age bracket plan to cut their next smartphone purchase budget, which is the highest proportion among all age groups.

    Commenting on this trend, Counterpoint Research Associate Arushi Chawla said, “The unforeseen longer stay of COVID-19 has impacted the spending behavior of respondents in many ways. Spending on smartphones, which takes a prominent place in people’s lives, has also been impacted. The pandemic has created uncertainty over future income, making people spend mainly on essential goods. This has not only forced people to cut their next smartphone purchase budget but also pushed them to put off their plan for the next purchase.”

    Chawla added, “Nearly 60% of the respondents in Spain will be postponing their plan for the next smartphone purchase due to COVID-19. Female respondents are more concerned about the ongoing pandemic than men. This makes them the dominant category when it comes to putting plans for the next smartphone purchase on hold. This also means more females opting for a contactless mode as their next smartphone purchase location.”

    Impact of COVID-19 on Smartphone Purchase Intentions

    Counterpoint Research-Impact of COVID-19 on Smartphone Purchase Intentions..

    Source: Consumer Lens, Counterpoint Research

    Coming to the awareness of smartphone manufacturing location against the COVID-19 backdrop, the survey reveals:

    • Barely a quarter of the respondents are aware of the smartphone manufacturing location in detail.
    • The origin of the smartphone manufacturer does not hold much significance for the majority of respondents.
    • Half of the respondents will remain indifferent if they come to know that the smartphone is manufactured in China.

    Commenting on the issue, Counterpoint Research Senior Analyst Pavel Naiya said, “Men have more awareness about smartphone manufacturing origin than women. However, females dominate when it comes to those respondents who are unaware of the location but would like to know it in the future. COVID-19 has forced people in Spain to change their smartphone purchase preferences in terms of time and budget, but not in terms of manufacturing origin.”

    Naiya added, “Apple, Samsung, Huawei, and Xiaomi are the top brands in Spain. Battery, price, and internal memory are the key features that respondents look up when making a smartphone purchase.”

    If you are interested in a detailed analysis of smartphone consumer behavior, it is available for the subscribers on our research portal.


    The Consumer Lens survey was conducted among smartphone users in seven countries during May-June 2020. The consumer opinions are drawn from a heterogeneous group in terms of age, monthly income, gender, and occupation. Data points abided with all the logical checks throughout the analysis section and gave a better representation of the ongoing smartphone trends and future purchase intentions.


    Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects, and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in the high-tech industry.

    Analyst Contacts:

    Pavel Naiya

    Arushi Chawla

    Feel free to contact us at press(at)counterpointresearch.com for further questions regarding our latest in-depth research and insights, or press enquiries.

    Related Posts

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    NVIDIA-Arm deal, if successful, will bring dramatic changes to industry https://www.counterpointresearch.com/nvidia-arm-deal/ Fri, 18 Sep 2020 10:48:02 +0000 https://www.counterpointresearch.com/?p=33378 US chip company NVIDIA’s $40-billion acquisition of UK-based chip designer Arm from Japan’s SoftBank Group, which was announced on September […]

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    US chip company NVIDIA’s $40-billion acquisition of UK-based chip designer Arm from Japan’s SoftBank Group, which was announced on September 13, comes at a time when AI computing, networking and data processing are more important than ever. This acquisition has a big possibility of pushing a dramatic change or improvement in IoT, PC and server architecture. 

    Since both NVIDIA and Arm are leading vendors in their own territories, the complementary synergies between the two are expected to make the deal a win-win for both. At the same time, the deal will create more concern for other stakeholders.

    Arm is a company that almost monopolizes the SoC core design in several segments. However, Arm is not involved in chip manufacturing or creates any chip with its own brand. Instead, it licenses IP, instruction set architecture (ISA) and other technologies to other chip companies, allowing them to design their own unique SoCs for a variety of applications. In the past, the low power consumption capability of Arm’s IP allowed it to grow and dominate in the mobile device market. Currently, almost all mobile phones, tablets and IoT devices use Arm technology. In recent years, it has gradually expanded to high-speed computing devices such as PCs, and data centers.

    NVIDIA specializes in graphics processing technology and is one of the leading GPU vendors. Thanks to the fast-growing demand for AI and high performance of its GPU, Nvidia has become one of the leading vendors both in edge computing and data center in the past few years.

    While NVIDIA and Arm have quite complementary businesses, they also share common goals, such as the server and data center businesses. By combining Nvidia’s AI capability and Arm’s complete ecosystem for edge devices, NVIDIA hopes to empower more edge devices, including smartphones, PCs, self-driving cars, robots and 5G devices, to be able to process inference.

    • From the perspective of the server market, Arm plans to launch a series of Neoverse microarchitectures in an attempt to expand its service beyond the mobile device. However, Arm’s progress in the server segment remains slow because of its weakness in AI. Therefore, the acquisition by NVIDIA will accelerate the use of Arm chips in data center.
    • From the perspective of the computer market, Arm recently introduced the Cortex X1 CPU core, which is designed for flagship smartphones and other high-performance mobile devices. It is expected that NVIDIA will support Arm to design powerful cores for x86 platforms. However, this is something that some of the competitors will not like. A new Arm core with higher computing power will also shorten the gap with existing x86 CPU vendors.
    • From the perspective of the mobile phone market, NVIDIA is unlikely to launch its own smartphone APs. NVIDIA believes that it is a software company. Therefore, licensing could be more in line with its current direction. Just as Arm’s licensing business, NVIDIA could license its GPU and AI cores to other SoC vendors, along with other Arm CPU cores. This will enhance the image processing and AI capabilities of Android phones and shorten the gap with Apple’s SoC. Also, this will enhance the competitiveness of Arm’s IP.

    The AIoT market is undoubtedly the initial target of NVIDIA-Arm merger, but the data center is the final. NVIDIA’s AI started in the cloud and is moving quickly to the edge, such as warehouses, hospitals, streets and airports. With the deployment of AI capability moving from the cloud to edge, smart sensors connected to AI computers can improve the user experience and save cost. These small autonomous machines will compute continuously and connect to powerful cloud data centers in every corner of the world.

    However, NVIDIA’s merger with Arm may run into hurdles, such as opposition from other related companies and antitrust examination in different regions.

    • Arm’s existing partners may switch to RISC-V, which is a new free and open-source architecture, if they feel that Arm’s integrity and independence are being compromised. Counterpoint believes that although the RISC-V Foundation already has many important players and RISC-V is already being used to design MCU, the gap between it and Arm is still quite large and will take time to build comprehensive ecosystem. Therefore, it is almost impossible to replace Arm on mobile phones in the next five years. In addition, RISC-V will still face the same problem as Arm — how to remain in a neutral position while keeping business growth.
    • According to NVIDIA, the proposed transaction is subject to customary closing conditions, including the receipt of regulatory approvals from the US, UK, China and the European Union. The transaction is expected to be completed in around 18 months. The uncertainties of this deal mostly stem from the current trade dispute between the US and China. As the deal will change the jurisdiction of Arm, from the UK and Japan to the US, the Chinese approval to the transaction becomes important. In addition, Arm is still locked in a dispute over the control of its Chinese subsidiary. Counterpoint believes NVIDIA will need to have more communication as well as guarantees and concessions to resolve the issue. The good news is that NVIDIA has a lot of investment and partners in China, making it easier to get approvals. 


    Through this acquisition, NVIDIA wants to enhance the AI capabilities of Arm-based IoT endpoints to achieve smart devices everywhere, while continuing to consolidate its position in the data center segment. However, the acquisition is still challenging and unpredictable and may take longer than expected to produce the desired result.

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    Is Apple One a bargain? It’s complicated https://www.counterpointresearch.com/apple-one-bargain-complicated/ Thu, 17 Sep 2020 12:25:55 +0000 https://www.counterpointresearch.com/?p=33402 The hard numbers confirm this. According to Counterpoint Research, Apple Music had an estimated 68 million users by the end of 2019. […]

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    The hard numbers confirm this. According to Counterpoint Research, Apple Music had an estimated 68 million users by the end of 2019. Barclays Analysts estimated that the company had 170 million paid iCloud customers in 2018. Comparatively, Apple had just 10 million subscribers as of February 2020 for Apple TV Plus — many of whom were riding along on the free one-year trial that Apple offers for the service, which will coincidentally start to expire for the earliest customers next month. And while estimates for Arcade are harder to come by, it’s likely far below Apple Music and iCloud.

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    Weekly Update: Global Coronavirus Impact and Implications https://www.counterpointresearch.com/coronavirus-weekly-update/ https://www.counterpointresearch.com/coronavirus-weekly-update/#disqus_thread Wed, 16 Sep 2020 19:00:44 +0000 https://www.counterpointresearch.com/?p=26439 To receive weekly updates on the COVID-19 situation and our latest research straight to your inbox, click this link to […]

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    Click here for the latest weekly updates on the impact and implication of COVID-19 situation on the Automotive industry.

    COVID-19 Week 38 Update

    Global coronavirus cases crossed the 30 million mark this week, with the epicentre gradually shifting to India. The country’s total number of officially reported cases is expected to cross that of the US next month if current rates of increase persist. Many hospitals in the worst affected regions of India have already started reporting oxygen shortages.

    The World Health Organization (WHO) said on Wednesday that worrying trends were visible in some countries before the approaching onset of winter influenza season, with hospitalisations increasing “particularly in Spain, France, Montenegro, Ukraine and some states of the US”. The WHO has asked people who fall in the high-risk category for COVID-19 to get themselves vaccinated against flu.

    The chart below shows that France and, especially, Spain are experiencing stronger second waves of infection than in the spring.

    14 Day Cumulative Cases Per 100K Population

    The race for a COVID-19 vaccine has intensified with over 150 candidates in the fray globally. AstraZeneca, which had halted its global trial for a vaccine being developed along with Oxford University after a subject in the UK reported some illness, on Saturday announced resumption of the trial following clearances from safety watchdogs. Supported by the Trump administration, many companies in the US have already started mass production of some vaccine candidates in the hope that one of them will clear the required trials. Reports say plans are being finalised to ship the vaccines within a day of getting the regulatory clearance.

    Russia and China’s efforts for a vaccine, though low on support from the global medical fraternity, are claimed to have produced positive results. Both the countries have tied up with other countries for manufacture or distribution of their vaccines.

    From the COVID economy this week, data warehousing company Snowflake made a stellar debut in the stock market on Wednesday, more than doubling its IPO price of $120 per share. The Warren Buffett-backed company has raised more than $3 billion in the largest US listing this year so far.

    With its cloud business booming, Oracle has reported 1.6% increase in its total Q1 revenue to $9.37 billion, beating estimates. The company’s unit that also houses its cloud business reported 2.1% increase in revenue to $6.95 billion.

    Amazon has announced that it will hire 100,000 more workers for full and part-time roles in the US and Canada this year to meet the spurt in demand due to the pandemic. In addition, it is also opening as many as 100 new warehouses and operations sites.

    COVID-19 Week 37 Update

    Following the expected trajectory, India on Monday overtook Brazil as the country with second highest number of total COVID-19 cases. On Wednesday, India reported 95,529 daily new cases, taking the total to 4,462,965, against Brazil’s 34,208 daily new cases and 4,199,332 total cases. However, in total deaths, India is at third position with 75,091 deaths till Wednesday against Brazil’s 128,653.

    What is more worrying is that India’s cases are rising steadily with the peak nowhere in sight. Add to this the rickety health infrastructure and densely populated areas with poor hygiene, and you have a big disaster waiting to happen.

    COVID-19 Dashboard by CSSE at JHU - Week 37 UpdateIn the race to find a vaccine for COVID-19, two of the front-runners had some discouraging news this week. On Tuesday, AstraZeneca announced that it had halted its global trial for a vaccine being developed along with Oxford University after a subject in the UK reported some illness. An independent panel will now go through the clinical trial data before giving a go-ahead to restart the trial. On Friday, Moderna said it had asked its teams to enrol more members from the minority communities for the clinical trials for its vaccine candidate, even if that meant delaying the trials.

    Commenting on the AstraZeneca trial suspension, the World Health Organization (WHO) was reported to have said such suspensions were not uncommon and that the safety of subjects was most important. Meanwhile, in an unusual move, leading vaccine developers in the US and Europe on Tuesday pledged that they won’t bow to any pressure to rush through their trials and would follow all safety and efficacy standards. AstraZeneca and Moderna participated in the pledge. All these companies were further buttressed by the US National Institutes of Health chief, who told a congressional hearing on Wednesday that there was no way to tell if a safe vaccine would be available before the November 3 presidential election, thus contradicting President Donald Trump.

    COVID-19 continues to affect the technology companies in different ways. On Tuesday, Apple announced that its annual event on September 15 would go virtual for the first time. Apple usually showcases its most important products in these events, but this time around expectations are that new versions of iPhone will miss the September 15 date.

    COVID-19 Week 36 Update

    As testing is stepped up in India, a true picture of the spread of COVID-19 pandemic in the country is emerging. And the news is certainly not good. On Sunday, India reported the biggest single day rise in coronavirus cases anywhere in the world so far. As against the previous record of 78,619 cases in the US on July 24, India reported 79,457 cases on August 30. Among the top three countries in terms of total number of cases, the top two — the US and Brazil — are now on a downward trajectory when it comes to daily new cases.

    COVID-19 Dashboard by CSSE at JHU - Week 36 Update.jpgIn the US, the White House has rejected the World Health Organization’s (WHO’s) concerns over the move to introduce a COVID-19 vaccine in the country without completing the Phase III clinical trials. A White House spokesman said the president would spare no expense to ensure that “any new vaccine maintains our own FDA’s gold standard for safety and efficacy”. Calling the WHO “corrupt”, the spokesman said the US would not join any effort led by the multilateral organization to develop and manufacture a vaccine. Meanwhile, the US Centers for Disease Control and Prevention (CDC) has reportedly asked all states to start preparations for distribution of a vaccine among high-risk categories beginning late October.

    Even as efforts are on to have a vaccine as soon as possible, existing medicines continue to get a chance to prove their efficacy. An analysis of results from seven separate global trials has revealed that steroids can lead to survival of 68% of the sickest COVID-19 patients compared to around 60% in case of those not taking steroids. Following these results, the WHO has updated its advice to include a “strong recommendation” for use of steroids in seriously ill patients.

    Technology companies are also doing their bit in the fight against COVID-19. Google and Apple have come out with a new system, Exposure Notifications Express, which makes it possible for health officials to use smartphones for contact tracing without needing an app. Under the system, officials have to submit a configuration file to Google and Apple, which then use it to set up a functionality that phone users can opt for to determine their possible proximity to any person testing positive for COVID-19.



    COVID-19 Week 35 Update

    Even as the COVID-19 cases crossed the 24-million mark globally this week, countries which had seen a spurt in cases during the initial phase of the pandemic are reporting fresh spikes. On Wednesday, Italy reported 1,367 new cases, highest in three-and-a-half months. The fresh wave in the country is being blamed on the citizens returning from vacations. South Korea reported 441 new cases on Wednesday, which is the most since March, while France reported 5,429 cases on the same day, the most since mid-April.

    Counterpoint COVID-19 Dashboard by CSSE at JHU - Week 35 UpdateMore distressing news came from Hong Kong on Monday, where researchers reported the first documented case of coronavirus re-infection. A man who had recovered from COVID-19 got infected again by a different strain after four-and-a-half months, according to the University of Hong Kong experts.

    In the US, the Centers for Disease Control and Prevention (CDC) has triggered a big controversy by stating that asymptomatic people may not need to be tested. Experts and politicians have slammed the move, with many saying it is politically motivated. National Institute of Allergy and Infectious Diseases director, Anthony Fauci, is reported to be concerned over the guidance. He fears people would be misled into believing that asymptomatic cases are not of great concern.

    In the COVID-spurred economy this week, Salesforce on Tuesday reported a 29% jump in its Q2 revenue to $5.15 billion, beating estimates. Good demand for its software for remote work has convinced the company to raise its 2021 revenue forecast to $20.7 billion-$20.8 billion from $20 billion.

    Box Inc on Wednesday said its Q2 revenue increased 11.4% to $192.3 million, beating estimates, on more customers for its online services for content management and storage, and for data security products.

    According to a KPMG survey, 80% of business leaders have accelerated their digital expansion plans, with 69% saying they are planning to reduce their office space in the short term.

    UK’s largest supermarket Tesco on Monday said it would create 16,000 new permanent jobs to service its growing online business.

    COVID-19 Week 34 Update

    India is sitting on a COVID bomb if a study by a leading chain of laboratories in the country is to be believed. Antibody tests conducted by Thyrocare across the country show that the virus has infected one in four Indians. This could potentially take the total number of cases in the country to 325 million, much higher than the government estimates.

    Concerned over some developed nations reaching deals with companies for vaccine candidates, the World Health Organization (WHO) has lashed out at this ‘vaccine nationalism’ that encourages hoarding and overlooks the interests of developing nations. The global body wants its 194 member countries to join an agreement for a ‘COVAX Global Vaccines Facility’ to share vaccine candidates with developing countries. It has set August 31 as the deadline for joining the pact.

    COVID-19 Dashboard by the CSU at JHU - Week 34 COVID-19 UpdateWith the pandemic forcing a tectonic shift in the way we live and work, investors have started betting big on the long-term success of tech companies like Apple. Their stocks and valuations have hit record highs even as the broader economy plumbs new depths.

    On Wednesday, Apple became the first listed US company with a $2-trillion stock market value. The company’s shares rose to as high as $468.65, which is equal to a market capitalization of over $2 trillion. The company’s stock has been much in demand following its impressive results for the quarter ended June 27.

    Another US company that has seen its valuation rise due to the pandemic is fintech start-up Robinhood Markets. The company, which has contributed to the surge in day trading among stuck-at-home millennials, has raised $200 million from D1 Capital Partners at a valuation of $11.2 billion in the latest funding round.

    The pandemic may have hit hard Airbnb’s main business, but it can’t stop the company from betting big on future and bringing an IPO. Airbnb on Wednesday confidentially filed for an IPO with the SEC, with the details like the number of shares on offer and the price range yet to be worked out.

    In Finland, Rovio Entertainment, known for its Angry Birds game series, has reported a 160% jump in its Q2 adjusted operating profit at euro 13.8 million on surge in demand due to the COVID-19 lockdowns.

    COVID-19 Week 33 Update

    India’s ballooning COVID-19 cases continue to bring worry to health officials and policymakers. Though the country stands third globally after the US and Brazil in terms of total number of cases, it has been leading in daily new cases since August 4, with the graph following a definite rising trajectory. On Wednesday, India reported 61,252 daily new cases, compared to 54,519 in the US and 54,923 in Brazil.

    COVID-19 Dashboard by the CSU at JHU - Week 33 COVID-19 Update

    However, the biggest news this week on the COVID-19 front came from Russia on Tuesday when President Vladimir Putin announced that his country had become the first one to approve a COVID-19 vaccine after testing it on humans for less than two months. Named ‘Sputnik V’ after the world’s first satellite, which was launched by the erstwhile Soviet Union, the vaccine is expected to enter mass production by this year-end. But experts the world over have raised an alarm over Russia’s claims on the vaccine, saying in the absence of proper data and large-scale trials the vaccine’s efficacy cannot be trusted. Russian health minister Mikhail Murashko has dubbed these concerns as “groundless”.

    Cisco has reported 9% fall in its revenue to $12.2 billion for the fourth quarter ended July 25. However, it managed to beat estimates on increased demand from the work-from-home (WFH) segment for its web security and teleconferencing solutions. But the bigger picture is not so rosy for the company. It has forecast its Q1 numbers below estimates and announced a restructuring plan as the pandemic forced its clients to hold back spending.

    World’s biggest electronics contract manufacturer and Apple supplier Foxconn has reported a better-than-expected second quarter profit of $778.54 million, with the rising demand from the WFH segment managing to offset sluggish smartphone sales.

    The pandemic has hit demand for Toshiba’s electronic devices and chip-making equipment, with the Japanese conglomerate registering its first quarterly operating loss in nearly four years. The company reported an operating loss of $118 million for the June quarter.

    China’s gaming and social media major Tencent has reported a 37% rise in its second quarter net profit at $4.8 billion, beating estimates. Though the COVID-19 pandemic hit its other entertainment businesses, it pushed the demand for the company’s video games.


    COVID-19 Week 32 Update

    The total number of deaths due to the COVID-19 pandemic crossed the 700,000 mark on Wednesday with the US alone accounting for more than 160,000 deaths. However, in terms of fresh daily deaths, Brazil (1,322) nudged past the US (1,311) on Wednesday. In daily new cases, India took the top slot with 56,626 cases. However the US data is becoming increasingly dubious following the US administration’s insistence on taking over some aspects of data reporting from the US CDC.

    New Daily Cases by Country Since March 1st - COVID-19 Week 32 UpdateA big casualty of COVID-19 has been the education of children the world over. On Tuesday, United Nations (UN) Secretary-General Antonio Guterres warned that the world was facing a “generational catastrophe” due to shutting down of schools. According to UN calculations, schools remained closed in around 160 countries in mid-July, impacting more than 1 billion students, with around 40 million missing out on pre-school. This is accentuating the digital divide where relatively affluent children can often use PCs, tablets or smartphones to reach online learning resources, but many in families with marginal incomes cannot.

    From the COVID-created economy this week, Teladoc Health announced on Wednesday that it would buy chronic care provider Livongo Health in a $18.5-billion deal, spurred by the boom in online medical care due to coronavirus.

    Sony reported a marginal 1.1% fall in profit for the June quarter, surprising markets and analysts. The company registered a profit of around $2.15 billion riding the demand for its gaming products, which managed to neutralize the impact of profit drop in other business segments.

    Another Japanese major, Nintendo, has reported an operating profit of $1.37 billion for the June quarter on the soaring demand for its Switch device and popular title ‘Animal Crossing: New Horizons’.

    On the other hand, Japan’s Sharp reported 38% drop in its June-quarter operating profit at $85.2 million, beating analyst estimates. The pandemic has affected its sales of electronic devices and office printers.

    Many other companies have reported earnings with several high profile component players reporting slightly better results than they expected. They continue to expect the 2H to be down slightly (c5% Y/Y) with smartphones and compute a bit better due to WFH/distance learning. But automotive likely a bit worse. Macro conditions cloud the perspective as the full impacts on unemployment are not yet visible due to job retention/furlough schemes that are beginning to wind down in some countries, leading companies to make people redundant in increasing numbers.

    COVID-19 seems to have shown the way forward to the newspaper industry. The New York Times’ revenues from its digital business overtook that of the legacy print segment in the second quarter for the first time in its history.

    COVID-19 Week 31 Update

    COVID-19 has tightened its grip across countries with the total number of cases crossing the grim milestone of 17 million. It took just three days for the cases to rise from 16 million to 17 million.

    Sum of New Daily Cases by Continents Since March 1st - COVID19 Update - Week 31In another grim figure, COVID-19 deaths in the US crossed the 150,000 mark this week. This is around quarter of the global number and higher than any other country. Meanwhile, President Donald Trump’s security adviser Robert O’Brien has tested positive for the virus, becoming the country’s highest-ranking official to test positive so far.

    However, official statistics for the US have come into doubt now that the White House has effectively taken over reporting data from the CDC. US data was always complex due to multiple agencies across the states having a hand in compiling the statistics. However, there is now the shadow of political interference to further muddy the water.

    In India, after last week’s surveillance study report which implied at least 6.6 million cases in Delhi, India’s most populous city, a similar report came this week for Mumbai, the second most populous city. According to the report, around half of the population in city’s slums is carrying the virus. To understand the scale here, Mumbai has a total population of around 12 million with 65% of it living in slums.

    14 Day Cumulative Cases per 100000 population - COVID19 Update - Week 31This grim picture of galloping cases and no concrete cure has forced Google to extend work-from-home (WFH) for its employees till June next year. Others are expected to follow suit. The company was planning to reopen its offices globally in June. Similarly, the world’s biggest technology and gadget show CES, which is held in Las Vegas every January, will be online-only next year, the Consumer Technology Association has decided.

    Samsung’s operating profit increased 23% in Q2 on good sales of DRAM memory chips to online providers. The company’s chip arm’s operating profit soared around 60%. Samsung forecasts that the global demand for smartphones and consumer electronics will recover in the second half of the year.

    The COVID-19 lockdowns did hit Verizon’s store sales in Q2, but they also pushed the demand for the company’s internet services, adding more phone subscribers. As a result, the fall in total operating revenue was contained at 5.1%.

    Music and video streaming apps have been among the biggest beneficiaries of the COVID-imposed lockdowns. But the spurt in subscribers didn’t help much in pushing up Spotify’s Q2 numbers. Reason: The pandemic also kept the advertisers away! Revenue from advertisements fell over 20% during the quarter.

    However, this was not the case with online payments processor PayPal. The company reported an 86% increase in its Q2 profit. It processed $222 billion over the quarter, which is 30% more than the same period last year.

    COVID-19 Week 30 Update

    COVID-19 cases crossed the 15-million mark globally this week, with South Africa replacing Peru among the top five worst affected countries.

    COVID-19 Dashboard by the Center for Systems Science and Engineering (CSSE) at JHU - Week 30 COVID-19 UpdateBrazil reported a record number of daily new cases on July 23 at 67,860. The World Health Organization (WHO) had on Friday predicted a plateauing of the country’s graph. Meanwhile, Brazil President Jair Bolsonaro on Wednesday tested positive for the third time since July 7, when he was forced to go into self-isolation at his official residence. Bolsonaro had been opposing measures to curb the pandemic, including wearing of face masks.

    India also reported a record number of new cases on the same day, at 45,720. However, new research suggests that almost a quarter of Delhi’s 29 million residents may have had COVID-19. Among a random sample of 20,000 Delhi residents, antibodies were found in 23.5% of the tests. This would imply at least 6.6 million cases in the city – vastly more than the official 124,000 cases.

    The number of cases in the US continue to accelerate. They are likely to surpass the 4-million mark by Friday, meaning it will have taken just 16 days to add a million cases; the previous million took 27 days. Only Chile has more official cases per capita than the US.

    Daily New Cases by Selected Country - Week 30 COVID-19 updateLooked at by continent, the Americas continue to dominate the viral outbreak picture. Asia is also rising fast – with much of this being accounted for by India. Africa seems relatively unaffected, but the data from South Africa points to the likely level of infections being much higher than officially reported. South Africa had 60% more deaths from “natural causes” than normal, indicating that many of these could have been related to COVID-19, which would imply a much higher number than that officially reported.

    Sum of New Daily Cases by Continent - Week 30 COVID-19 UpdateAs was being predicted in media reports, The Lancet on Monday reported positive results from the trials conducted by AstraZeneca and Oxford University for a vaccine candidate. Called AZD1222, the vaccine was able to produce an immune response in early-stage trials. The WHO had earlier described it as the leading candidate for a vaccine. However, on Wednesday, the global body added a note of caution, saying the world would have to wait till early 2021 for any vaccine to hit the market.

    COVID-19 continues to impact the balance sheets of technology companies. On Wednesday, Microsoft reported 13% increase in its fourth quarter revenue at $38 billion. This increase came on the back of 14% rise in revenue from the sale of its products for PCs and Xboxes. Similarly, the company’s cloud computing arm, Azure, reported around 50% jump in sales, pushing the overall revenue of Microsoft’s Intelligent Cloud segment by 17% to $13.4 billion. On the other hand, COVID-19 negatively impacted Microsoft’s professional networking site LinkedIn’s numbers, thanks to a weak job market.

    International Business Machines (IBM), a Microsoft rival, on Monday reported that revenues at its cloud business increased 30% to $6.3 billion in the second quarter.

    Logitech International said on Monday its non-GAAP operating income had increased by over 75% in its first quarter, riding on the rising demand for video conferencing products, webcams and headsets.

    On the deal street, Norway’s Adevinta will buy eBay’s classified ads business for $9.2 billion, betting on increased traffic at digital marketplaces.

    COVID-19 Update Week 29

    Among the top five countries by total number of COVID-19 cases, three — Brazil, Russia and Peru — have followed a downward or plateauing graph for daily new cases, for the past couple of weeks (see chart). But in the case of Brazil (daily new cases at 39,705 on July 15) and Peru (3,857), we will have to wait before reaching a certain conclusion, mainly due to inadequate testing in the two Latin American countries. Russia’s graph (6,422) displays a definite downward trajectory after reaching a peak on May 11 (11,656) while the United States (71,750), India (32,682) and Mexico (7,051) continue their journey upwards.

    Counterpoint 14 Day Cumulative Cases per 100,000 PopulationTwo pieces of heartening news on the COVID-19 battlefront came last week, with financial markets across the world also acknowledging it. On Tuesday, US-based company Moderna announced that it was planning to start a late-stage clinical trial around July 27 for its vaccine candidate. In its early-stage study, the candidate showed it was safe and managed to provoke immune responses in all the 45 volunteers.

    In the other good news, The Lancet reported that it would publish on Monday the Phase I clinical trial data on a COVID-19 vaccine candidate being developed by British-Swedish company AstraZeneca and Oxford University. This candidate has already reached the Phase III trial stage in Brazil. Media reports say the data to be released on Monday will have “positive news”.  World Health Organization (WHO) chief scientist said in June that this vaccine was probably the world’s leading candidate.

    In an indication that demand for products like smartphones will take time to return even after recovery from the pandemic is achieved, Counterpoint’s early data for June suggest smartphone sell-in remained depressed in China, down almost 10% YoY. This despite China being largely free from many of the fears and restrictions dogging other global markets. As if to underscore the this anomaly, shipments to other regions including North America and Europe have bounced back to similar or even better levels than a year ago despite more severe and long-lasting restrictions caused by the pandemic. How sustained these will be in the face of growing unease at the situation in North America and renewed flare-ups in parts of Europe, remains to be seen.

    Elsewhere in the smartphone market, a Reuters report said on Monday that Foxconn was planning to invest up to $1 billion to expand a factory in southern India where it assembles Apple iPhones. The report lists COVID-19 as one of the reasons for the “shift” from China to India.

    The work-from-home (WFH) segment continues to attract corporate attention. India’s Bharti Airtel and Verizon Communications Inc’s BlueJeans have come together to launch a business-focused video conferencing tool. Airtel BlueJeans will be free for three months and store its data in India, according to Bharti Airtel CEO (India and South Asia) Gopal Vittal.

    Google said on Wednesday that Gmail’s business customers would now be able to edit documents without leaving the e-mail service. The company has been eyeing for long the segment dominated by Microsoft Office.

    With WFH, there is another activity that has increased at some homes due to COVID-19. The United Kingdom saw an unexpected rise in its June inflation, thanks in part to the rising prices of gaming consoles.

    COVID-19 Update Week 28

    As testing is stepped up in emerging economies and hitherto undetected cases enter the official records, the order is changing in the charts tracking the pandemic. On Monday, India overtook Russia to become the country with the world’s third-highest number of COVID-19 cases at around 700,000. The United States (3,000,000+) and Brazil (1,700,000+) take the first and second spots. Globally, the total cases crossed the 12-million mark on Thursday.

    Countepoint daily new cases by selected countries since March 1st, unsmoothened

    A study by researchers from the Massachusetts Institute of Technology (MIT) [find here] predicts that India will hit 287,000 cases per day by early 2021 if no vaccine or medicine is developed by then.

    A glimmer of hope came from Mumbai’s Dharavi, Asia’s largest slum, on Tuesday when it reported just one fresh case. Though the number went up to three on Wednesday, it goes far to prove that if authorities get going there is no mountain that can’t be scaled.

    Elsewhere, US top infectious diseases expert Anthony Fauci has warned that the country is still “knee-deep” in its first wave of infections and that the number of cases had never reached a satisfactory baseline before the current resurgence.

    Counterpoint Sum of New Daily Cases by Continent Since March 1stHowever, a starker piece of information came from the World Health Organization (WHO) on Tuesday, which admitted to an “emerging evidence” that COVID-19 could spread by air beyond the two-metre distance that the global body had been asking people to maintain. The WHO is expecting results in around 10 days from the clinical trials it is conducting for possible drugs to be used for treatment of COVID-19 patients.

    The weakness in the global economy due to the pandemic is expected to reflect in the Q2 numbers (we could as well call it the ‘Covid quarter’) put out by the companies as the earnings season gets underway. But the companies catering to the work-from-home (WFH) economy that COVID-19 has given rise to are set to beat the trend. On Tuesday, Samsung Electronics forecast a 23% rise in its second-quarter operating profit, thanks to the increasing chip sales to data centres. The good numbers from this segment were able to offset weak demand for Samsung’s other products, like smartphones.

    In the Philippines, broadband service provider Converge ICT Solutions on Friday filed for an IPO of around $725 million on the local bourse, riding the increase in demand for broadband from the WFH and e-commerce segments.

    In Africa, Loon, an arm of Google’s parent Alphabet, on Wednesday started offering the world’s first commercial 4G internet using balloons to villagers in Kenya’s remote regions. The floating base stations cover about a hundred times the area of a traditional cellphone tower. The company admits it is getting more enquiries about this service from operators and governments ever since the pandemic started.

    COVID-19 Update Week 27

    The US and Brazil continue to vie for the lead in ‘most daily cases’. While Brazil has been on a steadily increasing trend, the US had seemed to be getting the outbreak under control. This was the case until lockdowns started to be eased in mid-May. In states that had been relatively lightly hit, the virus immediately flared-up, even while previously badly hit areas, like New York, continued to moderate. Now the trend is accelerating and the US is recording new record daily highs. On a weekly granularity that smooths some of the daily fluctuations, the US is now recording an average case count of more than double the level in mid-June.

    Sum of new cases - COVID weekly update week 27Brazil is the worst representative of a broader outbreak in Latin America, with most countries in the region suffering significant impacts from the virus.

    The International Monetary Fund (IMF) predicts that Latin American economies will suffer most among all global regions; it expects the region’s economy to shrink by 9.4% this year. It’s outlook for 2021 is for only a moderate recovery. Latin America has endured a number of years of below par economic growth, but the only time in recent history that has seen a economic contraction on the level currently being forecast, was in the early 1980s. Then, the convulsions caused by several countries defaulting on their foreign debts, caused widespread political upheavals.

    The consequences of the COVID-19 pandemic on the personal finances of individuals across the region will potentially lead to increased anger at the poor handling of the viral outbreak; Jair Bolsonaro in Brazil being the most egregious case. The anger may then lead to changes in leadership, although elections are not due in Brazil and Mexico for several years. Either way, the outlook for the region is bleak. For more detail on Counterpoint’s forecast for the mobile device markets in Latin America, please contact us.

    Other countries and regions causing concern include South Africa and India. South Africa, like India, had imposed a strict lockdown. It has now started to ease the restrictions, but the outbreak is responding by showing sharp increases.

    India is showing a similar pattern – putting a strain on its already overburdened health system. India has the fourth largest number of cases globally – closing in on Russia’s number; though we believe Russia’s official case number is highly manipulated.

    Sum of new daily cases by continent since March 1st - COVID weekly update week 27COVID-19 Update Week 26

    As we have been highlighting for several weeks, Latin America and particularly Brazil, has become the epicenter of the COVID-19 outbreak. The USA too is experiencing a sharp rise in cases. The data in the following chart shows the sum of new daily cases. It is unsmoothed hence the rapid oscillations day to day, but the trajectory is clear. Europe, which was the center of the pandemic in March and early April, has largely brought the outbreak under control, although the level of control is fragile and likely to suffer some recurrences over the coming weeks.

    The USA was the next epicenter – with New York state a particular concern. However the USA tried to move quickly towards reopening and, in some states, had not fully locked down in the first place. These states are now seeing rapid increases in the viral outbreak.

    But even the USA is being overtaken by Brazil in terms of daily new cases and the wider Latin America region seeing a large spike in cases, with 18th June recording a new daily high for any region with almost 85,000 new cases. However, as we’ve said from the outset, the level of testing is likely insufficient to reveal the true extent of the outbreak.

    Counterpoint - Sum of new daily cases by continents since March 1st - Week 26 Update

    Daily new cases in India are also on the rise. For several weeks, the number of official new cases seemed to be oddly consistent day after day. However that trend has now broken to the upside – with an average of over 15,000 daily new cases in the last week, compared to fewer than 10,000 in the first week of June.

    The US and India are two of the three largest smartphone markets globally. In both countries lockdowns are easing and we’re seeing the smartphone markets returning to growth. But both markets are at risk of renewed restrictions on freedom of movement, though returns to full lockdowns remains unlikely.

    Counterpoint - Weekly average of daily new cases by countries since March 1st - Week 26 Update

    Jobless claims likely to surge

    Many of the financial support packages implemented to help companies furlough workers are likely to come to an end over the coming weeks and months. These schemes served to forestall widespread redundancies in many countries. As these financial props come to an end, it will inevitably lead to a sharp rise in redundancies as companies seek to align their cost bases to much lower revenue run rates.

    The US had few such packages which led to the sharp rise in jobless claims over the last two months. This has continued with an additional almost 1.5 million new claims in the last week. The unemployment rate in the US is running at over 13%. While some employers have started hiring again, others are continuing to make layoffs at roughly the same rate.

    Now, we expect the waves of redundancies seen in the US to start occurring in other countries. Qantas, the Australian airline has announced 6000 lay-offs – adding to 10s of thousands of other travel-related job cuts.

    Unemployment is usually a lagging indicator in recessionary times. Given the severity of the economic downturn caused by coronavirus, the response of the unemployment rate may be much sharper than we’ve seen in previous recessions. Unemployment always impacts consumer confidence and will likely therefore dampen any recovery in sales as lockdowns continue to ease.

    COVID-19 Update Week 25

    China is trying to contain a flare up of new cases in Beijing – which has caused a partial tightening of restrictions in some areas of the city. This is raising concerns about the potential for a second wave of infections. However the first wave is still gathering pace in most of the world.

    COVID-19 Dashboard by CSSE at JHU - Week 25 Update
    Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

    The total number of official cases has risen by almost exactly one million in the last week, with Brazil on course to surpass 1 million cases within a few days. This is very likely a gross underestimation of the actual situation in Brazil following President Bolsonaro’s calamitous handling of the outbreak.

    New Daily Cases by Country since March 1st - Week 26 Update
    Source: Data from European Centre for Disease Prevention and Control, Counterpoint Research

    Beyond Brazil, which is now the new epicenter of the outbreak, we’re seeing significant increases in cases in several states in the USA that had moved away from lockdowns around the middle of May. States seeing record daily increases in infections include Florida, Arizona, Texas, Oklahoma, Nevada and Oregon. After bringing its rate of infection growth down from its peak, the US has settled into a pattern of averaging over 20,000 new cases per day – while there are fluctuations on a day to day basis, taken over a period of seven days, the trend is flat.

    India, which is also relaxing its lockdowns, is now seeing new cases moving higher, although the official statistics for India still look strange with reported daily new cases within a very tight range. This may simply be a function of the availability of testing, rather than a specific effort to manipulate the statistics, such as we have seen in Russia. But this notwithstanding, the trend in India is upward. This is also the case in neighbouring Pakistan and Bangladesh. Indonesia has also seen its highest level of new daily cases in the last few days.

    Sum of New Daily Cases by Continent Since March 1st - Week 25 Update
    Source: data from European Centre for Disease Prevention and Control, Counterpoint Research

    Many politicians have contracted COVID-19 over the last few months – notably the UK prime minister, Boris Johnson. There are now several more senior politicians either with confirmed infections or self-isolating. These include the president of Argentina – a country that has seen several cases among politicians. The president of Honduras has been admitted to hospital with pneumonia linked to coronavirus. And in central Asia, the national leader of Kazakhstan has tested positive for the virus.

    With infection levels continuing to climb in many markets around the world, should we therefore expect the imposition of new restrictions on movement and the closure of shops again?  We currently think that this is unlikely. Countries have to balance the need to protect the public with the pressing economic reality that businesses cannot return to any kind of normalcy with lockdowns in place, crippling output and constraining wages or preventing people from earning at all. This is especially acute among informal workers that make up the majority of workforces in many emerging economies. The threat from malnutrition and other diseases of poverty is likely greater than from COVID-19 itself. The new normal may be having to live with COVID-19 as a constant threat, or frequent feature of the disease landscape of the world.

    COVID-19 Update Week 24

    The USA has surpassed 2 million confirmed cases. A grim statistic, but at the population level it is not worse than several other countries. As the US eases its lockdown measures across the nation, we are monitoring the viral response. The US is off its highs of daily new cases – seen in late April, but the rate of infection has not slowed much for several weeks and continues to run at around 20,000 new cases per day.

    Counterpoint COVID19 Dashboard by CSSE at JHU - Week 24 Update
    Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

    Brazil stopped reporting official case numbers and deaths last weekend. But its supreme court has ordered the restoration of reporting. It’s not a surprise that the Brazilian government wanted to supress the information, because it is so bad. Brazil has cemented its position as the second worst affected country after the USA. The real infection rate in Brazil is likely far higher – and could exceed that of the USA, based on analysis from the University of Pelotas.

    Counterpoint Daily New Cases per Thousand Population After Countries Reached 100 Cases per Day - Counterpoint - Week 24 Update
    Source: Data from European Centre for Disease Prevention and Control, Counterpoint Research

    However Brazil is not the only country seeing cases rise. Mexico has reported its highest daily rise in cases within the last few days. Also of concern is India, which had observed one of the world’s most severe lockdowns. However, it is progressively easing the lockdowns despite a high levels of viral transmission in the country. Like Brazil, India has limited capacity for testing, so the official figures likely under-represent the true picture of infection levels in the country. The data from India is also strange in that the total of daily new cases has been consistent, a few cases below 10,000 for five days in a row. This looks suspiciously like data is being manipulated. Similar patterns were seen in Russia, which has been manipulating its data.

    Irrespective of individual country anomalies, the pattern of new daily cases is far from flattening, it is actually getting steeper; every day since May 28th has seen more than 100,000 new daily cases globally.

    Counterpoint New Daily Cases by Countries Since March 31st - Counterpoint - Week 24 Update
    Source: Data from European Centre for Disease Prevention and Control, Counterpoint Research

    Economic Impact

    The impacts, both direct and indirect, are seen in economic data that continues to show the world slipping into a deep recession. The OECD published its forecast earlier this week and it makes for sobering reading. The OECD has outlined two scenarios – the first being a deep recession followed by a slow return to growth – a so-called U-shaped recovery. The second scenario factors-in the potential impact of second wave of coronavirus infections, that may emerge in the latter part of 2020 and in to 2021; fall and winter in the Northern hemisphere.

    Counterpoint Research A Collapse Followed by a Slow Recovery - Counterpoint - Week 24 Update
    Source: OECD 2020

    Despite the dire economic data, we continue to believe the smartphone market is relatively resilient compared to many industries. Consumers rely heavily on their mobile devices for information and entertainment, however they may delay upgrading to a new model when economic uncertainty is high. This is most likely to disproportionately impact low-end devices – those favored by consumers on marginal incomes – as they are the ones most likely to find their jobs impacted by the economic downturn.

    Some updates from companies in the smartphone supply chain indicate less negative outlooks than many fear. Some of this is likely due to supply issues resolving, but there are also positive indicators connected with OEM demand as shops reopen. We will continue to monitor these modest green shoots because we expect they will move to more solid indicators of demand recovery.

    COVID-19 Update Week 23

    The focus of the pandemic in Latin America, especially Brazil, continues to gather pace. Recent analysis by the University of Pelotas suggests the real rate of infection is seven times higher than the official rate. We expect the situation in Brazil will continue to worsen for some time as lockdowns have been relatively poorly observed, and even those that have been, are being relaxed. Furthermore, the lack of widespread testing makes it impossible to assess at what stage the infection is at. However, notwithstanding that, if the actual caseload is seven times the official number, it would imply the true figures of those infected in Brazil could be almost double that of the USA.

    Counterpoint Sum of New Daily Cases by Continent Since March 1st Week 23 UpdateUnglobalization

    The coronavirus pandemic has contributed to a trend we’ve been seeing develop over the past several years – that of a gradual weakening, and in some cases a reversal, of globalization.

    China arose to become the workshop of the world over the last three decades. This was especially true in the smartphone ecosystem where the vast majority of smartphones have historically been manufactured in China – mostly in and around Shenzhen.

    The China-US trade dispute has accelerated focus on the location of manufacture as some OEMs fear that any escalation in the tussle between the two countries will risk their ability to export goods.

    Other self-interested projects, such as Brexit, which is driving a wedge between the UK and the rest of the EU, is further fracturing the fragile stability in global trade.

    Now COVID-19 is adding new pressures to international divisions that were already evident. The fact that the Chinese government seemed to supress initial information about the novel coronavirus, potentially missing opportunities to contain it before it became an international problem, has harmed China’s perception around the world. And the extent to which various industry sectors are exposed to fluctuations in supply is more evident now than it was before.

    As markets try to gradually reopen following the pandemic, it is unlikely that we return exactly to the way things were before the virus outbreak. Travel to develop new products was curtailed during the worst phase of the outbreak, leading to delays in product launches. It is probable that travel continues to be restricted in various ways. Immigration for work will be increasingly constrained as governments impose limits on visa grants – often in response to those imposed by others.

    National governments have tended to become more nationalistic – favouring local players, many of whom they will have had to prop-up with crisis financing – this again will hurt international trade. In India, there has been a backlash against Chinese applications. This has spawned a rise in apps that target Chinese apps for removal from devices, though these apps have themselves run into problems.

    In the telecoms sector, Huawei was already under suspicion in the US, Oceania, India and parts of Europe as a vector for Chinese espionage. The US has been lobbying governments to ban Huawei from critical telecoms infrastructure. The responses to COVID-19 and other developments in China, for example the pressure on Hong Kong, are leading governments to look again at previous decisions on Huawei, potentially leading to reducing its potential involvement.

    The US is also piling-on pressure by extending its year-old inclusion of Huawei on its ‘entity list’. The new extension will effectively prevent Huawei from using TSMC as a foundry for its Hisilicon-branded chipsets. We write about it in detail here.

    And TSMC is making strategic investments to build new fabs in the USA, something it hasn’t done before. This is no knee-jerk reaction however; decisions this big are years in the making.

    Nevertheless, it does point to a new trend that we expect to see post-COVID-19 – more diversified supply chains. Instead of relying on few suppliers and geographic locations, we expect manufacturers to develop a broader web of suppliers. The net result will be greater complexity, possibly slower development and slightly higher costs, but more resilience.

    COVID-19 Update Week 22

    Little evidence showing a slowdown in new cases since last week. Over 700,000 new cases have been added to the total in the last seven days. Global official deaths have now exceeded a third of a million. However this total is likely a significant underestimate. For example, the official UK total is 37 thousand deaths. However deaths in which coronavirus was a likely cause of death, but no testing was carried out to confirm it, is closer to 70,000.

    COVID-19 Dashboard by CSSE at JHU - Week 22 UpdateNevertheless, new cases are continuing to moderate in Europe and North America, with the focus shifting more and more to Latin America, as we identified in last week’s update. The latest data shows this trend quite starkly.

    Sum of New Daily Cases by Continent Since March 1 - Week 22 Update

    Brazil is a large part of this rise, it now ranks second globally in terms of cases – and this despite a lack of testing, so the real number is likely far higher.

    Brazil is a populous country, but accounting for the population size the following chart shows that Brazil is now leading in terms of daily new cases.

    Daily new cases per thousand population after countries reached 100 cases per day - Week 22 Update

    Our Latin America Senior Analyst, Tina Lu, summed up the situation in Brazil as follows:

    Everything is feeling quite chaotic in Brazil.  As the number of confirmed cases and deaths in Brazil continues to increase, the not poorly organized lockdown has taken a toll in the economy. The PT, the previous ruling political party, which ruled Brazil for 20 years, is asking for President Bolsonaro’s impeachment, which is bringing increased uncertainty to the country.

    Recently, the president, the state governors and some legislators agreed to work together. This truce is providing some measure of political stability that is adding confidence to the market.

    Bolsonaro was pushing for states to reopen, but currently Sao Paulo and Rio are both on lockdown until May 31st and Sao Paulo may remain locked-down through June, as this state is seeing one of the highest impacts in Brazil.

    Despite the turmoil, most smartphone production facilities are continuing to operate. All major OEMs’ factories are currently in operation, although output is around 40% to 50% of normal levels due to the need to observe strict hygiene and social distancing measures. In addition the market itself is sharply lower.

    Despite the situation, OEMs are launching new models. For example, Nokia-HMD launched the brand in Brazil with its Nokia 2.3 model.

    Channels are operating as best they can, almost all shopping malls are closed, but many have implemented store pick up.  In addition, online sales, with WhatsApp aid, is increasing, especially for large sales ticket items.

    Despite the decline in output, stores have sufficient stock to cover the reduced sales; demand having reduced more than supply.

    COVID-19 Update Week 21

    While many countries are now either beginning to ease restrictions or are planning to do so, the number of cases continues to rise. The WHO reported on 20th May, that the highest daily increase was registered on 19th May – over 105,000 new cases. The world has also reached a new milestone in the total number of infections – it has now exceeded five million. While these numbers, as always, must be seen in the context of broader availability of testing, it does indicate that the pandemic is showing no signs of abating.

    COVID-19 Dashboard by CSSE at JHU - Week 21 Update
    Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

    Of the countries that are faring worst in terms of case numbers and deaths from COVID-19, there is an emerging pattern. Those countries with populist and/or authoritarian leaders tend to do worst (US, Russia, Brazil, UK) while those with progressive, democratic (and often female) leaders are doing best (New Zealand, Germany, South Korea, Finland). It is not within the purview of Counterpoint Research to speculate about politics, but it is relevant if you see any of these markets as being critical to your business fortunes. Countries that are not coping well with the pandemic are likely to experience more severe and prolonged coronavirus outbreaks with the potential for extended periods of disruption.

    Poorest Countries Becoming Focus – Latin America Worst Hit

    As we have discussed in previous weekly updates, the impact on emerging markets is likely to be felt most strongly. This is because they don’t have healthcare systems capable of responding to a pandemic like the coronavirus. For example, Uganda has more cabinet ministers than critical care beds in hospitals.

    Brazil is a case in point. It officially has the third worse outbreak in reported numbers of cases. But testing is not widely available so the real level of infection is likely far higher – quite possibly the highest globally, with some experts in the country estimating at least three million cases.

    Brazil has a populist president, Jair Bolsonaro, who has consistently played-down the threat from the disease, urging people to defy attempts by Brazilian state authorities to maintain lockdowns and social distancing measures. Brazil has lost two health ministers since the start of the outbreak – both in disagreements with Mr Bolsonaro.

    Reports from Manaus, which is the biggest city in the Amazonas region, suggest that the healthcare system has been completely overrun. They also show the use of mass graves as the conventional burial processes are unable to cope.

    Mexico is also experiencing a rise in the level of infections, even as it begins to relax lockdowns in some municipalities. Like many emerging countries the level of testing is low, so the real situation is difficult to assess with any confidence.

    Peru is another country in Latin America that has experienced a severe outbreak. Testing of stallholders in a market in the capital Lima, showed that almost 80% were infected. And this despite Peru otherwise applying relatively sound quarantine measures. It is thought that public produce markets across the Latin America region have become significant vectors for viral spread.

    Counterpoint Sum of New Daily Cases by Continent Since March 1st - Week 21 Update
    Latin America is emerging has a coronavirus hotspot as daily new cases in Europe and North America continue to moderate (Source: European Centre for Disease Prevention and Control and Counterpoint Research)

    In our revised handset forecast, Latin America is notable because we expect it to suffer the most significant downturn of all the world’s regions. This is because the economies were already fragile and because online channels are underdeveloped relative to many other regions. In most Latin American countries, mobile handsets are not regarded as essential items and are thus unable to be sold. If you would like more details of our regularly updated forecasts, please contact your Counterpoint representative, or contact info@counterpointresearch.com.

    COVID-19 Update Week 20

    Many people are impatient to be out of lockdown. This is understandable. Lives and businesses have been put on hold. The economic disruption is likely to be long-lasting and profound.

    And the straightforward facts are that even in the most heavily impacted countries very few people have actually contracted COVID-19. This means there remains a large percentage of the population that has had no contact with the virus and has not developed immunity. So countries are therefore vulnerable to new spikes in infections, such as has been seen recently in South Korea. A vaccine, should one even be possible, is unlikely to be available widely until late 2021. So, what should we do until then?

    The disease is potentially deadly. But the vast majority of people who catch it, recover without issue. And many never knew they even had it in the first place as they were asymptomatic. Until broad scale population testing is undertaken, we won’t know for sure the exact mortality rates. However based on current data, COVID-19 has a mortality rate of between 0.5% and 1%. At 1% it would be 10x deadlier than seasonal flu. But this still means that even among those that do contract the disease, only a small number will become seriously ill. For most it is a mild disease with no long-lasting impact.

    Policy Models

    Policy responses by governments are based on modelling the direct impacts of COVID-19 – but not other impacts to the well-being of the economy or society. For example the mental health impacts of being made redundant or of businesses going bankrupt.

    The most common policy response has been a lockdown. In most cases this is done to reduce the pool of people susceptible to infection, lowering the transmission rate and easing pressure on stressed healthcare systems. But what has been the impact of different policy responses?

    Sweden did not implement a severe lockdown. It essentially asked the population to apply common-sense, to not gather in large numbers and to practice social distancing as far as possible. Its outbreak, as illustrated on the following chart, has not been significantly different than other countries that did implement more severe restrictions.

    Daily New Cases per Thousand Population After Country Reached 100 Cases per Day - Week 20 Update
    Source: Data from European Centre for Disease Prevention and Control, Counterpoint Research

    We expect that governments will be forced to continue gradually lifting the lockdowns despite the potential for infection levels to return to a pattern of growth. US states are starting to reopen. This despite the fact that, outside of New York State, infection rates were not consistently falling.

    For countries that have a much higher percentage of casual workers, less developed healthcare systems and little to no social welfare, it is likely the impact of the lockdown on people’s lives and livelihood will be more severe than the disease itself and will be difficult to continue to enforce without draconian measures or the risk of civil unrest.

    And it is likely the disease will be here to stay. It will not disappear as abruptly as it appeared. It may undergo mutations over time – most likely to a form that is less lethal.

    So life should start to move to some sort of post-COVID state – but what will that look like?

    The Hangover

    The impacts on our ways of life have been profound and there is much talk of the ‘new normal’. Twitter has told staff that are able to work from home that they may continue to do so, forever. Several other organizations, Facebook and Google for example, have implemented homeworking for some roles until later in the year, but Twitter is the first to make the change effectively permanent. It is unlikely to be the only one. Vodafone, in its results presentation highlighted that 90% of its European-based staff had switched to home working. It said that productivity had not been significantly impacted, though it did note that staff were working longer hours.

    Changes in many industries are likely to be long lasting. With even a modest increase in the numbers working remotely, the use of digital collaboration tools will increase, commuting levels decline and international travel – for both business and leisure – also likely to be permanently altered. Vodafone said it had seen a dramatic fall in roaming revenue of between 65-70% which is likely to cost it Euro 0.5Bn, although lower churn is leading to savings on connection commissions. It also experienced a rise in SMEs asking for payment delays or suspensions and large enterprises delaying projects.

    Retail has seen a strong shift to online channels. There may be some return to offline when restrictions ease, but much of the shift is likely to be permanent. Vodafone said that through March and April it saw a strong shift to digital channels.

    Changing Forecasts

    We have revised our forecasts for the year to account for more severe impacts. We now expect the smartphone market will be down 10% year over year in 2020 – driven by shifts in replacement rates and the impact of a deep and longer recession. However, we continue to see mobile communications as essential. All our consumer research has highlighted the fundamental role it plays in people’s lives; a smartphone is usually the last thing someone looks at before sleeping and the first on waking. However, for most people, buying a new smartphone is a discretionary purchase and one that can be delayed in the face of economic uncertainty. But it’s not a purchase that can be delayed indefinitely. This means the market for smartphones is likely more resilient than many others, but it is not immune from the impact of the current economic turmoil. For more details on our forecasts, please contact us directly.

    COVID-19 Update Week 19

    More financial results have confirmed the picture that was emerging from early reports. The impact of the coronavirus is hitting all companies but with wildly different levels of severity. This will play out as countries move towards a relaxation of the most severe levels of lockdown. The focus now shifts to the shape of the economic recovery.

    Economic activity rebounded in China quite quickly, but remains at a reduced level compared to where it would otherwise have been at this time of year. The initial rebound looked promising – an expectation that businesses would get back to pre-coronavirus levels. But this has not fully happened. Much of daily life remains curtailed – fewer people are eating at restaurants, using public transport, visiting shopping malls. As we consider countries that are behind China in the progress of the disease’s development and that were harder hit, for example Europe and the USA, what can we expect?


    Countries across the region are now moving toward easing the most severe restrictions. Germany, the EU’s largest economy, started to allow small shops, hardware stores and car dealerships to reopen in late April. Restaurants and hotels can reopen from May 9th. Even the Bundesliga football season can resume from late May – albeit with matches played in empty stadiums. Large gatherings may be permitted from September provided there’s no resurgence in the levels of infection.

    Italy allowed manufacturing and construction to resume earlier this week. Shops will be allowed to reopen from mid-month. Schools will not resume until September.

    France is allowing some stores to reopen from May 11th, but people are being encouraged to continue working from home until at least June.

    Spain is extending its state of emergency through May 23rd, though it is allowing people outside to take exercise.

    The UK is reviewing its options and will make announcements at the weekend. It is expected to introduce a phased relaxing of the lockdown.


    There is a patchwork of different approaches to relaxing stay-at-home orders across different US states. The US administration is anxious to get the country back to work as jobless claims in the last seven weeks have exceeded 30 million.


    India has extended its lockdown until at least May 21st. It has also introduced three zones to identify the most and least affected areas, with greater relaxations allowed in the so-called green and orange zones. However the red zones include the major economic centers such as New Delhi, Mumbai and Bangalore.

    For the above markets, we expect some level of normalcy will have been reached by June – with most stores open and people starting to return to offices, though we do not expect a full move away from increased levels of remote and home working, perhaps ever.

    This is unlikely to be a smooth resumption of economic activity. There is a high chance of new spikes in infection – especially if measures to maintain physical distancing – are not observed. This can lead to the R0 or reproduction number exceeding 1.

    Our regular chart of the rolling seven day average of new cases across several important markets highlights several concerning points:

    1. While the new cases in the US are trending lower, the pattern is not consistent – even with averaging. We also note that widely available testing is still not in place in all parts of the country, so, as with many countries, the true picture of infections is likely far higher.
    2. Russia has been included this week instead of Germany. Like many dictatorial states that like to control the news flow, Russia was slow to acknowledge that coronavirus was even a problem. But now it is officially reporting more than 10,000 new cases per day. With an economy that’s highly dependent on oil, the outlook for Russia is bleak.
    3. Brazil’s new case line continues to rise – and has now exceeded the patterns observed in the most severely impacted markets in Europe. Given the tension between President Bolsonaro and state governors, which is creating confusion in the country about how best to respond, we expect that the numbers in Brazil will continue to worsen.
    4. India – the new daily cases also continue to rise, even as the government plans some easing later this month. Should this curve continue its upward trajectory, extensions to the most severe restrictions may not occur.

    Daily New Cases After Country Reached 100 Cases Per Day Week 19 UpdateV, U or W shaped recovery?

    That the world is in the grip of a recession is not in doubt. The question is what does the future hold in general and what does this imply for the technology sector in particular?

    Economic forecasters are wrestling with the data. The most likely outcome for the global economy in the first quarter was a year over year contraction of around 1.3%. The US is thought to be running at around 12% lower than it was a year ago. Goldman Sachs estimates that the impact of a severe lockdown, such as applied in Italy, leads to a GDP decline of 25%. Even countries that successfully contained the outbreak, such as South Korea can expect a GDP decline of 10%.

    Surveys of consumers in several countries suggest that many will not rush to return to pre-coronavirus lifestyles – for example a reluctance to visit bars, restaurants and jump on aeroplanes. But as we noted in last week’s update, spending on streaming services, gaming, online retail etc, has been holding up. So any recovery will have a different complexion than the economy before the coronavirus outbreak.

    However, governments will not be able to prop-up ailing companies and furloughed employees indefinitely. This will likely lead to a rise in companies going bankrupt and employees, currently being kept in a state of suspended animation, being made redundant. This suggests the rate of unemployment in many countries will trend down or, at best, flat for many months. Unemployment is normally a lagging indicator in ‘normal’ recessions. This one is far from normal, unemployment has immediately spiked higher. Some of the casual workers that were quickly laid off, may be able to find new positions as economies rebound, but salaried worker unemployment is likely to get progressively worse for months to come – exacerbating already poor levels of consumer confidence.

    The indicators all point to a lengthy period of reduced economic activity – so a U-shaped recovery is more likely than V-shaped. And any re-emergence of coronavirus infections either later in 2020 or in early 2021, will almost certainly cause a second dip – producing a potentially even more destructive W-shaped economic pattern.

    COVID-19 Update Week 18

    Since last week, we’ve now had many more companies reporting results for 1Q as well as giving their assessments of what the future holds. Companies rarely have perfect visibility of their downstream markets, and even if they do, take care not to over or under play the risks for fear of being penalized by the financial markets. But much as a school of fish or flock of birds simultaneously change direction, insights can be gleaned by listening to their collective voice. And what we hear is: the first quarter wasn’t so bad, the second quarter will be worse. The outlook for the year is unclear, but the nearest analogue we have is the 2008/9 financial crisis, so until greater clarity emerges, we will use that as our guide.

    Economic tide recedes

    In addition, we’ve had initial GDP numbers from several countries – notably the USA that posted a fall of 4.8%, its largest contraction since the financial crisis of 2008, an end to the longest period of expansion in its history, and likely the first taste of a more severe downturn in the second quarter. The US has also now recorded 30 million jobless claims in the last six weeks.

    The US GDP number comes on the heels of China’s official GDP statistics – a drop of 6.8% – its first contraction in GDP for four decades. And although China’s economy is now gradually moving forward again, its GDP outlook for the year will be little better than 1% growth, in the best case.

    The COVID-19 wildfire continues to rage

    An update on the COVID-19 numbers. Several grim milestones have been reached this week. The world passed 3 million confirmed cases, the US alone accounting for almost a third of them and its total number of deaths, as has been widely reported, has exceeded the number of US service personnel killed in the Vietnam War. However it’s European countries that have the highest number of cases and deaths per 1000 population. But the number of confirmed cases is not the same as the real total number of cases because it is a function of the level of testing. Many emerging countries do not have the facilities to test widely, so the official numbers likely underplay the impact in many countries. This fact will become more and more apparent over the coming weeks and months.

    Counterpoint Daily New Cases After Country Reached 100 Cases Per Day - Week 18 UpdateAmong the countries that have been hardest hit so far, the picture continues to improve. South Korea that was hit early, but instituted rigorous levels of testing, and tracking and tracing, has reported no new cases on 30th April; it’s new case load has been hovering at around 10 per day for several weeks. Even countries that had severe outbreaks, such as Spain, are managing to contain the spread of the disease through strict lockdown and physical distancing measures. This is leading to the cautious restarts of grounded economies, the phased opening of schools, and efforts to return to some semblance of normality. Some US states have been jumping ahead, even while the outbreak still rages. The danger of relaxing the lockdown too soon, will be new spikes in infections. Let’s see.

    Early Results

    As the Q1 earnings season progresses, we’re seeing the impact of the virus on companies financial results and forward guidance, if given.

    Sectors hardest hit include those involved in travel, hospitality and tourism, offline retail of non-essentials, automotive and oil.  Those actually benefiting include grocery retailers, online retail specialists and software and service companies supporting remote access and working. Telecom operators and internet companies that have mixed revenue sources not overly reliant on advertising, are generally holding up, though the pattern of the businesses is changing. And the 5G rollout continues, with a few hiccups, so infrastructure players are reporting respectable results. A selected few companies highlight the trends:


    Reported earnings yesterday. Given its broad exposure to the mobile communications market, it should be indicative of the general health of the sector. It indicated that the initial impact of the coronavirus outbreak was around a 20% fall in handset sales – mainly from China (see our analysis of the market here). Qualcomm expects this to deepen to a 30% fall in the second quarter, as the impact of the outbreak ripples across the globe. However its overall outlook for the year, is for around a 10% annual decline. It nevertheless continues to hold its forecast for 5G devices for the year – though its forecasts covers a wide range (175m to 225m).


    Apple reported iPhone volumes were 7% lower y/y in the first quarter. It started the quarter strongly, before the coronavirus hit the Chinese supply chain and consumer demand. Apple now has a much more diversified revenue base than it did a few years ago, so benefited from more people accessing its digital life services and adding wearable devices to their personal portfolio of Apple devices. And while Mac and iPad volumes were down, many of the buyers were new to the products. More detailed analysis here.

    Texas Instruments

    TI has exposure to many industries – so provides a broader snapshot of developments. Its results and commentary highlighted the nuances that are characterising the impact of the coronavirus-driven downturn. It reported broadly flat sequential revenues, down a few percent y/y. It said March orders had rebounded following the China New Year extended shutdown, but this surge in orders had started to evaporate into April. It is, nevertheless, continuing to build inventory, speculating that the market may prove to be more resilient, while expecting around a 20% drop in 2Q. TI further said it is basing assumptions on the 2008/9 financial crisis – in the absence of anything better to work with. Management highlighted the snapback in demand in 2009 as the reason it is building inventory in the second quarter.

    Another chip vendor with a broad customer base, Microchip, also saw March orders rebound. It is also assuming a pattern similar to 2008/9, but unlike TI, Microchip is trimming its costs.

    Intel has a narrower customer base. Its first quarter benefited from stronger sales of notebook PCs and for datacenters – especially from cloud providers. While its business looked strong, it maintained a cautious outlook given the economic conditions, and pulled back from guiding for the year.


    Microsoft is benefiting from the massive rise in remote and home working. It reported that in a single day in March, its system hosted over 200 million meeting participants generating over 4 billion meeting minutes (I have been in meetings that felt that long). It’s also benefiting from the rise in gaming; with nearly 90 million active users of Xbox Live. Xbox Game Pass has more than 10 million subscribers. Its Windows OEM, Surface and gaming revenue increases were enough to more than offset declines in ad-driven search.


    Facebook and other social media platforms, have seen surging use during the last few weeks as locked-down consumers turn to platforms like Facebook, WhatsApp, Instagram and Messenger to stay in touch and assuage boredom. It has surpassed 3 billion people using at least one of its services. The surging use, though, is coincident with falling advertising revenues and falling advertising rates, as advertisers seek to cut costs as their industries are directly impacted (travel, entertainment) and channels to market are closed for others (offline retail).

    Google’s parent Alphabet reported similar patterns in ad revenues, though Google is benefiting from stronger cloud computing revenues; its business is more diversified than during the 2008/9 downturn.

    Operators – holding us together

    The importance of high quality, high capacity, resilient networks has never been more starkly shown than now. It’s testament to the work that telecom providers do that they are able to flex to the increased demand with barely anyone noticing. With most operator stores closed, sales of mobile phones are lower, but this also means churn has trended lower, so acquisition costs have not weighed on the financials. However, with many consumers and businesses using fixed-price plans, increasing usage does not necessarily translate to substantially higher revenue. Two operators from different parts of the world illustrate these trends:

    Orange – the France-based operator with shares in operators in Europe, Middle East and Africa, saw first quarter sales up 2% – with decent performances across its properties apart from Spain – but here it was more competition than coronavirus that impacted its progress.

    America Movil – one of Latin America’s largest operators, also saw a 2% improvement in sales in Q1. It has seen many of its stores close amid tight lockdowns across the region. But it reported that most sources of revenue were higher. However, the second quarter will be tougher because most of the first quarter was unaffected – AMX’s outlook for the second quarter and rest of 2020 is more downbeat as it expects a severe economic pullback to hurt demand.

    Offline retail battered, online strongly up

    Grocery retailers – both online and offline are having a good crisis. But most offline retailers are faring badly. In the tech sector, results from the UK’s Dixons Carphone, which includes the mobile retailer Carphone Warehouse provide a good illustration.

    Immediately prior to the coronavirus outbreak, Dixons Carphone announced it was closing over 500 of its Carphone Warehouse stores and moving to a store-in-store model with its large Currys-PCWorld consumer electronics stores. The viral outbreak accelerated the Carphone Warehouse store closures and forced the temporary closure of Currys-PCWorld offline stores as well. However, in the latter part of March and into April, the company has seen a 166% increase in online sales – with the early emphasis on homeworking products – PCs, printers — then food preparation and storage products. More recent sales have emphasized health and fitness. It says that the rising online sales have replaced around two-thirds of the missing offline sales.

    Automotive – a car crash

    Auto sales have started to rebound from low levels in China during February; Nissan is the latest company to report encouraging signs. However, the broader sector continues to struggle across Europe and the US. The current consensus from car companies is an expectation of a 20% reduction for the full year, though some are talking of current sales being only 20% of what they would normally expect. The problem for the car companies is that the pandemic is coming amid the biggest ever transition for the industry – from internal combustion engine to electric drive trains. This transition alone was an existential threat for many car companies; sales of ICE cars are relatively profitable – electric cars are not. That profit from ICE car sales was needed to fund the colossal investment needed to shift to electric cars. With near-term sales mortally wounded, the investment outlook, which was already challenging, has become even cloudier.

    COVID-19 Update Week 17

    While the countries around the world start to consider their next steps – furthering lockdowns or easing them – companies are now reporting results from the first quarter. These provide an indication as to the likely impact for second quarter as most economic activity was seriously impacted only in March and will likely deepen before, hopefully, recovering by mid-year.

    Economic pressure mounts

    Oil prices are often viewed as an important economic indicator. Indeed, during the early 2000s, as China’s economy grew along with many other emerging markets – the so-called BRIC economies – the oil price rose as demand for the commodity increased, reaching a peak of $146 per barrel in 2008, just before the last recession.

    Currently, Brent Crude is hovering around $22 per barrel, off its lows but still at levels not seen for decades. Oil is not a particularly good economic indicator, because it is subject to the vagaries of politically motivated variations in supply. However, the current low price shows that the market has little confidence in the global economy, suggesting we’re likely in for an extended, deep, recession.

    Unemployment is a better economic indicator, but one that typically lags in periods of recession. But the coronavirus is causing an atypical economic situation. Millions of workers across the developed and emerging economies are out of work. Around 26 million workers have filed new unemployment claims in the US in the last few weeks, more than 15% of the workforce.

    In emerging economies, the situation for millions of casual workers is bleak. In countries including India, Bangladesh, Indonesia, Philippines, over 70% of workers are in the informal economy with most unable to work during the lockdown, but with government support patchy or non-existent.

    Lack of remittances

    For many emerging economies, remittances from citizens working abroad, form a significant portion of the economy – especially for poor families. Many of these emigrants work manual jobs in the hospitality, transport and building sectors – all of which are working at reduced levels, or not at all, which is causing the flow of remittances to dry-up – heaping further stress on already weakened economies.

    Low income, little chance

    Even in developed countries, the impact of coronavirus is falling disproportionately on the poorer segments of society. Research by a team of economists that interviewed 4,000 US workers in late March, showed that 16% had already lost their job and among the 20% least able to work from home, 40% had lost their jobs. Conversely, those with relatively high incomes, above $60,000 per year, had seen relatively little impact on their employment status.

    These data feed through into how spending on products like smartphones is likely to respond to the coronavirus crisis. For many consumers, high cost discretionary purchases are being put on hold. For the smartphone market this means longer replacement cycles. However, buyers of high-end and premium smartphones are the ones least likely to be directly affected by the economic meltdown. As they come to terms with the new normal, their levels of anxiety are likely to diminish, confidence rise and we therefore expect purchasing of essential technology products, which smartphones are, to rebound. The short term however, will be characterised by a short, sharp, slowdown. And products typically purchased by those on the margins of the economy, prepaid, low-end smartphones and feature phones, are likely to be disproportionately more impacted, though this may be offset by people opting for cheaper alternatives. In Europe, phones for elders – mostly feature phones – have seen an uptick in sales as families provision loved ones with every available means to remain in contact at a time when physical distancing is required.


    As companies’ 1Q 20 results are starting to be reported, the impact of the lockdowns is becoming clearer. European car sales were down by more than half in March compared to 2019; March is usually a strong month for sales. February sales, by comparison, were flat y/y. Nevertheless, after enduring several weeks of lockdown, several car manufacturers, including Daimler, VW and Renault are starting to reopen plants in Europe.

    AT&T reported decent results, but sales of phones were down sharply in the quarter.

    LG Display reported a sharp contraction in sales, citing weak demand for TVs and smartphones, though demand for monitors, laptops and tablet devices was improving, to support increased remote and home working.

    Building 5G Networks – a burning issue

    Problems continue in the UK and other markets where conspiracists are drawing a link between 5G and the spread of coronavirus. This absurd notion has led to several base stations (the vandals have little idea which are and are not 5G) being set on fire. Government bodies and telcos are appealing for sense to prevail, but conspiracists are deeply distrustful of the authorities and continue to spread the rumors via social media.

    In addition to vandalizing base stations, telecom engineers have been harassed and threatened with physical harm, even when not actually working on 5G infrastructure.

    The combined impacts of this, together with the needs for social distancing and the difficulties in obtaining planning approvals during lockdowns, is slowing network rollouts.

    Impact of telecoms

    Although challenges are mounting, most telcos and ISPs are delivering resilient services in the face of substantially increased demand for services. For example, US telcos are reporting:

    • Core network traffic up ~25%
    • Hotspot usage up 60%
    • Gaming traffic up 75% or more
    • Lower cell-to-cell handoffs – by 30%-55% as people stay home
    • Wi-Fi calling up 85%-105%

    Impact on other tech

    Gaming is one of the sectors seeing the greatest surge in use as people turn to gaming in increased number to escape the boredom and anxiety caused by extended lockdowns. However game developers are finding the new remote working mode is increasing the challenge of readying new titles for release. While much of the coding can be, and has been,  done remotely, the coordination costs are sharply higher when teams are no longer collocated. This may delay the launch of some new titles this spring.

    How to exit lockdown

    Daily New Cases After Country Reached 100 cases per day Week 17 update

    With the numbers of new daily cases in many markets slowing, or at least flattening, governments are trying to balance their need to get their economies rolling again with the fear that opening up too quickly will cause a surge in new cases. This fear is well-founded. Research from China, Korea and Italy suggests that people that previously had COVID-19 continue to test positive for the virus even a month after the symptoms are gone. And even in the most badly affected countries, only a tiny proportion of the population has been infected, meaning that if those that have recovered from the disease do have immunity, this will apply to very few people in total.

    Nevertheless, various countries are cautiously opening up. Spain has allowed some construction and manufacturing workers to return to work. In Germany, shops up to 800 square meters in size and car dealers are being allowed to open. However France has extended its lockdown into May – as has India.

    Several US states are discussing how to reopen their economies – some under pressure from protesters. The states include New York, the worst hit in the US, and California.

    Contact Tracing by Phone

    One of the tools that will enable economies to reopen, is the ability to test widely and then track and trace those that may have had contact with an infected person. Apple and Google have taken the unprecedented step of aligning their Bluetooth protocols for iOS and Android. This will allow app developers to use the capability to develop apps capable of alerting phone users that they may have been in close proximity with someone who became ill with coronavirus. The system uses the Bluetooth LE protocol. When an appropriate app is installed, the smartphone continuously broadcasts a unique code while simultaneously listening to codes from other phones in the vicinity; Bluetooth LE’s range is up to 9 meters. Phones will create records of which codes it has ‘heard’. Should a user of the app subsequently fall ill and test positive for COVID-19, the code of the infected person’s phone will be broadcast, allowing all phones with the app to cross match if it was in close proximity with that of the infected person.

    This could prove an excellent way to tighten the contact tracking and tracing process, which is notoriously difficult, resource intensive and time consuming. However, it both requires that a high number of smartphone owners install the app – ideally significantly more 50% of the population – and that there is widespread and easily accessible testing, which currently only applies to a few countries. Markets where similar initiatives have been tried, for example, Singapore, have not achieved the requisite numbers of app installs despite a relatively compliant population.

    A further hurdle is the lack of Bluetooth LE support in many phones, especially feature phones that are still widely used in many emerging markets.

    So while the accord between Apple and Google is remarkable, it’s no silver bullet.

    COVID-19 Update Week 16

    The global total of official infections now exceeds 2 million, with the worst affected country, the USA, accounting for over 30% of the total. The real number of infections likely far exceeds the official total; many countries are still unable to test sufficiently large numbers to verify the extent of the disease outbreak.

    Nevertheless, for several countries in Europe and the United States, the rate of new daily cases is noticeably slowing. And the rate of slowing in new cases has been sufficient for several European countries to have either already started to lift the most severe restrictions, or start to plan for this to occur. Borders are being reopened gradually, though in Europe, this is partly to admit agricultural workers to harvest crops that would otherwise rot in the fields.

    Counterpoint Daily New Cases After Country Reached 100 Cases Per Day
    Source: data from European Centre for Disease Prevention and Control, Counterpoint Research

    As restrictions are relaxed, there is a strong possibility of further flare ups in infections necessitating a re-tightening of restrictions. And lockdowns continue to be enforced in India and many other markets, with prospects for these to be extended into May.

    But while there are positive signs from tracking the path of the disease, the global economy is far from out of the woods. Claims for unemployment support are soaring. The US released new unemployment claims today that exceeded 5 million, meaning the total of new claims for the month have exceeded 20 million.

    While some European countries have seen unemployment rates rising, governments across the region are paying up to 80% of employees’ salaries in a variety of furlough schemes. These governments learned from the problems caused by the 2008 global financial crisis, when such schemes weren’t widely deployed. This resulted in several European countries, notably Spain and France, suffering high unemployment rates for up to a decade following the recession. Germany, that did use the furlough scheme following the 2008 recession, recovered more quickly.

    Governments that are capable of doing so, are putting in place schemes to support companies and even the self-employed, so that as the coronavirus wildfire passes, green shoots of recovery can quickly be nurtured. But the pattern of recovery, will vary dramatically from sector to sector and even company to company.

    The International Labour Organisation says that the sectors facing severe declines in output and therefore a high risk of layoffs or furloughs employ almost 38% of the global workforce, which equates to around 1.25bn people. This implies that even a V-shaped recession will likely be deep. And any U-shaped recession will cause an extended period of misery for many.

    Emerging market stress

    Capital flight from emerging markets has been acute. This can be seen in the foreign exchange markets where the Mexican Peso, Brazilian Real, Russian Rouble and South African Rand have all depreciated substantially against the US dollar. The slump in world trade and almost complete cessation of tourism is also hitting many emerging markets. So while many of these markets are not feeling acute pain from the impact of the viral outbreak, their economies are under severe strain.

    US Dollar to exchange rates with various currencies
    US Dollar to exchange rates with various currencies, Source: Trading Economics

    Consolidation in corporate power

    Many large companies were in a healthy condition before the outbreak, with ample cash on their balance sheets and limited debt. They will likely be comfortably able to withstand the inferno and come out the other side, not only in a reasonable shape, but finding the landscape less cluttered than before; a consequence of the viral outbreak will be that smaller and weaker firms, are less able to survive. And those that do, will be vulnerable to being acquired. Expect therefore that power will concentrate in the hands of those that already had most of it before the outbreak.

    A further consequence is likely to be an acceleration in the diversification of supply chains. Companies that were overly reliant on China were hurt early in the outbreak. But before the coronavirus crisis, we’d already seen companies moving to diversify their manufacturing bases away from China; Vietnam and India are likely to be the biggest beneficiaries.

    COVID-19 Update Week 15

    The rolling seven day average of new daily cases of corona virus show that lock downs and physical distancing do work, though it takes time. They work by reducing the pool of potential people that the virus can infect, which slows the spread and allows authorities a chance to contact-trace and quarantine those that have been infected or that have been in contact with people infected. It is a mammoth task and economically destructive.

    The US was slow to implement lockdowns and they’re still not universal across the country. The chart below shows the rolling seven day average of new daily cases for selected countries. A rolling average is used because the data is noisy and the average helps to smooth out anomalies. Previous epicentres in Italy and Spain are trending lower. The UK (including Prime Minister, Boris Johnson) continues an upward trend, though at a slower rate.

    The US is, very clearly, still escalating rapidly though the rate of growth is slowing, however this may be more a function of the number of tests being carried out.

    Counterpoint Daily new cases after country reached 1000 cases per day
    Source: Data from European Centre for Disease Prevention and Control, Counterpoint Research

    China and South Korea continue to offer encouraging pictures with new daily cases in the few 10s and daily life returning to normal, even in Wuhan.

    Economics of a pandemic

    Our concern is now shifting more and more to the long term economic impact that the pandemic will cause. The world is officially in a global recession as declared by the International Monetary Fund around 10 days ago. However the impacts are likely to be felt differently among the developed and developing countries.

    Lockdowns, while effective at slowing the spread of the virus, are economically harmful. In a crisis, perfection is the enemy of the good. We have seen governments rushing to close borders and lockdown cities, while also creating financial lifeboats to help citizens and corporations weather the storm. While many of these measures are good and necessary, the haste with which they’ve been established has left many vulnerable people outside the safety nets.

    In rich countries, governments have the capacity to support the economy for months. In developing countries, this is not the case. In India, the government acted with great speed to lockdown the country. But in so doing, it seemed to forget the millions of migrant and casual laborers that make-up a large percentage of the workforce. Many found themselves not only jobless, but also homeless – more or less overnight. With nowhere else to go, and little functioning public transport, many embarked on journeys by foot, for hundreds of kilometres to their home villages. In some cases carrying the virus with them. And many of the world’s poor live in overcrowded conditions with little access to facilities to carry out the mandated regular handwashing.

    There are similar cases throughout the developing world. South Africa and Brazil, among many other countries, have implemented lockdowns of varying severity, meaning many migrant and casual workers are out of jobs, but with limited or no savings to fall back on. This puts casual workers in an invidious position, either starve, or try to continue working in some capacity and risk either contracting the virus, the wrath of the authorities, or both.

    And the governments of emerging economies are not strong enough to support their populations or corporations during lengthy shutdowns. And worse, capital is fleeing to safe havens – which has meant the US dollar, almost exclusively. The US Federal Reserve is easing access to the dollar for some countries, but this is likely scant comfort.

    The US, while rich, is a highly stratified society with a large underclass working low paying jobs, effectively on a casual basis; most American employment contracts have few protections against immediate dismissal. And even those with decent contracts tend not to have access to statutory sick pay. As a result jobless claims have skyrocketed – 16 million new claims in the past three weeks. And those were the ones able to negotiate flaky jobless claims websites that continually crashed under the weight of numbers, or visit overcrowded unemployment offices, running the risk of contracting the infection while doing so.

    Rich countries have, nevertheless, created massive cash lifeboats to support companies unable to continue operating at capacity, or, in some cases, at all. Some countries, the UK for example, are also creating support packages for the self-employed – such as builders, plumbers and electricians. These packages should mean that as the countries come out of lockdown they can rapidly resume economic activity at something close to previous levels. The calculus is that a rapid resumption of economic activity will start fiscal flows to start paying-down the massive debts that governments are establishing.

    We doubt, however, that the resumption of activity will be smooth across all sectors of the economy. Furthermore, the new ways of working for many may become a new normal, with more people than ever working from home. Companies may be able to reduce the size of office space as they realize that as many as a third of employees can work effectively from home on a near continuous basis.

    Sectoral Impacts

    We have updated our assessment of sectoral impacts. These are not designed to be read as detailed forecasts, but to guide thinking around which sectors are likely to be hardest hit and which are, conversely gaining in the current situation.

    Counterpoint COVID-19 Expected Impact Relative to Baseline ForecastSmartphones: The smartphone market in China saw a sharp hit in January and February but was already recovering before the end of March as supply chains, retail activity, return to normalcy. We expect 2Q to reflect a slight rebound with further slight positives throughout the balance of 2020.

    The smartphone market outside China is contracting sharply as retail stores are shuttered leaving online as the principal route to market. The downswing had already started before lockdowns were implemented. It may be as deep as China’s sharp slowdown but will likely last longer. Unlike China, where at least a part of the slow down was supply driven, the rest of world’s contraction is driven more by consumers withholding replacement activity until they get more comfort with the new economic realities of their situation. Assuming the lockdowns ease within a few weeks, the recovery should be strong, though we can expect some consumers to change their spending patterns.

    Automotive: The auto sector is likely to be hit hard globally. In the early part of the year Chinese car sales almost halted entirely. And while they are recovering, there is now a mismatch between supply and demand. This pattern is likely elsewhere. In Europe the COVID-19 crisis has also coincided with new and highly restrictive emissions regulations. It is likely part of government stimulus spending will encourage consumers to scrap older, higher polluting cars, in return for cash subsidies.

    Hearables: following a modest supply interruption we expect sales of hearables will benefit. Consumers that are self-isolating, working from home and relying more on streamed media will likely seek out high quality audio.

    Retail: the impact is nuanced.

    • Offline Retail: Grocery is seeing a surge as consumers stockpile for isolation and/or disturbed supply chains. Non-essential stores however, are being forced to close.
    • Online Retail: sees a surge in demand as consumers forego venturing out to physical retail stores. Provided deliveries can still be made, consumers realize a preference for online over physical retail and while there is a mean reversion, online remains slightly ahead of physical

    Streamed media: Physical isolation causes an uptick in demand for streaming media services especially video and games. Streamed music benefits less as consumers seek sources of news through radio stations or news-based podcasts.

    Transport in all forms is hard hit. Airline travel is sharply lower, with many fleets grounded or flying extremely limited schedules. Tourism is also largely halted. The recovery is likely to be long, slow and painful with many companies seeking bailouts from governments.

    Telecom: not charted, but we are seeing telecom service use substantially higher. For some mobile operators the reduction in international travel means lucrative roaming revenues are reduced, but more use of hotspots to enable home working means many are using networks more with many users migrating to higher data packages as a result, so a net benefit to operators – both fixed and mobile.

    Cashless Payments: cash is being seen as a potential vector for the virus. This is stimulating the faster adoption of digital payment mechanisms across the world, even overcoming fears about the security of some systems.

    Big Tech: in general the established tech giants are faring well. Use of cloud resources and over-the-top applications supporting audio and video-conferencing and collaborative remote working are seeing strong upticks in demand. Aside from a few early teething troubles, the services have flexed to accommodate the increased demand effectively underscoring the importance of resilience, quality and capacity.

    One additional positive for the tech sector is that governments preoccupied with fighting the impact of the viral pandemic will spend less time scrutinizing M&A. This together with substantial pull-backs in valuations will likely mean a number of new deals will be made through 2020.

    Related Posts

    Coronavirus (COVID-19) – Update Week 14, 2020

    The novel coronavirus continues to wreak havoc on daily life around the world, and in an increasing number of countries; 180 have now reported cases. In the past seven days the total number of confirmed cases has doubled again and is still accelerating – with new cases increasing by around 20% per day (75,000 between March 31st and April 1st).

    But physical distancing and lockdowns do bring results – Italy’s number of new cases on April 1st was almost the same as the previous day – indicating that it is nearing the top of the new case growth curve and should see a decline in the days to come. However more worrying were spikes in new cases in Spain and France, both countries that had previously seen slowing growth. However, the data is noisy, and a slowing trend is seen in most markets that have been rigorously enforcing lockdowns and physical distancing measures.

    Last week we said the US was, ‘almost certain to overtake all other countries..’, it didn’t take long. The US now has a massively higher number of cases than all other countries – almost twice as many as Italy. We indicated our concern about the US when we started keeping this weekly update and this has now been borne out. The fast growth in newly reported cases is partly a function of greatly increased testing, which is now uncovering the extent of the infection. Despite the sharp rise in cases, March manufacturing data from the US was more resilient than feared. But new jobless data shows a massive rise in new claims 6.64 million compared to an expected 4.88 million. That the new number is so much worse than even the most pessimistic forecast highlights that the full extent of the impact remains unclear.

    Coronavirus COVID-19 Global Cases by John Hopkins University (JHU)
    Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

    However, while many states in the USA have implemented lock downs, there is still a stark contrast in indicators of activity. For example, two snapshots taken at the same time and at the same scale, from FlightRadar24, show the level of air traffic over the US compared to that over Europe. Pre-COVID you would see comparable levels of air traffic, though the US has always been somewhat higher. But in the midst of the current crisis, we are surprised at the continued level of passenger air traffic in US airspace. While the one over Europe is early evening and that of the US is around 2pm EDT, there is clearly more traffic over the US. Inspection of the flights does show a high proportion of cargo, but many are still passenger flights. By contrast, around 80% of the flights over Western Europe are cargo flights. On April 1st, the Trump administration said it was considering isolating hotspots from flight traffic, but has not yet imposed such as restriction. That said, data shows the number of passengers in the US is dramatically lower. So while many aircraft continue to fly, most are almost empty.

    FlightRadar24 – images taken on March 31st at around 2pm EDT. (2)

    FlightRadar24 – images taken on March 31st at around 2pm EDT. (1)
    Source: FlightRadar24 – images taken on March 31st at around 2pm EDT

    Income and Infection – strongly linked

    New York City accounts for almost half the cases in the US. Data released by the city by zip code indicates a strong correlation between median income levels and the number of cases. This is unsurprising as the localities with the lowest incomes see the most overcrowded living conditions, where people have the greatest difficulty in self-isolating. This also gives us concern about fast growing and emerging markets that exhibit similar living conditions.

    The Dharavi area of Mumbai is home to around a million people living in extremely high population density, in make-shift housing. The first coronavirus casualty was reported overnight. It is reasonable to expect the number of cases in the area to multiply rapidly. The Indian authorities are enforcing the largest lockdown globally. While official cases remain relatively low in the country, the lack of testing means that real number of cases is likely far higher. We continue to monitor the situation in India with concern as it is now the second largest smartphone market globally and still growing – unlike China and the US. A deep and sustained impact from corona virus will have a profound impact on the global smartphone market.

    Indonesia is the world’s fourth most populous country. It has also seen an uptick in infections. While again the official number is low, we also think community infection is likely occurring unseen due to the lack of testing and preparedness. Expect the case rate to move sharply higher in the coming days and weeks.

    Brazil has seen a sharp rise in cases. President Bolsonaro has been dismissive of the threat posed by the disease and has been urging Brazilians to return to work. However, most of Brazil’s state governors are defying the government and requiring people to self-distance and remain home. Nevertheless, it is likely that community transmission is underway in Brazil and cases will grow exponentially.

    Daily new cases by continent show how the virus has spread East to West. Asia is not out of the danger zone yet.
    Daily new cases by continent show how the virus has spread East to West. Asia is not out of the danger zone yet.

    Economic Impacts

    The International Monetary Fund declared that the world had officially entered a global recession. Given the scale of reductions in economic activity across multiple sectors, this is not surprising.

    Forecasts are being updated as the situation unfolds. Currently, most economists are expecting a contraction in economic growth of around 2% y/y in 2020, which represents a downside swing of some 4.5 percentage points over previous forecasts.

    Change in GDP Growth Due to COVID-19 in Selected Countries
    Source: Economist Intelligence Unit

    Smartphone Market Impact

    We have modelled the most likely impact on the smartphone market based on the mix of factors we have seen so far, and expect to see over the next few months. We have looked at parallels from recent recessions to help guide our thinking. Our conclusion is that we expect to see a sharp contraction as consumers withhold making discretionary purchases during periods of maximum uncertainty. The result is an extension in the replacement cycle. However we expect that extension will be limited to no more than six months. We further expect that the long run average market growth rate will not vary significantly – but the near term growth rates will reflect the slow down and then rebound — a similar pattern to that seen in recent recessions but allowing for the different level of market maturity.

    Other Sectors

    Automotive remains hard hit. Most production facilities across Europe and North America remain closed. It’s a similar story in India. During the recession in 2008/9 the governments in the US and Europe implemented scrappage schemes to encourage consumers to replace older vehicles and inject spending into the auto sector. Given the strict new emission norms being implemented in Europe, governments in the region are likely considering the potential to gain benefits from newer lower emission vehicles that will go some way to addressing air pollution, while also pushing money into the hard hit auto sector. We are therefore expecting the return of scrappage schemes, perhaps with escalating rebates for the most fuel efficient cars such as full electric.

    Subscribing clients can request more detail of our forecasts across a number of sectors including smartphones, IoT, automotive and more.

    Coronavirus (COVID-19) – Update Week 13, 2020

    A week is a long time in politics, and also in this coronavirus outbreak. In the past seven days, the number of confirmed cases has risen by 255,000 and still accelerating – currently by around 50,000 cases per day.

    Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

    China still has the most cases, but Italy is fast catching up. Italy and Spain have recorded more deaths than China.

    Statisticians have observed that the coronavirus outbreak precisely follows mathematical models and it is these that are informing government behaviours once an initial period of denial is overcome. The stages are clear and follow a consistent pattern. This from a former colleague, Dr Timo Partanen:

    1. Discovery phase – the virus has been present for days or weeks, spreading within a population but largely unnoticed because testing has not taken place. Testing starts to happen but is lagging behind. The daily growth rate of cases is very high.
    2. Exponential growth phase – the unrestricted spread of the disease is about 25% per day. This can be observed when the virus is spreading freely in a community without any social distancing measures, but testing is comprehensive enough so that significant numbers of new cases are recorded. Italy stayed in this stage for around the first 12 days of March.
    3. Declining growth phase – When social distancing is established, the growth rate starts to decline in a somewhat predictable pattern. How long and how quickly it declines varies by country based on the measures taken. This has happened in Italy for more than a week; yesterday’s growth rate, 7.5%, was again lower than the previous day. Spain, at 18% is behind Italy but growth rates are starting to slow. France 13%, Germany 13% are below the unconstrained growth rate. The UK, at 18%, is still high, but social distancing measures have only just been rigorously applied. The next two weeks should show a declining rate of growth in the UK.

    What about Korea and Japan?

    Both countries followed a different pattern, because their strategies were to test and track the epidemic intensively. They didn’t get a long period of 25% daily growth, because they followed every case and isolated all contacts. That cut the “natural growth” towards 10% a day.

    And where is the USA?

    As a whole it is still in the discovery phase and the numbers are distorted by the lack of tests. Some states have applied tough measures – such as California. But at the country level the growth rate in cases in the last 24 hours was almost exactly 25%. It is still not under control and there is no clear indication of how widely the virus has spread already. For example, in New York testing was expanded properly only last week and it is now undertaking more than 15k tests per day, and is finding 5k cases per day. The federal government is unwilling to impose the most stringent levels of control for fear of impacting the economy more deeply. This will likely mean a longer period of unconstrained growth in cases, unless almost all individual states apply the lockdown in a coordinated fashion. But it is the federal government that controls air traffic, for example.

    It is almost certain that the US will overtake all other countries, including China, with the highest total number of cases.

    Anomalies in the numbers

    Iran is likely far, far worse than official statistics imply. Iran has not imposed a lockdown, so we expect there to be an almost unconstrained spread of the virus among the population. But with little testing and a government that rigorously controls communication, we may never know the true extent.

    Russia too is likely to be experiencing a worse outbreak than official numbers suggest. It has established special facilities to deal with the outbreak, but is not reporting its cases freely.

    India – the official number of infected is low. But while it is growing relatively quickly (20% in the last 24 hours) the government has moved fast to implement draconian lockdown measures that should slow the spread even if the real level of infection is much higher. The problem for many places in India is that social distancing, in some of the most densely populated areas, will be difficult to sustain for long. India has implemented the fiercest measures of any country. It will be a test case of how to bring the outbreak under control across a vast and populous country.

    Counterpoint Covid Weekly Update: Air Traffic
    Air traffic over India March 26th. Almost all flights visible are overflying. Source: FlightRadar24

    Impact on the Global Economy

    There is a high probability of a global recession occurring in Q2 and Q3 of 2020. Sectors most obviously impacted include travel and tourism, hospitality and entertainment; people are not travelling, eating out or going to the cinema. These sectors employ millions globally and have come to an almost complete stop in many countries.

    The stark economic indicators seen in China in February are now being replicated in many other countries, even while China gets back on track.

    The disruption to international travel is hurting trade already. Over half of global air freight is carried on passenger aircraft. The image below from FlightRadar24 looks similar to last week’s. But an examination of the aircraft criss-crossing the Atlantic shows that around half are cargo planes. The American Association of Port Authorities, an alliance of ports of the US, Canada, Caribbean and Latin America has warned that cargo volumes during the first quarter are likely to be down 20% y/y. Jobless rates in the US are surging, applications for income support in the UK have jumped.

    Counterpoint Covid update: Reduced air traffic over the Atlantic
    Reduced air traffic over the Atlantic and half of it freight, March 26th. Source FlightRadar24

    Governments are acting fast though. The experience of the financial crisis of 2008/9 showed that decisive action helped address the damaging levels of uncertainty. Central banks in Europe, US and in other countries have prepared stimulus packages of staggering magnitude. Yesterday, the US Senate approved a package totalling around $2trn (9% of GDP). The total extra fiscal stimulus announced so far amounts to more than 2% of global GDP – far more than was applied in the wake of the 2008/9 financial crisis.

    The stimulus and support packages may help. But consumer uncertainty tends to lead to withholding spending in times of trouble, only returning to previous levels once confidence returns.

    Developed countries are fortunate in being sufficiently wealthy that they can afford to support the economy and workers for an extended period. In addition, healthcare systems are well-developed. Poorer countries have a higher proportion of casual workers and patchy healthcare, so the impacts will likely be, proportionally, greater.

    Impact on Smartphones and Technology

    We have developed new forecasts that are available for subscribing clients. These show a sharp fall in demand, moving in a wave across from China to the west, consistent with the viral spread. Under lockdowns, almost all offline retail activity ceases, though online continues to function.

    The smartphone market is resilient; smartphones are perceived by consumers as essential. However, aside from replacing a broken phone, the purchase is usually discretionary and can therefore be delayed, effectively extending the replacement rate. The resulting contraction in the market will likely be short term in nature, we expect it to recover relatively quickly once the worst of the outbreak passes.

    Homeworking and social distancing are underscoring how important technology is to keep people connected and entertained. While we see the Coronavirus pandemic as a sharp, short-term negative, we continue to believe the long term impact on the market will be marginal.

    Counterpoint will be hosting a webinar to talk through the likely impacts as we see them. Click here to register

    Coronavirus (COVID-19) – Update Week 12, 2020

    While the pandemic escalates in the west and increasingly wreaks havoc on daily life, China and South Korea are starting to get back to normalcy. Early, stringent action by the authorities was effective at containing the outbreak. There is chance of flare-ups but we expect those to be dealt with rapidly. Other countries such as Taiwan, Hong Kong and Singapore also appear to have been successful in limiting the disease spread. The biggest risk for these nations now is nationals returning home from countries on the fast escalation curve – notably Europe and the USA.

    In the last eight days, the number of confirmed cases has risen by almost 100,000. Almost a quarter of these new cases are in Italy, with many more in Spain, France and Germany. The UK has also seen a steep rise in cases, with London the epicentre of its outbreak.

    The US continues to give us concern. The country as not been able to test widely, so we continue to believe the official number of confirmed cases massively under represents the true scale of the problem.

    India, Russia, and many parts of the Middle East and Africa, and much of Latin America, have either been successful at preventing the virus from spreading or, more likely, are not able to test sufficiently effectively to reveal the true scale of the pandemic.

    The bottom-line, is that the picture from Johns Hopkins shown below is just the ‘tip of the iceberg’. The full scale of the disease may not be known for months or even years.

    Coronavirus COVID-19 Global Cases by CSSE at JHU
    Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

    Impact on Commercial Activity

    Turmoil continues on stock markets. Central banks are releasing unprecedented funds and instituting quantitative easing, but investors continue to lack confidence as they cannot see an end to the disruption. In this environment only safe haven assets are in demand – recently the US dollar. The price of gold had escalated but sold-off to cover investors’ losses in other asset classes while others opted for the US dollar above all other assets.

    Many countries are being progressively locked-down. Italy has been in this state for a couple of week and is being joined by France, which is imposing penalties on citizens straying outside without good reason. Many European countries are closing land borders to prevent foreign citizens from entering. Canada and the US have closed their land border. Brazil has closed its border with Venezuela.

    In markets that are locked down, all but essential stores are closed. Online remains active though and has seen strong upswings in activity.

    Airlines are reducing flights, with many grounding part or all of their fleets, and temporarily laying off staff.

    Reduced air traffic over the Atlantic compared to normal on 19th March.
    Source: FlightRadar24

    Travel and tourism, and hospitality more broadly, is hard hit with hotels empty and restaurants and bars being shuttered.

    Impact on the smartphone market

    Mobile phones are considered a necessity by most people. This means it is a resilient market. Recent parallels include the sub-prime mortgage crisis and subsequent global recession in 2008/9, the tech bubble bursting in 2001 and the impact of SARS in 2002/3. In each case, the market was knocked back but rebounded in the aftermath.

    The market has changed since 2009 – it is now much more mature, and in the markets currently most severely impacted, almost everyone has a smartphone. For many consumers, the purchase of new smartphone is a discretionary purchase; they can choose when to buy. The consequence of this has been seen over the last few years in lengthening replacement cycles, which has caused the smartphone market to contract as people hold on to their phones for longer and longer. The immediate impact of the coronavirus pandemic, is that the replacement cycle is likely to stretch still further. But consumers will replace. So while the market will slow down during the worst period of the crisis, it will rebound; we don’t think volume will be lost – just that the pattern of demand will change.

    There are two main risks, that could cause a material lowering of our long-term outlook:

    1. An extended global recession. Currently we are assuming a relatively sharp, but short recession, on a global basis.
    2. A second wave of viral infections peaking in 4Q 2020 and 1Q 2021. Past pandemics have seen this double peak. COVID-19 may be the same.

    There are also mitigating factors:

    1. Preparation of a vaccine – many teams around the world are working hard to isolate a vaccine – though this is unlikely to be ready until 2021.
    2. Effective treatments – there are some promising lines of research applying current medicines to treat those most affected by this coronavirus.
    3. Herd immunity – if sufficient people in a population are infected, recover and develop immunity, it is harder for the disease to spread. It is unclear how effective this is with COVID—19.

    We are updating our forecasts more frequently during this period. Subscribing clients will receive regularly-revised short-term forecasts that assimilate the latest information.

    Impact on other technology markets

    Demand for home working equipment and services are sharply higher, displays and headsets, and conferencing services. Access to Microsoft Teams was temporarily impacted earlier this week as thousands of normally office-based workers across Europe tried to access the service from home. More capacity is likely being made available.

    Automotive Markets

    Car companies are still coping with supply issues arising from the initial outbreak in Hubei Province that caused many parts to go into short supply. These companies are now having to contend with potential shortages of labor, as workers either become sick or have to self-isolate. Several factories in Europe and North America are implementing temporary closures.

    We also expect demand for new vehicles to be sharply lower in many markets as car dealerships are closed.

    Audio visual equipment and streaming

    With higher numbers spending more time at home, demand for streaming entertainment is escalating sharply. This may trickle over into demand for new equipment such as TVs, but big discretionary spends are more likely be deferred. However, demand for hearables is likely to rise as households try to manage the situation of multiple people enjoying their own content without disrupting others. Hearable devices are readily available from online stores.

    Coronavirus (COVID-19) – Update Week 11, 2020

    As we predicted two weeks ago, the WHO has been forced to pronounce the coronavirus a pandemic. It doesn’t change anything much in relation to the likely viral spread, but should help focus the minds of governments that may be reluctant to take the necessary steps to contain the outbreak, or mitigate its worst effects.

    Also as we noted last week, the coronavirus infection rate in China is decelerating. This is good news and should allow most factories outside the Hubei province to move back toward normal, seasonal activity levels by the beginning of the second quarter.

    In other countries, however, the picture is less positive with more than 25,000 new cases reported in the last week.

    Coronavirus COVID-19 Global Cases Johns Hopkins CSSE
    Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

    The pattern of infection and recovery is becoming clearer. The infection spreads rapidly through a population, reaching a peak and then subsiding almost equally rapidly once there are no new people to infect. By locking down areas and curtailing socializing, the pool of potential virus recipients is reduced, causing the outbreak to moderate more quickly. This is what happened in China. But a rapid lockdown it is not what has happened in Iran, Italy and many other parts of Europe, and the United States. The disease has likely been in the community in these countries for several weeks before being formally identified. Containment measures are belatedly being taken in some countries, Italy for example.

    Counterpoint COVID-19 Many Fewer Flights Than Normal Originating and Terminating in Italy
    Source: FlightRadar24

    Many Fewer Flights Than Normal Originating and Terminating in Italy

    But in most other countries, little is being done to either monitor the virus’ spread, or to prevent it. Angela Merkel, Germany’s Chancellor, has warned that as many as 60-70% of the German population may become infected, if stringent measures are not taken. It is reasonable to assume that this rate of infection would apply to other, similar countries.

    The USA is most concerning. Evidence from Seattle suggests the existence of coronavirus in the community as far back as early February, but the Centers for Disease Control and Prevention (CDC) was not able to effectively test for the virus at that stage and even prevented some research laboratories from reporting their own positive test results. The alarming conclusion is that the reported positive cases in the USA likely massively underrepresent the true picture of infections in the USA.

    Stock Shocks

    As the potential impact of the virus has become better understood, stock markets have been hit hard, with major indices registering falls in excess of 10%. Some of the falls were also related to a conflict between major oil producers that saw a sharp fall in the price of oil. Nevertheless, money markets are trying to price-in a short sharp shock to the world’s economy with little to guide them on what this will actually look like.

    Supply-Driven Downturn

    Most recessions have been caused by falls in demand. The most recent one of 2008-9, was triggered by a financial crisis that spilled over into a sharp reduction in demand as banks spiralled into a debt crisis of their own making.

    In this case, there is the potential that workers will be prevented from working due to illness or having to isolate themselves at home. If this occurs for a significant proportion of the population at any given time, it will have a short-term negative impact on economic activity – initially from the supply of labor, but then also in demand, as consumers will refrain from buying much beyond core necessities. The shock to the system should be short-lived and likely resolved relatively quickly. We expect a rebound in most economic activity to occur before the year end.

    Central banks are continuing to offer support. The Bank of England in the UK has cut interest rates by 50bps in a move that echoes that of the US Federal Reserve, last week. However in a supply-driven crisis these moves are unlikely to do much to stimulate economic activity. Governments are likely to need to support small and medium sized businesses that will inevitably struggle with cash flow problems, and support workers that are forced out of work. The UK government is implementing a raft of measures to support small businesses and the self-employed who may not otherwise be eligible for sickpay.

    Impacts beyond the numbers

    Rumors have been circulating for several weeks that Apple will delay the launch of the, yet to be named, lower cost iPhone. This is to be the successor of the iPhone SE, built around the same form-factor as the iPhone 8 series (SE2, iPhone 9..?).

    Problems with the launch were initially thought to be because initial volume ramps could be delayed due to Foxconn’s inability to start production. Travel restrictions on Apple’s engineers flying to China to supervise pre-production testing might also be a factor. And if all these were not problematic enough, just holding a launch event at this time, is difficult. So we expect Apple to postpone the launch for a few weeks at least. Other smartphone manufacturers are continuing to launch new products however (link to blogs)

    The E3 2020 expo in Los Angeles is the latest among more than 250 trade shows to be cancelled or converted to online events.


    We continue to expect a rapid increase in infections in Europe, USA and many other countries over the next eight to twelve weeks before returning towards normal during 3Q and with an expectation of largely normal levels of economic activity by the year end.

    Coronavirus (COVID-19) – Update Week 10, 2020

    There is cautious optimism that the worst of the outbreak in China is now past. Factories are beginning to ramp up production slowly, though many are still below normal capacity at this time of year. Foxconn said it is running at about half its normal low-season capacity – this equates to about 25% of full capacity. While factories are anxious to ramp-up production, they’re also being careful that labour-intensive work does not rekindle viral outbreaks.

    While this is somewhat positive for China, the outlook in the rest of the world is rather more bleak. And the realization of the potential for lasting economic disruption has caused a sharp falls of up to 15% in the value of shares on many stock markets. This has prompted central banks to intervene with support – for example a 50bps cut in interest rates by the US Federal Reserve.

    Last week we outlined countries of concern as, South Korea, Japan, Iran, Italy, UK and US. We think these will be good analogues for how the virus is likely to spread more widely.

    Coronavirus COVID-19 Global Cases Johns Hopkins CSSE
    Source: Johns Hopkins CSSE

    South Korea has continued to see infection rates escalate – mostly centered around the southern city of Daegu.

    Japan is considering delaying the Olympic Games until later in the year, but has not yet cancelled the event.

    Iran has the highest number of deaths outside China, but due to efforts by the regime to deny the extent of the outbreak it has likely led to a greater level of infection in the country. The number of deaths do not tally with the reported number of infections, which must be far higher than the official numbers would indicate.

    Italy – it is likely that the virus was circulating for several weeks before being fully recognized. This has led to the level of infections seen and also allowed for travellers to take the infection to other countries.

    UK – while the number of cases remain low, several people have been diagnosed who have not been to centers of infection or knowingly interacted with those that have. This indicates that containment is likely no longer possible. The UK government has enacted an emergency plan in which the realistic worse case scenario would see up to 20% of the workforce either off-sick or self-isolating.

    USA – new cases are emerging at a fairly rapid rate now, which suggests the virus is circulating and containment is no longer possible.

    More than 80 countries have now reported cases, although the actual numbers of reported cases are likely to be the tip of the iceberg; many people have only mild symptoms and may not be counted.


    As China gradually recovers from the initial peak of infections, we expect factory production to gradually return towards normal. However, the reduced capacity is likely to continue into the second quarter.


    While some supply restrictions ease, we are becoming more concerned about the probable impacts on demand as consumers moderate economic activity in the face of growing infection rates in multiple countries around the world. Our current scenario models a relatively modest decline in demand for smartphones outside China, but there is a growing likelihood that we will revise our estimates downward.

    We have also modeled the likely impacts across a range of industry sectors relative to our base line forecasts. Some of these are shown in the chart below:

    Counterpoint Coronavirus COVID-19 Expected Impact Relative to Baseline Forecast


    The impact to supply and demand was most acute in China. Supply restrictions have started to show up in other global markets. However we are now expecting to see some impact to demand in global markets as consumers moderate their economic activity in the face of personal and economic uncertainty. We nevertheless expect a rapid reversion as the worst of the infection passes with a slight positive rebound effect.


    The Chinese automotive sector came to almost a complete halt in January and February. This was mostly driven by a massive drop in demand, although factories also ceased activity through a combination of the Lunar New Year and coronavirus.

    Internationally, auto makers have been hit by reduced supplies of parts made by Chinese companies. Several have reported the need to reduce production until supplies return to normal.

    We are modelling the Chinese and global automotive sectors to rebound relatively quickly with a slight positive rebound, though we doubt all of the shortfall will be recovered in the near term.

    Streaming Media and Gaming

    We expect the enforced isolation that many will experience will lead to a greater consumption of streamed media such as music and video, and an increase in online gaming.


    Airlines are already cutting capacity – even between countries where there are limited outbreaks. This is driven by business travellers reducing flying – partly due to generally lower activity levels and partly due to the cancellation of large events, for example MWC and the Geneva Motor Show. We expect that as travellers realize that alternatives such as teleconferencing offers a good experience and people think harder about the need for travel – especially in the face of mounting climate change evidence — there will be a longer-term reduction in absolute person/km travelled. UK regional airline FlyBe collapsed late on 4th March. It had been struggling financially, but it cited reduced bookings caused by the coronavirus as a significant factor in it halting operations. It will likely not be the last airline to fail caused by coronavirus.


    We think retail will be a tale of two types – offline, brick-and-mortar stores, are likely to suffer a short term decline, while online stores will benefit. Though if there is any significant and sustained impact on logistics, then online stores may also suffer. We expect both to revert to the mean over time, though online may enjoy a slight boost while offline suffers a slight long-term reduction.


    The likely extent of infections remains unclear however, we expect countries outside China will likely see a peak in infections in the May/June period before recovering towards normal by the end of 3Q beginning of 4Q. Countries’ ability to contain the outbreak now looks challenging with the emphasis shifting to managing the impact as best they can.

    We will continue to monitor and update our scenarios as the situation unfolds.

    Coronavirus (COVID-19) – Update Week 9, 2020

    • Global stock markets are, perhaps belatedly, responding to the escalating impact of the Coronavirus outbreak and have started falling on expectation of extended and systematic supply chain disruption. Oil prices are also lower on fears that transport will be affected. Traditional safe haven assets, such as gold, have increased in price.
    • The Coronavirus is likely to be declared a pandemic. A pandemic is when an epidemic spreads to multiple regions/countries. There are political implications to declaring a pandemic, but it doesn’t change the dynamics of the disease spread – though it will serve to heighten peoples’ focus on the potential transmission of the disease and may also contribute to further disruption.
    • With cases escalating fast in S. Korea, Iran, Italy and Japan – and further cases emerging in Germany, Brazil and several other countries, it’s probable the World Health Organization (WHO) declares a pandemic within the next few days.
    • Despite initial failings in recognizing and reporting the novel Coronavirus, China has been quite effective at limiting people’s movement and therefore spread of the virus. But other countries may be less successful at containing outbreaks. And as China is the manufacturing source for N-95 facemasks, supplies for export will be restricted. India likewise is restricting exports of facemasks. Some drugs are also likely to become supply constrained.
    • Developed nations have vulnerable supply chains – shops in big cities are resupplied daily, for example. Any breakdown in supplies can lead to panic buying, shortages and further disruption to travel and many normal behaviors at a population level. At extremes, civil unrest can result in looting and a breakdown in law and order.

    Countries to watch closely for developments:

    South Korea: a spike in cases and lack of clarity among potentially infected peoples’ movements will lead to more cases developing over the next week or two. Containment currently looks challenging despite the alert level being raised to RED.

    Italy: a popular tourist destination, Italy is now attempting to lock-down parts of the country most badly affected. Nevertheless, cases are emerging in other countries based on people travelling from Italy. Likely a prime source for infections across Europe. The forthcoming Italy vs Ireland rugby international match has been postponed based on concern about the virus spreading with travelling fans.

    Japan: most cases relate to the impounded cruise liner, Diamond Princess, but the true number could be higher due to poor handling of passengers on the cruise ship.

    Iran: even the health minister has been infected. Cases likely under-reported and given the importance of some infected areas to Muslim tourists, high likelihood of spread to other Muslim nations in the region.

    U.K. has now started testing people showing flu-like symptoms but who have not been to known infected areas. If infection is found it will indicate that the viral spread has not been contained.

    U.S. it is likely that the true extent of cases is unknown and unreported due to lack of screening on ports of entry, lack of sufficient diagnostic testing and lack of funding to health agencies to take effective action. Increased testing, like in the UK, will reveal to extent to which the viral spread has already occurred.

    Overall, our expectation that we see widespread transmission of the disease and a concomitant impact on retail sales, supply chain disruption and other economic disturbance has risen from somewhat unlikely to likely. Companies will need to plan for an extended period of disruption to a business-as-usual situation – likely lasting well into the second quarter.

    Impact on China and Global Smartphone Demand

    • Demand-side: the PRC economy has been impacted severely during this period. Sales have fallen sharply and will recover slowly. We estimate a 30% drop during the lock down period. The lock down period and travel restriction period will last for at least two months, so affecting through the end of March. Some offline retailers are saying they have experienced a 50% drop in sales during the late January period. However there is some sales offset by an increase in online sales.
    • Supply-side: there will be impact to new devices to be launched in the first half which have facilities in China, as factories will not function properly. Components sourced from China will also be impacted as all factories will resume operation slowly and cautiously. This will range from displays from BOE, CSOT and semiconductors from YMTC and further on. So the negative impact from the supply chain side will last until end of Q2 minimum.
    • Our initial expectation was that the virus would be contained within two months and take three further months for things to get back to normal. We now expect Q1 PRC sales to be down by around 25% compared to our original forecast. This is 18% lower than Q1 last year. But this can worsen if the virus is not contained. Global sales will also go down 7% compared to same period last year. Overall we think Q1 and Q2 will show negative growth both globally and in PRC before rebounding.
    • This is our base case scenario. The downside risks are increasing daily and we will likely revisit this forecast based on emerging information over the next days and weeks.
    • We also expect  China smartphone sales to drop over 20% in Q1 2020. The impact of nCoV could be much more severe than many currently expect. (Click here to listen to the latest Counterpoint Podcast on the Coronavirus)

    The post Weekly Update: Global Coronavirus Impact and Implications appeared first on Counterpoint Research.

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    Samsung Galaxy Note 20 Ultra 5G Review Part 1: Striking Design, Fluid Display https://www.counterpointresearch.com/samsung-galaxy-note-20-ultra-5g-review/ Wed, 16 Sep 2020 08:09:49 +0000 https://www.counterpointresearch.com/?p=33317 The Galaxy Note 20 Ultra 5G is the first smartphone with Corning Gorilla Glass Victus. The smartphone flaunts a massive […]

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    The Galaxy Note 20 Ultra 5G is the first smartphone with Corning Gorilla Glass Victus.

    The smartphone flaunts a massive 6.9-inch display with a refresh rate of 120Hz.

    It features a triple rear camera set-up with a 108MP primary camera sensor.

    2020 has been a difficult year after the COVID-19 outbreak. But that has not stopped smartphone makers from innovating. The year started with the launch of Samsung Galaxy S20 Ultra, with features including 108MP quad cameras, 5G and high refresh rate display. Xiaomi entered the ultra-premium segment with the Mi 10 while OnePlus matured from being a flagship killer to flagship grade with the OnePlus 8 seriesOppo introduced its ultra-premium Find X2 Pro, whereas Vivo innovated by adding a gimbal camera system to the X50 Pro. And that brings us to the highly anticipated smartphone of the year, the Samsung Galaxy Note 20 Ultra 5G.

    With a starting price of $1,299, the Galaxy Note 20 Ultra is one of the most advanced smartphones available in the market today. Compared to last year’s Galaxy Note 10+, Samsung has improved the note-taking experience on the new smartphone. There are design refinements, upgraded cameras with 50X zooming capabilities, and a high refresh rate display. The Galaxy Note 20 Ultra 5G is also more tightly integrated with Microsoft productivity and gaming apps. In a nutshell, the smartphone has all the bells and whistles that power users could appreciate. But does it deliver on the promise? We will answer that in our review as we take a deep dive into each aspect of the phone starting this week.

    CMF: Mystic Bronze is the new gold standard

    The Galaxy Note line has always been the first to embrace Corning’s new Gorilla Glass solutions, and the same continues with the Note 20 Ultra 5G too. It is the first smartphone to feature the new Corning Gorilla Glass Victus both on the front and the back. The company says it is twice as scratch-resistant as the previous generation. It can survive drops of up to two meters, compared to 1.6 meters on the Gorilla Glass 6.

    counterpoint samsung galaxy note 20 ultra 5g vs note 10 plus

    The Galaxy Note 10 with Aura Glow color was one of the sexiest looking phones that changed colors as light reflected from different sides on the back. But having a glossy surface had two major disadvantages – it was slippery and was a big fingerprint magnet. With the Note 20 Ultra 5G, Samsung has opted for a frosted glass finish which takes care of both the issues. It is not slippery and does not attract fingerprints easily.

    counterpoint samsung galaxy note 20 ultra 5g review back

    Further, as we continue to talk about the CMF (Color Material Finish), Samsung deserves a shoutout for the new Mystic Bronze color. It is undoubtedly one of the most striking, elegant and sophisticated looking Galaxy phones yet. The aura of this color is such that people had been asking me about the phone every time I took it out in front of my family and friends. And there is a small gradient effect to it too. When looking from an angle with mild sunlight, at times, it appears like the Rose Gold color.

    Samsung has nailed the CMF part in making Mystic Bronze the new gold standard.

    Design: Minor tweaks bring some learning curve

    Design-wise, you still get a big slab of metal sandwiched between the glass on the front and the back. The edges are curved on the sides, which is something that we have seen since the Galaxy Note 7. There are two major changes that the Galaxy Note 20 Ultra 5G brings on the design front, and it will need some learning curve to get used to, especially if you are a Note 9 or Note 10 user.

    counterpoint samsung galaxy note 20 ultra 5g review buttons

    To begin with, the volume rocker and power buttons have been moved from the left to the right. This is good news for people who use their phones with the right hand. But for people who use their phones with the left hand, it will need a bit of time to get adjusted to the new layout. I, for once, have been using the Galaxy Note 10+ for a year now, and right after switching to the Note 20 Ultra 5G, the muscle memory of my left-hand thumb always acts whenever I want to control the volume or lock the screen.

    counterpoint samsung galaxy note 20 ultra 5g review top and bottom
    Ports placement Galaxy Note 20 Ultra (top), Galaxy Note 10+ (bottom)

    Second is a major change, which has happened after 10 generations since the first Galaxy Note was launched. I am talking about the S Pen stylus here. From the first Galaxy Note to the Galaxy Note 10+, it has always been on the right edge, but with the new Note 20 Ultra 5G, the S Pen is now on the left.

    counterpoint samsung galaxy note 20 ultra 5g review s pen

    What prompted this change in position? I believe it has to do with the big camera sensor and 5G RF antennas that Samsung had to accommodate in the design. Again, there is a small learning curve, but two or three weeks after using the phone, you will likely get used to it.

    The Note 20 Ultra changes the placement of S Pen, volume rocker and power button, and it takes time getting used it.

    There is one more annoying part of the design which may bother some users. The Galaxy Note 20 Ultra 5G brings a giant triple camera module on the back with a big camera bump. From an engineering point, I get that this was needed to accommodate the periscope-style zoom functionality. But it makes the weight distribution uneven. Even Oppo has offered a periscope-style zoom without needing a big camera bump.

    counterpoint samsung galaxy note 20 ultra 5g review camera module

    The problem with the bump is that when your phone is placed on a table facing its back, it wobbles. And unlike the previous models, Samsung has not even shipped the smartphone with a cover case, so that becomes an additional purchase for the users.

    The big camera bump at the back makes the phone wobble when placed on a flat surface.

    Display: One of the best-looking screens on a smartphone

    There is no doubt that Samsung is a pioneer of AMOLED screens. With every new iteration of the Galaxy S and Note-series smartphones, the company has improved the touch and display experience. The Note 20 Ultra 5G flaunts a big 6.9-inch WQHD+ Dynamic AMOLED display. The screen has a resolution of 3088×1440 pixels and a refresh rate of 120Hz. It is also HDR10+ certified which makes content viewing on Netflix and Amazon Prime Video a pleasurable experience.

    counterpoint samsung galaxy note 20 ultra 5g review front

    It is also the first Note-series smartphone to come with a variable, high-refresh-rate screen. The motion is incredibly smooth, and it is visible to your eyes when scrolling through menus or webpages. But the way this variable refresh rate works here is different from the other smartphones.

    Motion smoothness is easily noticeable when playing games or scrolling through the menus.

    The refresh rate varies from 60Hz to 120Hz depending on the screen resolution you choose. If you want to enjoy the high refresh rate benefits, you will have to scale down to FHD+ resolution and choose the Adaptive option under display settings. It will automatically adjust the refresh rate depending on the content and help save battery life. Though, I think an option of at least 90Hz by default for WQHD+ resolution would have been better. Since I got the Note 20 Ultra 5G, I have been using it at FHD+ resolution, and there is no visible difference in the reduced sharpness.

    counterpoint samsung galaxy note 20 ultra 5g variable refresh rate

    Otherwise, the panel is gorgeous. It is bright enough to offer great legibility under harsh sunlight. The colors are punchy, blacks are deep and whites are bright. Viewing angles are good too. No matter what content you are viewing on the screen, be it movies or games or simply scrolling through Instagram timeline, the display is a pleasure to look at.

    We will keep updating the review as we test the phone more over the next few weeks. Next up, we will talk about the cameras in-depth, so stay tuned for that.

    Also Read: Strategic Reviews and Insights on The Latest Smartphones

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    Three Things the Latest Apple Event Told Us by Omission https://www.counterpointresearch.com/apple-event-2020/ Wed, 16 Sep 2020 07:11:24 +0000 https://www.counterpointresearch.com/?p=33326 Much of the news on Apple on Tuesday focused on its latest products and services. The Apple Watch and iPad […]

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    Much of the news on Apple on Tuesday focused on its latest products and services. The Apple Watch and iPad line-up both got upgrades while Apple One and Apple Fitness+ helped Apple round out its service offers. Instead of going into further detail on these, I want to talk about three things that Apple is saying between the lines.

    1. No news about iPhones (almost)

    • While there was not a high chance that Apple would talk about iPhones in this event, leaving out any mention of the latest iPhone 12 series that is expected to debut in a few months is telling in its own right. This is another confirmation that there are delays and no definitive answer yet on new iPhone launch dates, or even models that will first be available. The new iPhones are rumored to have OLED screens and 5G connectivity.
    • However, the six-core A14 Bionic processor that was debuted in the new iPad Air is Apple’s first 5nm (actually, it is TSMC’s) that promises 40% CPU improvement and a 30% boost in graphics. This A14 chip will likely also be featured in the new iPhone 12 line-up.

    2. Apple One is a bigger deal than it looks

    Apple One is a subscription service that bundles specific Apple services such as Apple TV+, Apple News+, Apple Arcade, Apple Music, Apple Fitness+ and iCloud.

    The family pricing option of $19.95 per month is a compelling offer for many families that use Apple products, especially since it can cater to different needs for each family member. This puts pressure on streaming services, such as Netflix, Hulu, Spotify and Pandora, and even non-PC mobile gaming subscription services. Bundling services for Apple helps create more stickiness for its services and keeps the company on track to smash through its $14-billion quarterly service revenue ambitions.

    Apple did not make this the headliner for the event, but it surely will become the foundation for its push in services going forward. Apple could customize Apple One with more options and expand it in future.

    3. Apple retains ambitions for healthcare and wellness sector

    • Apple’s new Series 6 Watch comes packed with a blood oxygenation monitor on top of the already great ECG monitor and altimeter. With the launch of WatchOS7, existing sensors can also measure a lower range of VO2 Max values.
    • While other companies such as Garmin and FitBit have already included these features in their smartwatches, Apple’s strength lies in its ecosystem and cross-device integration and functionality.
    • Apple also announced three studies that will utilize the new blood oxygen measurements to detect conditions such as asthma, heart failure, and even flu and COVID-19 (although blood oxygen monitoring might be a bit late to detect COVID-19 symptoms — temperature is a better indicator for that).
    • Apple Fitness+ was even showcased as a service you can bring into the gym to be your personal fitness trainer. Skip the yoga classes and cross-fit sessions and instead use the app to choose a workout that you feel like doing.
    • Overall, Apple is slowly but surely becoming a contender in the health and fitness space, using its plethora of offerings and services to create a more cohesive user experience that other companies will have trouble matching.

    Everyone is anticipating Apple’s next announcements, especially since they will pertain to the iPhone 12 series that will debut in Q4 2020. However, even Tuesday’s announcements showcased Apple’s big ambitions in terms of innovation, services and health. They are the building blocks for Apple’s overall strategy and must be seen in this wider context.

    Related Posts

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    ET Telecom Presents Digital Telco: Virtual Summit ’20 https://www.counterpointresearch.com/digital-telco-virtual-summit-20/ Tue, 15 Sep 2020 12:49:42 +0000 https://www.counterpointresearch.com/?p=33294 Our Research Vice President Neil Shah will be moderating a panel discussion at the Digital Telco Virtual Summit ’20. The event runs […]

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    Our Research Vice President Neil Shah will be moderating a panel discussion at the Digital Telco Virtual Summit ’20. The event runs from 18th to 19th September 2020.

    The details for the panel discussion are below:

    Topic:  Managing the transition towards advanced 5G


    Time: 18th September 2020 | 3:40 PM – 4:40 PM

    An overview of the event:

    With next-generation technologies at the horizon, the Indian telecom sector, passing through turbulent times, is eyeing newer business opportunities, as the carriers strategically overhaul their architecture to become digital service providers. Embracing innovation to enable technology transformation is no more a second thought for telcos, as they must deliver faster, smarter and on-demand services with high resilience.

    Telcos, thus, are increasingly embracing open cloud architecture as a part of their cloud-native approach to step up transformation as a next-generation service operator. While at the onset of a new decade, marred with the Covid-19 pandemic, businesses worldwide have already started to reshape their operational models. It is high time for telecom carriers to closely collaborate with technology and IT infrastructure providers to redefine strategies, create new revenue streams and stay competitive in the market driven by cloud computing, the internet of things (IoT), artificial intelligence and blockchain.

    The virtual summit, organized by ETTelecom.com, will bring top executives from telecom carriers, technology & infrastructure providers, and regulatory & government officials together to deliberate potential strategies and bottlenecks in India’s digital transformation.

    In this two-day summit, Day 1 will discuss challenges & opportunities in the telecom sector and Day 2 will have an executive training program.

    Register for the event here.

    To get live Digital Telco Virtual Summit updates you can watch this space or follow us on Twitter 

    You can find more information about the event here.

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    Qualcomm Leads Market Despite Losing Share to HiSilicon In Q2 2020 https://www.counterpointresearch.com/qualcomm-leads-market-despite-losing-share-to-hisilicon-q2-2020/ Tue, 15 Sep 2020 12:11:35 +0000 https://www.counterpointresearch.com/?p=33273 Huawei shipments in China increased, leading to a decline in Qualcomm market share. The tightening of restrictions on Huawei will […]

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    Huawei shipments in China increased, leading to a decline in Qualcomm market share.

    The tightening of restrictions on Huawei will hit HiSilicon shipments and help Qualcomm and MediaTek gain market share.

    New Delhi, Mumbai, Hong Kong, Seoul, San Diego, London, Buenos Aires – September 15, 2020

    The smartphone application processor (AP) market declined 26% in the second quarter of 2020 as smartphone sales plummeted due to the COVID-19 pandemic and resulting restrictions. Qualcomm led the market with 29% market share, a drop of 3 percentage points compared to last year.

    Commenting on the decline in market share for Qualcomm, Neil Shah, VP of Research at Counterpoint, said: “While the overall smartphone market declined due to the ongoing pandemic, the decline in market share for Qualcomm was partly also due to Huawei, which increased the use of HiSilicon APs after US restrictions, and its growing share in China, the world’s largest smartphone market. Qualcomm’s share in Huawei (including HONOR) smartphones declined from 12% in Q2 2019 to 3% in Q2 2020.”

    We are already seeing manufacturing picking up pace because of pent-up demand in major regions. However, more restrictions on Huawei’s (HiSilicon’s) ability to manufacture chipset at TSMC cast a major doubt on its future smartphone sales.

    Shah added: “It is not all bleak for the smartphone segment. For example, 5G smartphone sales more than doubled (+126%) in Q2 2020 from just a quarter ago. This trend will try to offset the overall decline in the first half and fuel the growth back in 2021. This will also create significant opportunities for AP suppliers to increase the share of semiconductor content even if the overall market volumes remain lower this year. Furthermore, the restrictions on Huawei will drive the growth for Qualcomm, MediaTek and Unisoc.”

    Exhibit 1: Global application processor (AP) market share – Q2 2019 vs Q2 2020

    Expanding on the potential shift in competitive dynamics due to Huawei restrictions, Research Analyst Shobhit Srivastava said: “OPPO, vivo, Realme and Xiaomi will be the key drivers for Qualcomm and MediaTek as they look to fill the big gap which Huawei might leave behind in near- to mid-term. And this could be more beneficial for Qualcomm in the premium segment ($400+ wholesale), especially in China where Huawei dominates with over 40% market share, and in the mid- to high-tier segments in markets like Europe. In the mid and low segments, MediaTek with its affordable 4G and 5G solutions will gain popularity in markets such as China, Russia, and Middle East & Africa (MEA) as Realme and Xiaomi look to target Huawei’s market share. Unisoc with its cost-efficient 5G solutions will also be one of the drivers, due to the demand for affordable 5G smartphones in China and emerging markets. Having a sizable market in the Middle East & Africa, Unisoc will play a critical role in bringing in cheaper 5G devices in the region in the future.”

    Exhibit 2: Smartphone AP market share by region – Q2 2019 vs Q2 2020

    Highlighting new areas of growth for AP vendors, Srivastava said: “The advent of 5G will drive cloud gaming as one of the killer use-cases, bringing newer experiences in the premium segment. Additionally, we are also seeing increasing demand for casual and advanced gaming at the mass-market level. Thus, the affordable smartphone segment with gaming capabilities is estimated to grow a massive 1011% in 2020. Smartphone AP vendors are capitalizing on this opportunity by launching solutions with higher clocked GPUs and support for higher display refresh rates – 90 Hz, 120 Hz and even 144 Hz, elevating the gaming experience in the affordable segment. With 5G coming to lower price segments, mobile gaming is estimated to grow further due to its low latency connectivity. As a result, we are seeing OEMs working with AP vendors to add more models with gaming capabilities via solutions such as MediaTek G-series and Qualcomm G variants in the Snapdragon 6 series.”

    Overall, we estimate that the smartphone AP market will be on a growth trajectory from 2021 onwards and will continue to be on the path for the next three years as 5G adoption reaches emerging markets.



    Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in the high-tech industry.

    Analyst Contacts:

    Neil Shah

    Shobhit Srivastava

    Counterpoint Research

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    Weekly Update: COVID-19 Impact On Global Automotive Industry https://www.counterpointresearch.com/weekly-updates-covid-19-impact-global-automotive-industry/ Tue, 15 Sep 2020 04:30:39 +0000 https://www.counterpointresearch.com/?p=27637 To receive weekly updates on the COVID-19 situation and our latest research straight to your inbox, click this link to register […]

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    To receive weekly updates on the COVID-19 situation and our latest research straight to your inbox, click this link to register

    Click here to get the latest weekly updates on the COVID-19 situation and its impact and implication on the various sectors.

    Week 22: August Auto Sales Update – Key Markets Indicate Recovery

    While many key markets saw signs of improvement in August on month-on-month (MoM) basis, it remains difficult to ascertain the actual market situation as the pent-up demand may be covering up a lower intrinsic level of market demand. Moreover, there is always a risk of a second wave of COVID-19. As a result, Counterpoint analysts continue to hold on to their 2020 annual outlook of nearly 20% decline over last year, with global passenger vehicle (PV) sales estimated at around 71 million units.

    United States

    Automotive industry in the US continues to remain fragile. Vehicle sales in August declined close to 20% (YoY), reaching 1.33 million units, despite an extended weekend due to Labor Day falling on a Monday. Total January-August 2020 sales reached around 8.8 million units, down 23%. During the month, Toyota saw a sharp decline of 24.6%, followed by Honda (-23%). Hyundai, on the other hand, performed comparatively better with only an 8.4% decline. Limited inventories and fewer incentives continued to hold back sales.


    China automotive sales continue their fast recovery. Vehicle shipments reached close to 2.2 million units in August, up 11.6% on YoY basis. Total shipments during January-August 2020 were down 10% on YoY basis. Counterpoint expects the recovery to continue in coming months driven by improving car-buyer sentiment (especially in affluent classes) and pro-NEV (New Energy Vehicle) policies like scrapping of vehicle purchase tax on NEVs and extension of subsides till 2022 with a slower phase-out pace. In June, the government announced to increase the NEV credit ratio by 2 percentage points every year till 2023, from 12% in 2020 to 14% in 2021, 16% in 2022 and 18% in 2023.


    Easing of lockdowns in many countries coupled with stimulus packages to support economic revival seems to have started benefitting the region’s automotive industry. Vehicle sales in August crossed 1.2 million, declining 16% on YoY basis. Despite the decline, this was a good performance considering sales in August 2019 were high as automakers rushed to push their uncertified vehicles before the September 1, 2019 deadline for the Worldwide Harmonised Light Vehicles Test Procedure (WLTP) testing.

    Other Markets

    Japan: Vehicle sales in August crossed 326,000 units, declining 16% on YoY basis. Counterpoint remains cautiously optimistic for coming months as resignation of Prime Minister Shinzo Abe could adversely impact the market.

    South Korea: New vehicle sales in the country from top five automakers — Hyundai, Kia, Ssangyong, Renault and GM — declined close to 6%, reaching around 112,000 units. In June, the government extended the 30% cut in consumption tax on passenger cars till December 2020, benefiting sales.

    Other Asia: While the year-to-date sales have seen a considerable decline, they are improving on MoM basis. Key markets like India are seeing recovery in MoM sales due to easing of lockdowns.


    Author: Aman Madhok


    Week 21: Connected Car Gets Pandemic Push

    The COVID-19 pandemic has led to many changes in car-buyer behaviour and attitude. Digital services and features are being readily accepted by people as a way to stay connected, trackable and safe. Increasing penetration of in-vehicle screens will lead to easy integration of many of these digital features. This blog identifies and compares key digital features and services available for cars, and which among these will benefit due to changing lifestyle and behaviour of people.

    Counterpoint: COVID-19 impact on automotive connected car IoT digitalisation

    In-vehicle features

    In-vehicle digitalisation is expected to increase as people spend more time in their personal vehicles (compared to public transport). Popular connected features include navigation, digital keys, and Wi-Fi hotspot. Among these, digital keys will see a high demand in the coming years due to its low-cost implementation. Virtual assistant, voice recognition, personalisation and gesture control will also see increasing demand on growing concerns over touching surfaces.

    Safety features

    Safety features to prevent accidents, such as automatic emergency braking (AEB), lane departure warning (LDW), head-up displays and surround cameras, are expected to gain popularity. Convenience features like automatic cruise control (ACC) are expected to see a limited impact from the pandemic. Nevertheless, since many times these safety features are sold as bundled packages, COVID-19 will aid in their penetration.

    Connected Living

    Cars are expected to have seamless integration with home, infrastructure, and other devices promoting vehicle to everything (V2X) technology. Increasing coverage of 5G networks will allow seamless integration of cars with other devices and ecosystem. Vehicle to pedestrian (V2P) communication, in particular, will see development. However, high investment involved in developing a V2X technology could delay its implementation.


    Connected services promoting social distancing and reduction in the number of garage trips will see a rise in coming years. Pay-as-you-go services will enable touchless transactions for refuelling, toll payments and purchasing on the go, among others. OTA updates will become popular, restricting unnecessary trips to service centres.

    Health and location related apps are expected to gain popularity, aiding family members to track the location and well-being of their loved ones. Recently, GM launched a smartphone-based app, Guardian, which uses phone sensors to detect a crash and inform emergency services. Other features of the app include location status and roadside assistance.


    Digitalisation in cars will get a boost from COVID-19 with people embracing a digital life that promotes social distancing, safety, tracking and efficiency. Services and features enabling the above will see growing popularity among car-buyers. Digitalisation will also be supported by other factors like increasing screens in cars and increasing 5G network coverage.

    Author: Aman Madhok


    Week 20: Global Vehicle Sales Remain Fragile

    Global passenger vehicle (PV) sales declined by nearly 7% YoY in July, despite regions showing varied signs of month-on-month recovery from COVID-19 induced lockdowns. Overall, cumulative YTD global PV sales are down by 25% YoY through July.

    While most regions are certainly seeing signs of improvement, it remains difficult to ascertain the actual market situation. Pent-up demand remains the most important contributor to recovery, which may be covering up a lower intrinsic level of market demand. As a result, Counterpoint Analysts continue to hold onto their 2020 annual outlook of nearly 20% decline over last year, with global PV sales estimated at around 71 million units.


    The Chinese PV market continues to make a V-shaped recovery, with July volumes climbing 16% from a year earlier, a fourth consecutive month of improvement, stepping up sales to a higher gear from nearly 7% YoY growth in June. While July PV sales in China rose to 2.1 million vehicles, on a YTD basis cumulative volume have dropped 13% from last year’s 12.4 million vehicles.

    Sales of new energy vehicles (NEVs, i.e. battery-powered electric, petrol and electric hybrid and hydrogen fuel-cell vehicles) in July ended 12 consecutive months of YoY declines, with a 20% uptick to nearly 98,000 units. This sale spike possibly demonstrates that NEV OEMs and customers are now at terms with the lowered government subsidies since last year. Counterpoint estimates NEV sales at over 1.1 million vehicles in 2020, a decline of 11% from last year. Continuing to lead the pack of fully electric vehicles, Tesla sold 11,000 vehicles in July while BYD took the lead position in total NEV sales, delivering over 14,000 units.

    With China’s economy still recovering, and the possibility of a second wave of the virus still looming, Counterpoint is holding to its earlier base case forecast of nearly 22 million PV units for 2020, an almost 15% decline from previous year.

    United States

    Sales in the US continue to drift with the pandemic having a prolonged impact on the country’s economy. July PV sales volume, though up versus June, is down nearly 19% YTD compared to the previous year. Fleet sales too continue to remain weak, with July volumes falling by nearly 30% of the volumes reported in June.

    COVID-19 continues to spike in key US states, including California, Texas and Florida, resulting in curbs on movement of citizens and strong headwinds for the country’s PV sales. All this while the industry continues to reel from the effects of earlier lockdowns and “shelter in place” directives that had closed thousands of dealerships in March, April and May.

    Counterpoint analysts are holding to their earlier forecast for the US — a 24% annual decline for 2020, estimated at around 13.4 million units.

     Europe and United Kingdom

    PV registrations in Europe dropped 5.7% in July, with government incentives and lifting of lockdown restrictions having stimulated sales demand back to near pre-pandemic levels. However, from a year-to-date perspective, Europe is tracking an overall decline of 36% for the same period last year. Counterpoint analysts estimate Europe sales to fall by almost 26% this year to 13.6 million vehicles, with key factors like lowered government subsidies and possible resurgence of COVID-19 lingering.

    In the UK, PV sales rebounded in July as dealers reopened with easing of coronavirus lockdowns, even as battery electric vehicle sales continued to surge. Based on sales data released by the Society of Motor Manufacturers and Traders (SMMT), British new car registrations rose by almost 11% YoY in July to nearly 175,000 units. July is the first full month of business in the UK after car dealerships were allowed to reopen.

    Notwithstanding the signs of a slight bounce-back, Counterpoint analysts remain cautious. European and UK consumers are still wary about buying high-ticket items like cars, given the uncertainty over the economy.

    Rest of World

    India’s domestic auto industry may have turned the corner in July, with monthly declining trends flattening out. For the first time in several months, the Indian auto industry reported a single-digit decline of 1% in passenger car wholesales, with 198,000 units being shipped last month compared to 200,500 units in the same period last year. July shipments are likely the low point of a V-shaped recovery as Indian states increasingly ease lockdown measures and more dealerships open in key urban centres. The industry still needs to demonstrate a sustainable demand trend, at least over the medium term. As OEMs in India continue to resolve challenges with the supply chain, they will also need to procure buffer stocks of material to protect themselves against future lockdown disruptions.

    Japan’s PV sales continue to improve, with a relatively moderate 14% YoY decline in July, compared to a 45% YoY decline in May. Consumers are preferring purchase of smaller-sized vehicles to avoid crowded public transportation. Sales of Mini Vehicles (engine size smaller or equal to 660 cc) currently account for nearly 40% of total car sales. However, with the recent sharp rise in new COVID-19 cases, and possible enforcement of movement restrictions, the recovery in sales is expected to slow down.

    In South Korea, the selling rate has slowed down from an all-time high in June, with the first phase of a temporary excise tax cut on passenger vehicles expiring at the end of the month. The market, however, continues to perform reasonably well, with sales having increased YTD by nearly 8%. Sales in H2 2020 are expected to be sustained with an anticipated announcement of the second phase of the temporary excise cut, which has proven to have been a key factor in stimulating demand recovery in Q2 and Q3.

    Revised Global Automotive Outlook

    While varied signs of a fragile recovery continued to emerge in July, Counterpoint Research remains cautious and is holding to its earlier global automotive sales outlook of around 72 million units for 2020, an over 20% decline from 2019.

    Counterpoint: COVID-19 impact on automotive sales

    Author: Vinay Piparsania


    Week 19: Used Car Sales Start Recovery in Key Markets

    Used cars are seeing recovery in key markets not only owing to hygiene concerns amid the COVID-19 pandemic but also reduced car-buyer budgets due to economic downturn. Dealers have started to report increasing (or holding) residual value of used cars, indicating the increasing demand. Increased focus on online sales by automakers, dealers and third-party e-commerce companies is also benefiting the sales of used cars. This blog lists recent positive developments in key used vehicle markets, indicating a much faster recovery for global used car sales when compared to new cars.


    • Leading online used car platform Carvana reported 43% increase in sales during Q1 2020. The company has plans to expand to 100 new markets in the US.
    • Carmax, the leading used car dealer in the country, called back 155,000 furloughed employees (around two-thirds of its workforce).

    According to online platform Edmunds, the average listing price of used vehicles increased by $708 in July when compared to June, reaching $21,558.

    Counterpoint: COVID-19 used pre-owned car sales growth


    Used car market size in India is around 1.4 times higher than that for new cars (compared to 4-5 times in the developed world) and has a huge growth potential. Used car sales had been growing at a much faster rate during pre-COVID-19 times and industry participants are already seeing recovery in such sales:

    • Leading used car online platform Droom announced that the traffic on its platform was up by 175% and leads were up by 250% during the April-June period. During the same period, Maruti Suzuki True Value reported used car sales increasing 15% compared to last year.
    • Mahindra First Choice Wheels also reported higher demand in June compared to last year.


    While both new and used car sales continue to decline in many European countries, the rate of decline was steeper for new car sales during Q1 2020 in key markets like the UK, Spain, Germany and Italy.


    The fall in used car sales has slowed down in China after the market contracted by 67% (YoY) during Q1 2020. According to the China Automobile Dealers Association, used vehicle deliveries declined from 1.6% to 1.2 million in June, but the deliveries were up 4% compared to May.

     Early Signs

    Given the fluid conditions, the early signs of growing used car sales need periodic tracking and should not be generalised as a global trend due to the following reasons:

    • Lower inventory of new cars could momentarily drive used car demand. With auto plants reaching 100% production levels, used car sales could see a decline in coming months.
    • If driven by pent-up demand, the sales could see a decline in coming months.
    • Customers can hold on to their old vehicles for a longer time, creating an inventory shortage for used cars.
    • Used car market growth will vary from country to country depending on government policies, economic recovery and customer sentiments.


    Despite the uncertain conditions, it is expected that the used car market will see a much faster recovery from the pandemic when compared to the new car market, considering the strong drivers like growing need for personal vehicles and budget constraints.

    Author: Aman Madhok


    Week 18: India’s July Automotive Sales on Choppy Recovery Track

    India’s domestic auto industry may have turned the corner, with monthly declining trends flattening out, suggest July sales reports.

    For the first time in these last few months, the Indian auto industry has reported a single digit decline of just over 1% in passenger car wholesales, with 198,000 units being shipped last month compared to 200,500 units in the same period last year. July shipments are likely the low point of a V-shaped recovery as Indian states increasingly ease lockdown measures and more dealerships open in key urban centres. The month has shown significant wholesales improvement in both two-wheelers and passenger vehicles, indicating significant pent-up demand across the country.

    Counterpoint expects to see further improvement in monthly vehicle sales, with new product launches planned, supply chain stability and incremental demand from rural India as the country moves into its traditionally high-selling festive season. We expect extraordinary promotional offers by dealers and automakers to continue, encouraging consumers to visit showrooms and consider purchasing new vehicles.

     Choppy recovery across the country

    The July automotive sales distribution pattern, however, shows that recovery from the pandemic not only varies in speed across the country, but is also uneven. This can be attributed to the length of lockdowns in different regions, the underlying economy of a region, consumer confidence, availability of finance and incentives offered by dealers. Broadly, retail sales are recovering faster in semi-urban and rural areas, which have been relatively less impacted by the spread of COVID-19.

    Many regions continue to remain vulnerable due to their limited ability to manage further outbreaks of the virus. Intermittent and sudden lockdowns being re-introduced in some states, such as Uttar Pradesh, Maharashtra and Bihar, are negatively impacting the fragile consumer confidence and spending.

    While leading automakers Maruti Suzuki and Hyundai have seen a steady recovery in vehicle production and shipments since the unlocking in May, we believe sustaining the retail sales momentum will be a challenge as pent-up demand winds down. While some states could recover faster, the overall longer-term forecast is that some cities and states will take till the year end to recover annual sales volumes to pre-COVID levels, and some possibly not at all.

    Let us look at the performance of some of the key players in the passenger car and two-wheeler categories over the month:

     Passenger cars

     Maruti Suzuki posted a 1% growth, with 100,000 units shipped last month against 101,300 in July 2019.  While marginal, it does signal green shoots of recovery ahead with an almost 50% increase in mainstream hatchbacks — about 17,300 units shipped in July. This also demonstrates growing demand for safer, personal mobility options. In addition, Maruti Suzuki is planning to launch a range of compact SUVs in the second half of 2020, enhancing its offerings in this relatively resilient category.

    Hyundai too is moving closer to full recovery, having shipped 38,200 units in July versus 39,000 units last year, a 2% YoY decline but a significant improvement against the 79% YoY decline recorded in June. Hyundai continues to have a strong order book for its refreshed Creta SUV, the newly launched Venue Crossover and, surprisingly, for its updated Verna sedan.

    While Mahindra & Mahindra has reported a 35% YoY decline with shipments of 11,000 units last month, we expect sales to improve over the rest of the year. Revival in demand for its vehicles is expected to be sustained in rural and semi-urban areas. The scheduled launch of popular utility model Thar in a refreshed, contemporary and feature-loaded avatar, and in time for the festive season, will provide an additional push.

    Counterpoint: COVID-19 India July car sales


    India’s, and also the world’s, largest two-wheeler manufacturer Hero MotoCorp has reported a marginal YoY drop of less than 1% in July. It is running at over 95% of its production capacity, signalling a healthy rebound. The company’s July shipments saw 14% sequential growth over June. While the numbers primarily show signs of recovery, they also confirm that supply chain issues, such as the availability of workers and raw material, have been resolved considerably.

    Till the COVID-19 pandemic is brought under control, Counterpoint expects the country’s two-wheeler segment to continue to grow much faster than passenger vehicles, being a cost-effective personal mobility solution and also popular among Indian commuters.

    Counterpoint: COVID-19 India July two-wheeler scooter sales


    Counterpoint believes that while July sales may signal the start of a recovery trajectory, the industry still needs to demonstrate a sustainable demand trend, at least over the medium term. As OEMs continue to resolve challenges with the supply chain and scramble to replenish inventories, they will also need to procure buffer stocks of material to protect themselves against possible future disruptions due to re-introduction or extension of lockdowns.

    Counterpoint analysts continue to remain cautious and are holding to their earlier forecast of a 25% decline in all categories in 2020 compared to 2019.

    Counterpoint: COVID-19 India automotive vehicle car two wheeler forecast

    Author: Vinay Piparsania


    Week 17: Car Subscription Services Get COVID-19 Push

    The shift towards car subscription services, which started during the last few years, is only going to accelerate during the COVID-19 pandemic. Rising awareness about health among car- buyers is making them consider personal vehicles over public transport, with subscription payment models making vehicle ownership more accessible. This blog analyses the key drivers for subscription-based models and the role of COVID-19 in pushing this shift.

    Why Subscription?

    • Automakers are looking for new ways to push sales and make cars more accessible for customers in the wake of COVID-19 pandemic, which has put a lot of strain on their purchasing power.
    • There is a generational shift towards a shared economy where everything from OTT to consumer electronics is being subscribed to. In mobility too, millennials are moving away from car ownership to shared mobility.
    • Rental companies are offering flexible subscriptions ranging from 1 to 36 months and attractive schemes, like extended loan tenure, low down payment, no EMI for a year, return assurance and home delivery, to push sales.
    • During COVID-19, dealers have shifted online to provide a quick, streamlined and hassle-free buying process, thus aiding in subscription sales.

    Counterpoint: Key drivers subscription car sales

    Automakers Taking Subscription Seriously

    Counterpoint: COVID-19 automakers key subscription schemes

    While subscription services, including Volvo’s Care, Ford’s Canvas, Cadillac’s Book Porsche Passport and Mercedes-Benz’s Flexperience, were already available, more automakers are focusing on such services during COVID-19:

    • India’s largest car manufacturer Maruti Suzuki has partnered with ORIX to start a pilot subscription model for new cars. Hyundai, the second largest player in the country, started its subscription service in 2019.
    • In March, Nissan launched the ClickMobi car subscription services in Japan. The service is currently available in 23 of Japan’s 47 prefectures. The company plans to expand it to the whole country by September.
    • In January, Toyota launched the Kinto subscription service across Europe. This includes Kinto One, a subscription-based service for new cars.
    • In July, JLR launched the Pivotal vehicle subscription schemes in the UK, offering a six-month subscription starting at $934 a month for a Land Rover Discovery Sport or Range Rover Evoque. JLR expects subscription services to account for 10% of all car sales in the US and Europe by 2025.
    • Volvo, which launched its subscription service Care in 2017, expects it to account for 50% of its revenues by 2025.

     Mushrooming start-ups

    Many start-ups, including ZoomCar and Revv, are collaborating with automakers and dealers to provide the software platform, schemes and expertise for subscription-based models. Third-party collaboration is helping automakers and dealers in a fast scale-up of their subscription offers.

    • In July 2020, a London-based car subscription start-up secured €22.6 million in funding. The company provides subscription-based car buying in the UK in partnership with automakers including BMW, VW and Mercedes Benz.
    • Australian start-up Loopit (earlier known as Blinker), which has around 500 dealerships on its software subscription platform, announced 52% increase in dealers wanting to integrate into the platform during the country’s initial lockdown period.


    • In the short term, COVID-19 will accelerate the shift towards subscription models as car buyers refrain from lumpsum payments on big-ticket purchases. The need for privacy and social distancing will also push them towards such services.
    • In the long term, shift towards a shared economy and growing competition from ride-hailing services will continue to encourage automakers to adopt subscription models to push car sales.

    Author: Aman Madhok


    Week 16: Need for more resilient supply chains

    The COVID-19 pandemic has demonstrated how vulnerable automotive supply chains are to disruption, bringing under scrutiny the extended global supply strategies.

    The abrupt closure of production centres in China and its domino impact, causing widespread chaos among global auto manufacturers, were felt progressively in Europe, the US, India and South America. Having offshored their manufacturing activities to low-cost countries, many automotive OEMs and suppliers are now scrambling to establish shorter or localised regional supply chains.

    The drive to shorten supply chains

    Even months before the COVID-19 outbreak, there was a growing interest among global automakers to localize manufacturing of critical components. Trade tensions were at their peak with the escalating tariff war between the US and China, resulting in a broader nationalistic spirit arising in some other countries too. The intensification of protectionism, through targeted financial trade barriers, had become a real and present threat for multinational auto operators to deal with.

    With globalized supply chain networks currently programmed for the lowest possible price, most Western companies had set up centralised manufacturing facilities in lower-cost economies, where final products are assembled competitively and shipped to higher-income markets. Automakers, in particular, source parts and electronics from China, mainly because they are cheaper. However, rapid political developments, natural disasters and now the global pandemic have revealed the inherent weakness at the core of such a model of offshore manufacturing. For example, when the pro-Brexit (UK’s decision to leave the European Union) vote was announced in 2016, European auto OEMs and suppliers immediately planned for the worse and rushed to invest in new supply chain resources in the UK. While a change towards more flexibility and multi-level sourcing by the global auto industry had already begun cautiously, the COVID-19 impact has now made it a more definitive and urgent course of action.

    Over the next few years, Counterpoint analysts expect to see a broad overhaul of the global automotive supply chain infrastructure based on the following trends:

    Globalization to regionalization

    Currently, most leading global automakers source 30% to 60% of their parts from China, including modules and sub-assemblies. Given the incredibly high number of parts required – each with different lead times – a return to regional supply chains does present an incredibly complex challenge. However, that challenge is being considered worth taking on by stakeholders for a post-COVID world.

    Intending to establish alternative, flexible and adaptable supply chains — while mitigating single-source vulnerabilities – OEMs, component manufacturers and auto sub-system assemblers are now looking to strategically source, assemble and deliver from within their regional borders, and are also reconsidering setting up regional logistic hubs.

    Counterpoint: COVID-19 need for resiliant supply chain

     Fundamentally rethinking the supply chain

    COVID-19 has exposed the weaknesses of a globalized manufacturing system, necessitating a fundamental rethink of existing supply chain operations. The distributed global business model, being primarily driven by an objective to achieve minimum cost, needs to be resilient. Supply chain models will need to be reconfigured, based on business optimization. Modifying the supply chain as a key business driver and bringing back timely human oversight are some critical factors that can bring inherent agility.

    With volatility in production volumes and schedules expected to be a norm, suppliers and logistic operator chains will have to be adaptive, and be able to recover quickly from major natural and man-made catastrophic events such as earthquakes, floods, fires, industrial strikes and social unrest. Human overrides and protocols will need to be re-introduced to bring stability back to the global supply chain during such a crisis. As the current pandemic stress-test has demonstrated, large variances and disruptions cannot be managed through statistical and algorithmic models with such unusual events typically disregarded as “outliers” and overlooked in operational programming.

    Resilience through re-shoring — easier said than done

    Despite the pain caused by production losses, the business case for increasing supply chain resilience is not straightforward. Reconfiguring and reducing the length and complexity of global supply chains is not without its challenges. Inevitably, short-term costs will be a consideration, as well as the ability to recruit new staff with the requisite skills, knowledge and experience, and access to adequate capital.

    With thousands of suppliers involved in a vehicle’s value chain, diversifying suppliers to increase resilience involves significant investments and recurring costs. Automotive components are typically sophisticated, intricately engineered, bulky and also fragile, with high logistics and transport costs. In most countries, government policies encourage sourcing from local producers by achieving a local content threshold to qualify for reduced import tariffs. However, even if such suppliers are considered as alternatives, they are required to be tooled, trained and resourced to produce to specifications and quality standards.

    Nonetheless, the benefits of shortening supply chains are considerable, specifically greater security and increased resilience to causes of disruption. Although COVID-19 has brought these into focus, it is not the only risk to established OEMs. There is the ever-present threat caused by natural and man-made events, the ongoing trade disputes and tariff wars between major trading nations, and political instability in regions that supply critical raw materials, combined with a rise of nationalism and protectionism around the world.

    The current configuration of international supply chains relies predominantly on low trade barriers and assurances that they will remain for a reasonable time period.  Unfortunately, the devasting economic impact of COVID-19 has led to a resurgence of protectionist sentiments in most countries, and a highly probable threat of such benign policies being withdrawn. Further, the economic arguments for offshoring are not as persuasive as they used to be, with average wages in China’s manufacturing sector, for example, having increased over countries such Brazil or Mexico

    There could be many other significant factors behind re-shoring decisions too, such as access to qualified personnel, skills, technology and innovation. Proximity to primary markets is another key consideration, as well as improved quality. OEMs look for quality at the most competitive cost. One of the advantages of working with local suppliers is their ability, if set up correctly, to deliver both. Working with localised suppliers also reduces challenges associated with communicating across multiple time zones, languages and cultures.

    Among the deciding factors will be the types of components or aggregates being produced, along with market demand, speed of response and ability to supply custom-engineered solutions with short lead-times.


    The sheer number of suppliers to the automotive industry, who are currently clustered in specific regions of the world, present major obstacles to diversifying risks. Reducing or expanding the number of suppliers is not necessarily the only way to configure resilient supply chains.

    Counterpoint Research believes that ultimately we will see a combination of traditional extended supply chain models with a growing alternative network of short and localised supply chains. The latter network will most likely be established in alliance with specialised suppliers that can deliver components and services, and have the capability to adapt resiliently to changes in market conditions.

    Author: Vinay Piparsania


    Week 15: Financial Crunch to Promote Alliances in Auto Industry

    With most automakers remaining certain about their shift towards emerging mobility options, strategic partnerships and alliances can ensure their leap forward while maintaining a competitive advantage in these disruptive times.

    Mobility options involving electric and autonomous vehicles require billions of dollars in investment. With automakers currently facing a severe financial crunch, the need for partnerships and alliances has become more relevant and urgent.

    Below are some recent developments and measures taken by global automakers to ensure liquidity to manage their day-to-day operations:

    • Daimler recently secured US$13 billion credit line from banks.
    • Ford secured US$15 billion from existing credit lines and $8 billion from unsecured bonds.
    • Volkswagen has announced losing US$2.2 billion per week due to plant shutdowns.
    • French government will provide US$8 billion (EUR7-billion) bailout to PSA and Renault.

    With the financial crunch leading to automakers and suppliers re-allocating capital funds to manage operations in the short term, Counterpoint expects investments to recover slowly post-COVID-19 and after operations become stable again. The table below ranks different strategic mobility opportunities in terms of their short-term investment potential, with comments on the probable partnership/alliance outcomes.

    Counterpoint: COVID-19 new mobility investments

    Electric cars

    Investment drivers

    With the automotive industry being a key GDP driver in many countries, governments will look at promoting EVs to meet their overall emission targets (Paris agreement) on the one hand while driving economic recovery and employment on the other.

    Partnership scenario

    A key area of partnerships includes EV batteries.

    • Securing supplies: Automakers will need to ensure their battery supplies are secured by partnering with large-scale global battery companies like CATL and LG Chem.
    • Saving R&D costs: Automakers will consider partnering with battery companies to develop energy storage technologies, saving or sharing costs.


    Investment drivers

    • Social distancing: Car buyers are preferring connectivity services like over-the-air (OTA) updates, predictive maintenance and touchless transactions, and looking to restrict their visits to service centres to maintain social distancing.
    • New revenue avenues: OEMs are looking at value added connected services as an important area for generating additional revenues and shoring up profit margins amid declining vehicle sales.

    Partnership scenario

    There will be increasing partnerships across the ecosystem and supply chain — between automakers, telecom operators (to provide connectivity, subscription plans), TCU players (to provide the hardware) and software companies (to develop apps)

    Shared mobility

    Investment drivers

    • Work-from-home options to employees are expected to become permanent for many companies moving forward, potentially leading to a surge in short-distance travel
    • Amid the economic downturn, choices for last-mile and personal transportation will need to be economical. Hiring e-scooters, e-bikes and kickboards comes at a significantly lower cost when compared to owning a personal vehicle.
    • Maintenance of social distancing is encouraging people to avoid public transport, boosting take-up of shared e-scooters and e-bikes.

    Partnership scenario

    • Acquisitions: There are more chances of acquisitions rather than partnerships in this market. With cashflows for small and medium companies remaining stressed, they are suitable targets for acquisition by big companies like Amazon at lower than the valuation price. Intel’s recent acquisition of Moovit, a mobility-as-a-service (MaaS) provider, for $900 million signals the possibility of similar acquisitions in the sector.

    Autonomous vehicles

    Investment drivers

    Partnership scenario

    • There will be relatively fewer alliances (at least in the short term and compared to 2019) among stakeholders for advance autonomy (Level3+) as automakers try to invest in technologies with relatively faster RoI, and avoid cost on new technologies which are not proven and riskier to invest in.


    While COVID-19 will delay immediate investments in new mobility, market drivers will continue to encourage investments in the long term.

    Alliances and partnerships will become important tools for automakers to gain a competitive advantage. However, the nature of alliances will vary for each mobility type.

    Author: Aman Madhok


    Week 14: June Update – Global passenger vehicle demand to decline over 20% this year

    COVID-19 continues to have a profound impact on the global passenger vehicle (PV) industry. As markets around the world move into H2, there are some varied signs of recovery visible, as well as of further turbulence ahead. Uncertainties remain, with COVID-19 infections rising in several countries of Asia and South America, and, most alarmingly, in the US.

    Even as China was showing encouraging signs of a possible V-shaped recovery, June sales slipped significantly, indicating a bumpy ride ahead. The US industry too, despite having turned in some encouraging numbers in May, retreated last month. Europe, the UK and India remained sluggish and stuttering, with sales volumes expected to be under last year’s by over 25%, while South Korea remains a bright spot, tracking ahead on a year to date basis in June.

    With the risk of further virus spread and preventive lockdowns remaining high over the rest of the year, Counterpoint analysts continue to remain cautious in holding to their earlier PV global sales forecast.


    Based on recent numbers released by the China Passenger Car Association (CPCA), sales in China have significantly dropped in June, despite encouraging recovery trends demonstrated over May and April. Passenger vehicle sales came in around 1.68 million units in June, a 6.5% YoY decline. May sales had risen over 12% YoY to 2.1 million vehicles, and almost 4.5% YoY to 2 million vehicles in April.

    The June decline is a setback for an industry expecting to see a rebound in demand with the pandemic having been brought under control in the country, and showrooms and retail markets reopening for business. Evidently, the auto industry’s long-term dependency on a broader economic recovery in China and on overcoming already established consumer mobility trends, such as preferring ride-hailing options and putting off purchase decisions, remains.

    Sales of new-energy vehicles (NEVs), including electric cars, also continue to decline. NEV sales in June fell 35% YoY to 85,600 units, following a drop of 26% in May and 30% in April. After growing rapidly for several years, electric car sales have lost momentum, with the government rolling back subsidies in mid-2019 and prevailing lower oil prices making typical internal combustion engine (ICE)-powered vehicles more economical to operate. Electric vehicles (EVs), however, remain a priority for China and authorities are considering fresh stimulus measures to support their recovery.

    Bucking the trend, Tesla accounted for nearly 23% share of electric car sales in June. The American company, which started production at its greenfield Shanghai factory at the beginning of the year, has rapidly achieved market leadership and boosted monthly EV registrations in China. Counterpoint analysts are monitoring Tesla’s rise in China and the impact its operations and popularity are having on other domestic EV manufacturers.

     United States

    In June, COVID-19 cases saw a spike in some key US states, including California, Texas and Florida, triggering fresh curbs on movement of citizens and resulting in some strong headwinds for the country’s PV sales. With more social restrictions and lockdowns likely to be introduced over the weeks ahead, recovery prospects for the US remain fragile.

    Counterpoint analysts are holding to their earlier forecast of an over 24% annual decline for 2020, at around 13.4 million units.

    On a positive note, Tesla’s market capitalisation now exceeds Toyota’s, making it the most valued carmaker in the world and underscoring its sustained global EV sales momentum over the pandemic period.


    In Europe, we are beginning to see some improvement in vehicle markets, propped by a combination of pent-up demand and various government subsidy programmes encouraging drivers to trade in older cars for new ones. In France, car sales rose for the first time this year in June, recovering by 1.2% YoY to just under 234,000 units. Following France, Germany and Spain too have introduced similar incentives for their auto industries.

    The UK car industry has also demonstrated signs of improvement in June, boosted by the reopening of more showrooms. According to reports of the Society of Motor Manufacturers and Traders (SMMT), June registrations fell 35% YoY to 145,377, an improvement over prior months when YoY demand fell by 89% in May, 97% in April and close to 45% in March. While car showrooms in England reopened at the beginning of June, dealers in Wales and Scotland were allowed to do so only from near the month end.

    Notwithstanding the signs of a small rebound, Counterpoint analysts remain cautious. European and UK consumers are wary about buying high-ticket items like cars, given the uncertainty over the economy and their job security.

     Rest of World

    South Korea remains a bright spot in Asia, with domestic production and sales rebounding in June by over 41% YoY to 176,468 units.

    In India, while leading automakers like Maruti Suzuki, Hyundai and Mahindra ramp up production and demonstrate incremental wholesale shipments month on month, sales remain a far distance from the pre-COVID-19 levels. June wholesale volumes for each of these automakers show an over 50% YoY decline. While PV production schedules for July may be higher, disruptions to the supply chain on account of COVID-19 induced restrictions and manpower availability continue to challenge their manufacturing stability. On the other hand, tractor and two-wheeler sales have seen a sharp recovery in June, led primarily by rising rural demand and resumption of movement of goods following progressive easing of lockdowns across the country.

    Revised Global Automotive Outlook

    While some varied signs of recovery have begun to emerge in June, Counterpoint Research remains cautious and is holding to its earlier global automotive sales outlook of around 72 million units for 2020, a 20.1% decline from 2019.

    Counterpoint: COVID-19 impact on global automotive market

    Author: Vinay Piparsania


    Week 13: COVID-19 Impact on EVs


    Counterpoint expects electric vehicles (EVs) to weather the pandemic storm better than the conventional vehicles due to the commitment of governments to meet their overall emission targets. The impact of the pandemic in 2020 will differ across regions. China will recover the fastest due to its control on pandemic spread and pro-EV policies. In longer term, the impact of the pandemic will be minimal and EV sales will be driven by government regulations and incentives. Despite slower recovery in Europe, the investment in the region is expected to remain strong in the long term, driven by strong regulatory tailwinds. Long-term demand in the US will be the lowest if the emission norms remain lenient and the oil prices remain low.

    United States

    The COVID-19 impact on the US EV market has been limited due to strong sales of Tesla during Q1 2020. Plant shutdowns during the March-May period have started making impact on all OEMs including Tesla, which reported 5% YoY decline in deliveries during Q2 2020.

    The EV sales in the US will be hit hard by COVID-19 and see a slower growth in the coming years:

    1. In January 2020, the administration rejected GM’s and Tesla’s plea seeking extension of the $7,500 tax credit qualification to cover three times the initial 200,000-EV threshold per automaker. The government did not increase the threshold. On the contrary, it reduced the tax credit to $7,000.
    2. Protracted legal battles between Zero Emission Vehicle (ZEV) states and the central government will continue to adversely impact EV sales in the US, at least for the next couple of years. Cash-strapped automakers will be encouraged to invest in profitable vehicles like gasoline trucks and SUVs.
    3. Low crude oil prices (which fell to -US$37.6 in April) will encourage car buyers to stick to gas fuelled cars.


    Chinese government has taken positive steps in 2020 to revive the demand for new-energy vehicles (NEVs). It is expected that the government will continue to support NEVs with sales mandates and subsidies driving the market.

    1. In April 2020, China scrapped vehicle purchase tax on NEVs, effective in 2021 and 2022, and broadened the scope of the exemptions to include all NEVs.
    2. The NEV subsidies were supposed to end this year. However, during the same month, the government announced to extend the subsides to 2022, with a slower phase-out pace.

    NEV sales during the January-May period crossed 260,000 vehicles, declining 44% from last year. However, sales decline continues to drop with each passing month as the pent-up demand is released and business activities comes to normal. Counterpoint expects a strong H2 2020 for EV sales in the country compensating for the demand lost during H1 2020.


    The European car sales increased around 90% during January-April 2020 compared to last year due to following reasons:

    1. 2020 is the target year for EU CO2 emission standards to limit average CO2 emissions per kilometre per new car sold
    2. Germany increased the EV subsidies in February, boosting demand in the region
    3. Italy’s move to introduce incentives worth €60 million in 2019 and €70 million in 2020 and 2021 started to have its impact on sales

    The impact of the pandemic will be diluted during rest of the year as OEMs focus on meeting their emission targets. It is likely that the governments will respond to the pandemic by increasing subsidies and incentives for EVs to meet emission targets, boost economic growth and generate more jobs. The proposed US$22.6 billion (€20 billion) package for two years for clean vehicles, with 2 million electric and hydrogen vehicle charging stations to be installed by 2025, is a step in this direction.

    Counterpoint: COVID19 Impact on EV sales

    Author: Aman Madhok


    Week 12: Micro mobility – Silver linings amidst the pandemic?


    Micro mobility globally has been severely impacted by COVID-19 with lockdowns resulting in reduced ridership. The road to recovery is a tough one, but Counterpoint believes micro-mobility will be the biggest beneficiary from COVID-19 among all forms of shared mobility.

    Citizens and governments in many cities are becoming increasingly aware of the benefits of micro-mobility, and companies should prepare for coming opportunities to not only survive, but to grow over the long term.

    Counterpoint: COVID19 Impact on Micromobility

    Key indicators showing potential for rebound as lockdowns ease:

    • Changing customer preferences – businesses are realising productivity is not an issue. In fact, it has increased in some cases as employees work from home. This is expected to become permanent for many companies moving forward, leading to a surge in short distance travel. People are more likely to choose quick and eco-friendly e-bikes and e-scooters as they travel short distances around their home rather than taking long commutes.
    • Amidst the economic downturn, choices for last mile and personal transportation will need to be economical. E-scooters, e-bikes and kickboards are significantly cheaper than owning a car.
    • Concerns around social distancing will encourage people to avoid public transport, boosting take up of shared e-scooters and e-bikes. In China, bike share operators like Hellobike, Mobike and Didi Chuxing are seeing good growth after easing of lockdowns, as people reduce dependence on public transport.
    • Lockdowns have resulted in less pollution, increasing environmental consciousness amongst the general public. This is expected to benefit the sector in near future. Indeed, high pollution levels in many Chinese cities have boosted the profile of the sector, making bicycles and e-bikes an important mode of last mile transport.

    Government support

    To aid social distancing, governments are considering infrastructure investments to help the micro-mobility sector to grow.

    • The UK government is urging people to avoid public transport and instead use private vehicles, bicycles, or walk. It has announced an initial £250m (US$306m) emergency active travel fund (the first stage of a £2bn investment commitment) for EVs, cycling and walking infrastructure. Buildout of E-scooter trails in the country will be brought forward to 2020 from 2021. Pop-up bike lanes, wider pavements and safe junctions will be a part of the fund. £10m (US$12.2m) from the fund will be committed to street EV charging infrastructure.
    • Bogotá, Colombia has added 47 miles of cycling lanes to accommodate more riders and aid in social distancing. Cities such as Mexico City and London are benefiting from the current cycling infrastructure.
    • Other cities have blocked some roads to traffic, providing more space for pedestrians and facilitate social distancing. For instance, Oakland, California has restricted traffic on 74 miles, or 10%, of its roads, helping pedestrians and cyclists keep at least six feet apart.

    Green shoots

    As lockdowns ease, some e-bike companies are already seeing an increase in demand.

    • E-bike maker Vanmoof, which secured funding of $13.5m in May 2020, saw sales increasing 48% YoY during Feb-March period, and over 20% for the Jan-May period.
    • UK-based foldable bike manufacturer Brompton announced its online sales increased five-fold since the launch of the ‘Direct To Home’ service from the start of April.
    • E-bike sales in Germany have seen a significant increase from April with the easing of lockdowns, creating a shortage of e-bikes in many cities.


    • The global micro-mobility market recovery will likely start in 2021, or as we see stabilization in COVID-19 cases. A second wave of infections could delay the recovery further.
    • Most micro-mobility companies are relatively small and localized start-ups, with many already seeing losses before the pandemic started. The market will see consolidation as cashflow continues to tighten. Intel’s recent acquisition of Moovit, a mobility-as-a-service (MaaS) provider, for US$900 million signals the possibility of similar acquisitions in the sector.
    • E-bikes, e-scooters and kickboards are still illegal for travel on roads in many cities. Further, there is a lack of standardization for these types of vehicles.


    • Governments can play a pivotal role in the adoption of micro-mobility. The recovery will vary from country to country depending on favorable government policies, subsidies and infrastructure development.
    • Measures such as self-sanitizing handlebars, onboard sanitizers and periodic cleaning of vehicle fleets will become important to attract riders.
    • Innovative schemes and discounts can help micro-mobility companies through the tough times. For instance, two-wheeler sharing company Bounce is offering its bikes on a weekly and monthly subscription basis.

    Utilization of existing vehicle fleets into logistics and food delivery can open up new revenue streams for micro-mobility companies. For instance, two-wheeler sharing company Rapido is looking to earn 25% of its revenues from logistics moving forward.

    Author: Aman Madhok


    Week 11: US May sales – Is the worst over?

    Actual passenger vehicle (PV) sales reported for the US in May suggest the domestic auto industry could be on its way to recovery.

    Reported May sales for PVs and light trucks came in at around 1.1m units, down 33% YoY but an improvement over April and March’s respective 45% and 38% declines. Further, breaking the 1m monthly mark for the first time this year, May volumes showed significant improvement over the 350,000 units sold in April, with light trucks being a bright spot.

    US auto sales on the rebound

    May is traditionally a critical month for the US auto industry as it marks the beginning of the summer sales season. With almost all states having eased COVID-19 restrictions, most automakers in the country have reported sales rebounds during May.

    Monthly sales declined over 30% YoY for General Motors, Ford, and FCA. Leading Korean carmaker Hyundai saw a 13% YoY decline, a 5% pt improvement from April. Honda saw a May YoY sales drop of 17%, with trucks performing much better than cars – down 10%  and 25%, respectively. Toyota reported a YoY sales decline of 26%, May’s unit sales were almost double that of April, which fell 56% YoY.

    It is possible April could be the low point in a possible V-shaped recovery, with states re-opening and dealerships returning in May. The month has shown significant sales improvement and recovery, highlighting pent-up demand. As well, extraordinary promotional offers by dealers and automakers alike have brought consumers back to showrooms and encouraged buying.

    Counterpoint believes that May’s sales pace, while lower than last year, is indeed the start of recovery for the industry. Automakers are already scrambling to replenish inventories as customers return to showrooms. However, there is still a long road ahead, and we will continue to track the market over the coming weeks.

    Production hiccups stalling assembly lines

    As many states across the country eased shelter-in-place restrictions during the month, May also brought attempts by auto OEMS looking to return to normalcy with restarts at their assembly plants.

    However, supply chain issues continued to plague production lines at major auto plants, as they faced problems from suppliers in Mexico. While most plants in the US and Canada restarted by mid-May, most manufacturers in Mexico had not resumed operations even by the end of the month. Given the inter-dependency of the North American automotive supply chain, most plants in the US continue to face parts shortages, resulting in sporadic production operations. It may still be a few months before we see some stability.

    Counterpoint estimates prolonged plant/supplier shutdowns have resulted in the loss of nearly 3m units of vehicle production in H1. Anticipating slower line-speeds and reduced demand over Q3 and Q4, we expect full-year 2020 output losses to increase to over 3.5m units, a 22% decline from last year.

    In any case, with automakers already concerned about record low inventories at dealerships, carmakers have been looking to continue working over normally planned shutdowns in summer.

    Keen on riding the wave in customer demand, especially for light trucks, General Motors has called off its traditional two-week summer shutdown and will continue to produce vehicles at most of its North American plants.

    Similarly, Ford Motor Company has shared that most of its US assembly plants will be reducing their annual summer shutdowns to one week.

    As well, most other auto OEMs are considering deferring annual summer breaks to later in the year.

    Sales recovery to hit headwinds?

    The question going forward is whether recovery signs will continue into June and further out.

    While recent trends suggest sales are showing steady gains and automotive manufacturing in North America is gradually coming back on stream, there is also the possibility of a resurgence of the virus bringing further economic headwinds.

    However, Counterpoint continues to maintain its current outlook for the US auto PV and light trucks market at a base case estimate of almost 13.4m units in 2020, marking a 24% YoY contraction.

    Exhibit 1: US Vehicle Sales,’000 units

    Counterpoint: Coronavirus Pandemic Impact on US Automotive Industry

    Author: Vinay Piparsania


    Week 10: Changing consumer behaviors and how mobility companies can adapt

    The pandemic is affecting most sectors of the economy, especially shared and smart mobility operators. Public-transport usage in major cities has declined anywhere from 70 – 90% of normal loads, and operators are now required to follow strict protocols like requiring face coverings, temperature scans and limiting the number of riders in trains and buses to ensure social distancing.

    Similarly, ride-hailing mobility usage has plummeted dramatically, with several players suspending services during lockdowns. In the US, demand for Uber and Lyft fell by over 80% in April from pre-COVID levels.

    Over the long term, the outbreak will have lasting impacts on shared mobility as the pandemic alters the economic, regulatory, and technology environment, as well as changing consumer behaviour.

    Changes in consumer behavior and preferences

    Mobility is an essential aspect of our lives, but how we get around in the future could be significantly different in the post-COVID world. Social distancing is the most significant driver of change in this new environment, with people rethinking their transport modes to avoid the risk of infection. Recent trends in China’s major cities are demonstrating that as bus and subway ridership drops, private cars, walking, and biking are gaining in popularity.

    Personal vehicle use may be the winner in the short term, and app-based ride-hailing aggregators are seeing a dramatic decrease in consumers using their services as remote working becomes the norm.

    Further demands are being made on share-car drivers and their companies to take responsibility for keeping vehicles clean and virus free. To adapt, mobility industry players are adjusting their tactics, with leading companies focusing on various strategies.


    Lyft, which announced cuts and furloughs affecting hundreds in May, stated that rides on its platform in the US reached only 25% of pre-COVID levels during the month, with consumers slowly coming back in cities where lockdown restrictions were eased. Lyft drivers are now required to self-certify within their app of wearing a facemask before they are allowed to pick up passengers.


    While the global number for June trip requests are picking up as several countries ease restrictions, rides are still significantly below last year’s levels. In an attempt to improve profitability, Uber has remained focused on its core businesses of ride-hailing and food delivery, and also announced cuts to its workforce. Uber also introduced a new feature requiring drivers to take a selfie of themselves wearing a facemask before logging onto the company’s network. Uber has also been providing disinfectant sprays to drivers, encouraging them to sanitize their cars regularly.

    Didi Chuxing

    With cities in China now officially re-opened for business, Didi Chuxing, the country’s largest ride-hailing app, is seeing ride-sharing demand coming back to levels similar to last year.  Since May, Didi has been using AI technology to authenticate that its driver-partners are wearing face masks.

    Diverse regulatory and policy responses across regions

    The current crisis is helping some regions move more quickly towards sustainable mobility, while others are looking to defer or relax regulatory mandates to support depressed automotive industries.

    In some markets, incentives such as cash for turning in old cars is driving sustainability through replacement and also encouraging adoption of electric vehicles (EV).  In other regions, like the US and China in particular, regulators have considered relaxing emission targets in support of automakers.

    Chinese regulators are also relaxing, at least for now, policies limiting personal vehicle ownership in order to facilitate social distancing. Many governments are also showing interest in dedicating space for pedestrians and cyclists, while some cities like New York are looking to close some streets to vehicular traffic.

    Technology development 

    Over the short to medium term, the pandemic could delay the development of advanced technologies, such as autonomous driving, as automakers divert research budgets to fund immediate cash requirements. Similarly, investments in micro-mobility and shared-mobility start-ups are expected to fall and could drive market consolidation.

    The impact of COVID-19 on EV development will differ across regions. In China, we expect post-COVID EV sales to rebound, with continued investment in development. In Europe, while ramp-up of EVs may be delayed with historically low oil prices, stringent environmental regulatory pressures could remain a counter-balance. In the US, we could see EV demand stagnate should federal emissions regulations be eased and oil prices remain subdued.

    Over the long term, however, autonomous vehicles, micro-mobility solutions and other technologies that support physical distancing will benefit. We believe that as the initial crisis subsides, customer demand for these solutions could soar.

    How can mobility companies cope?

    Even before the pandemic, mobility and automotive start-ups were suffering from slowing growth in major economies. Battered by lockdowns and movement restrictions, ride-hailers around the world have had to resort to cutting jobs and slashing costs.

    Looking ahead as the pandemic gradually comes under control, mobility companies will need to look at developing detailed plans to scale up operations, not only focusing on where, but how. A portfolio review aiming to rationalise services can help focus on profitable operations and decide on which technologies are to be prioritised, so to emerge from the crisis leaner and stronger.


    Counterpoint believes recent consumer behaviour changes in the mobility space will be temporary, and shared-mobility solutions, including public transit, will rebound. Micro mobility and last-mile solutions, too, will eventually recover, as cleaning and disinfection protocols are practised, with status updated on ride-hailing apps.

    Now more than ever, it has become imperative for automakers and mobility operators to review their long-term strategy.

    Exhibit 1: COVID-19 Impact to Global Automotive and Shared Mobility IndustryCounterpoint: COVID19 long and short term impact on automotive industry

    Author: Vinay Piparsania


    Week 9: Poised for a rebound?  May’s mixed signals

    As the effects of the pandemic are being brought under control, we are seeing gradual automotive sector recovery, though at varied rates.

    With most parts of the world easing lockdowns in May, auto sales have begun to show some signs of improving. Prospects for China, having reopened earlier than most, and the US are looking more positive than for Europe.

    In the short term, the global automotive industry appears to be poised for a rebound as manufacturers replenish dealer inventories and meet pent-up demand, especially with many consumers expected to take efforts to avoid public transport and ride-sharing.

    Longer-term, however, Counterpoint sees a more gradual recovery, with dampened vehicle sales from Q1 carrying over into Q2. Supply-side issues will also cause problems, with stuttering production schedules from broken supply chains, financially stressed suppliers, and delayed new model launches limiting supply.

    With some leading indicators now visible, we have decided to maintain our current 2020 PV forecasts. However, key risk factors of a virus resurgence remain high for some locations, with the possibility of markets going into lockdown again.

    Below is our latest outlook, incorporating May sales updates from key global markets.


    The first country to be impacted by the virus outbreak, China has been quick to recover from the pandemic, and PV sales are almost back to pre-coronavirus levels of growth. Largely on account of the automotive industry’s effective restart in March, sales and production activity approached normal levels in April, with PV sales up 4.4% YoY to 2.1m units. May saw further improvement, with sales rising 12% YoY to 2.1m vehicles.

    Pent-up demand drove steady deliveries in April. This was further supported by government subsidies and intensive promotions and discounts offered by dealers. The momentum continued into May, raising our overall expectations for Q2.

    However, domestic and global headwinds remain, and the market still faces a high level of economic uncertainty. Consumer confidence is fragile, with fear of unemployment and income loss dampening high ticket, discretionary purchases.

    As a sustained, comprehensive recovery is still to be established, prospects for H2 remain cloudy and we maintain our current forecasts.


    May sales are estimated at around 1.1m PVs, down 30% YoY, but an improvement to April and March’s respective declines of 45% and 38%. Easing of restrictions across most of the country helped May pass the one million mark.

    Throughout the lockdowns, however, the market did demonstrate some resilience, with significant commercial activity continuing as vehicle sales were categorised an ‘essential service’ by many states.

    While American retail consumers are coming out again to look at cars and trucks, facilitated by digital retail tools and appealing discount offers, fleet and commercial category buyers, particularly those in rental cars, are not. This is worrying as new vehicle sales to rental car companies accounted for about 10% of the overall market, or 1.7m vehicles, last year. Bankruptcy filings of Hertz and its parent company Advantage Rent A Car in the last week of May will likely weigh down US auto sales.

    We maintain our current outlook for the US, with a 24% YoY contraction expected in 2020.

    Europe and the UK

    European car sales picked up slightly in May after a disastrous April. In Spain, May sales dropped over 72% to 34,000 units, and to almost half previous year totals in France, Italy and Germany, which saw sales of 96,000, 100,000, and 168,000 units respectively, as partial lockdowns remained. Overall, YoY sales for Western Europe fell over 57% in May, to 556,000 units.

    For the UK, new car registrations were down 89% YoY in May, with 20,200 cars registered last month. Despite the drop, the figure marks an almost five times increase over new car registrations in April, when only 4,300 cars were sold. The Tesla Model 3 topped the UK new car sales chart for the second month running, with 850 units delivered, making up nearly 5% of all registrations.

    With around half a million new cars registered since the beginning of the year, the overall UK market has halved in the first five months of 2020, compared to almost one million units registered during the same period last year. While showrooms in England have reopened after two months, dealerships in Scotland, Wales, and Northern Ireland are still shut.

    Reopening’s have helped sales in Germany, with May sales falling by 50% compared to over 60% in April.

    As we look ahead, Counterpoint is paying particular attention to any government announcements around fiscal policy or economic relief programs such as that planned for France and Germany, which are looking to lower VAT. While details will vary by country, recent announcements imply modest levels of incentives can be expected.

    Even with some signs of improvement in May, the industry remains in crisis, with various stages of lockdowns expected for some time. Our outlook for Europe remains unchanged – a 26% contraction expected in 2020, with the possibility of a gradual recovery in H2 2020 as consumer sentiment improves with the easing of lockdowns.


    After zero sales in April, preliminary shipment data for May suggests only 37,000 units were sent to dealerships, an 85% decline YoY, as the country started to open up gradually during the month.

    With auto OEMs and dealerships estimated to be holding nearly 300,000 units of inventory – about two month’s stock based on current projected retailing rates – wholesale shipments over the next few months are expected to be difficult.

    Overall consumer sentiment in the country remains weak, mostly because of the economic fallout of a complete nationwide lockdown lasting 50 days, depressing GDP forecasts, and increased caution around car loans. For any significant recovery to happen this year, it is critical that automakers and dealers have operations and consumer offers fully in place as the festive sales season commences during the last quarter of the year.

    Our India sales forecast remains unchanged. Our base case outlook sees YoY passenger vehicles declining by 25% to around 2.1m units.


    While having been a relative bright spot so far, the Japanese market worsened in May. Sales dropped, nearly 55% YoY to 218,285 vehicles, compared with a 29% YoY decline in April.

    Consumer sentiment remained depressed, with expectations of an economic downturn curbing big ticket purchases. Also, the government’s declaration of a state of emergency and stay-at-home advisory, which ran into the Golden Week holiday in late April to early May, severely impacted sales, which normally spike during the annual holiday.

    While overall economic activity shows some positive signs of recovery since lifting of restrictions in May, our outlook remains unchanged.

    Revised Global Automotive Outlook

    While varied signs of recovery began to show in May, Counterpoint Research remains cautious and we leave our earlier global automotive sales outlook unchanged at around 72m units for 2020, a 20.1% decline from 2019.

    Exhibit 1: Global Automotive Sales (M units)

    COVID19: Impact on Automotive Sales

    Note: The nature of the current global health crisis means we cannot rule out further revisions to the global 2020 automotive forecast.

    Author: Vinay Piparsania

    Week 8: India’s Auto Industry to decline by at least 25% in all categories in 2020

    India’s automobile industry, the fourth largest globally by volume, is headed for another year of significant declines as extended lockdowns impact production and consumer demand. Sales volumes of passenger and commercial vehicles are projected to drop to levels not seen in over a decade.

    The storm continues

    At the beginning of the year, the auto sector was already suffering in the midst of a challenging economy.  Compounding this, more stringent environmental and safety regulations, the growing popularity of shared mobility platforms and cautious lending by banks and non-banking financial companies (NBFCs) negatively impacted vehicle sales. COVID-19 is now making the situation far worse.

    Based on data reported by the Society of Indian Automobile Manufacturers (SIAM), March passenger vehicle sales declined 51% YoY to 143,014 units. Sales of two-wheelers fell 40% to 866,849 units, and commercial vehicles declined 88% to 13,027 units. With a nationwide lockdown in effect from the last week of March, the industry saw zero production and sales of new vehicles in April.

    Factories and dealerships struggle to resume operations

    While automakers began partial operations in May, it has been an uphill struggle. Openings were allowed only after receiving due approvals from respective state authorities, and conditional to following safety protocols such as body temperature scanning, social distancing and ensuring high standards of sanitization.

    Shutting down operations was far easier than reopening factories as companies need to manage complex synchronization issues. The resumption of operations requires OEMs to coordinate with hundreds of local and global suppliers, logistics partners and thousands of employees. The biggest challenges come from not having enough workers willing to come back and sufficient and continuous parts supply. It is likely plants across the country will function with a skeleton staff at least until July.

    Slow dealership re-openings are another problem, with almost all vehicle sales delivered through them – online sales are a rarity and still under development. As of the last week of May, only 3,500 dealerships were operational around the country, representing 20% of the total network. And amongst these, half were operating only their service departments and not showrooms.

    The sharp contraction in sales will also lead to a decline in average manufacturing capacity utilization. For the PV segment, effective annual capacity utilization is projected to drop down to as low as 45%, from 60% a year ago. Two-wheelers and commercial vehicles will drop to below 50% and 35%, respectively, from 65% and 51% a year ago.

    Demand outlook for 2020

    The lack of government policy intervention for the automotive sector in this year’s national budget and also recent fiscal stimulus packages combined with a lack of visibility around when social and economic demand conditions will get back to normal has resulted in Counterpoint revising our 2020 forecasts. Our base case outlook sees YoY passenger vehicles, two-wheelers, and commercial vehicles declining by 25%, 21% and 28%, respectively. CV sales in particular, have been languishing under the impact of a new axle load norms, and is unlikely to show much recovery this year with freight demand projected to remain low.

    Recovery timing

    Demand recovery can only be expected around the festive season in the last quarter of the year. With growing consumer preference for cheaper, personal transport, two-wheelers – motorcycles in particular, with their higher rural share – will likely be the first category to see a rebound. Should the government develop scrappage schemes and lower interest rates for vehicle loans, along with reduction in sales and road taxes, as seen across SE Asia, these interventions could accelerate recovery.

    Despite the above challenges, we remain positive longer term in view of India’s comparatively low vehicle penetration – 110 two-wheelers and 32 cars per 1,000 – Australia has 740, Japan has 591 and China has 164 vehicles per 1,000 individuals. We expect recovery post-2022, helped by improvement in non-banking financial institutions and the overall economy. Combined with a young population, rapid improvements in road infrastructure, growth in rural demand and possible introduction of entry-level passenger cars, this could significantly boost consumer demand.

    Exhibit 1: Key Factors Affecting the Market

    Counterpoint: COVID19 Key Factors Impacting Indian Automotive Industry


    Exhibit 2: India Vehicle Shipments1 (in Million Units)

    Counterpoint: COVID19 Growth Rate of Indian Automotive Industry; Cars, Two-Wheelers and Commercial Vehicles

    Note: The nature of the current global health crisis means we cannot rule out further revisions to the global 2020 automotive forecast.

    Author: Vinay Piparsania

    Week 7: Southeast Asia Pressure Points

    As the world continues to deal with COVID-19, economies are moving into recession. The automotive sector, with its large-scale production and tightly interconnected global supply chain, remains the worst impacted.

    This week we focus on the impact to Southeast Asia, with ASEAN representing the fifth-largest auto market cluster in the world.

    Lockdown measures introduced mid-March

    Like many others, most ASEAN countries underestimated the risk of outbreak at the start of the year, with governments doubtful on it becoming a pandemic. Remaining tentative on diverting resources to public health, most ASEAN countries waited, introducing lockdown measures only around mid-March. As a result, key economic sectors in the region remained, for the most part, unaffected by the outbreak before this time – this included international travel, tourism, and export dependant businesses.

    However, as the crisis erupted and lockdowns ensued, millions across the region rapidly began losing jobs as business came to a standstill. As immediate countermeasures, central banks across the region introduced rate cuts and easier lending terms to ensure liquidity. Governments also announced fiscal support measures including direct disbursement, soft loans, and tax cuts to mitigate the impact of the potential economic crisis.

    The auto sector has been hit hard, with overall Q1 vehicle sales in ASEAN5 (Indonesia, Malaysia, Philippines, Thailand, and Vietnam) falling to 683,000 – levels not seen in nearly a decade.

    Declines for the month of March are the most revealing, with new vehicle sales plummeting around 40% YoY across ASEAN, and auto OEMs selling only 197,000 vehicles – this compared to 328,000 a year earlier. We expect April to be worse, with auto production remaining shut across the region last month and economic damage possibly worse than the 1998 Asian financial crisis.

    Significant revisions to our Indonesia, Thailand, and Malaysia Automotive Outlook

    Economic growth in the region was already slowing down due to US-China trade tensions, and lockdowns have only exacerbated the situation – especially in Thailand and Malaysia. The extent and duration of distancing measures have been severe, and we have reviewed our FY 2020 outlook in this updated context.


    In Indonesia, SE Asia’s largest auto market by volume, vehicle sales saw a comparatively moderate Q1 decline of 7% YoY to 237,000 units, with negative lockdown effects mitigated by a mid-March rollout. Though skeptical early on, the government eventually announced a partial lockdown on March 18, allowing only essential businesses such as food, healthcare, banking, and utilities to operate; as a result, vehicle sales for the month dropped 15% YoY to 77,000 vehicles.

    With the full effect of shutdowns to be felt in the weeks ahead, we project steeper YoY vehicle declines from April onwards. And with a recession imminent, Counterpoint estimates this year’s auto demand to fall 36% to 603,000 units.


    One of the region’s largest markets, Thailand reported Q1 sales of 200,000 units, a YoY decline of 24% after an especially bad March, which saw a 42% YoY plunge to 60,000 units. This has worsened the shrinking market, which took a U-turn in 2H19 after two straight years of strong growth.

    With a prolonged lockdown, Counterpoint expects broad-based economic challenges resulting in a 2020 GDP decline of -5.5%, the worst drop since the 1998 Asian financial crisis. We have revised this year’s outlook accordingly, and estimate new vehicle sales of 745,000 units, a 28% annual decline.


    Malaysia was one of the worst-performing markets in the region with Q1 sales falling by over 26% to 106,000 units. The government implemented its Movement Control Order (MCO) from mid-March, prohibiting all interstate and international travel, and sales of non-essential items including automobiles. Sales plunged by almost 60% in March to around 22,000 units. With no new vehicle production and all dealers in the country closed, zero vehicle sales have been reported for April.

    While Malaysia has begun to ease lockdowns, allowing resumption of partial manufacturing operations, restrictions on reaching full capacity at automotive plants remain in place until June 9. Counterpoint estimates Malaysia’s vehicle market this year to fall by over 29% to 426,000 units.

    The Philippines and Vietnam

    The Philippine market is fell in Q1 by over 16% YoY to 90,000 units, with the impact of the pandemic becoming evident only in March when the government began mid-month to lockdown the country’s most populace regions. We expect the full effect of the pandemic to become more apparent from April.

    Vietnam was the region’s worst-performing market during the quarter, with sales estimated to have dropped around 32% YoY to 50,000 units. Its comparatively bad performance was due to Vietnamese authorities in February taking an earlier stand to contain the spread of the virus. Recently on May 20, the Vietnamese government, in a move to stimulate automotive demand, has approved plans to reduce vehicle registration fees by 50% till the end of the year.

    2020 ASEAN vehicle sales outlook

    We have revised our overall vehicle sales projections for 2020 and now estimate a YoY decline of 30% to 2.3m units, with country breakdowns as follows:

    Exhibit 1: ASEAN5 Vehicle Sales, Q12019 & Q12020, ‘000 Units

    Counterpoint: COVID19 ASEAN Automotive Sales


    Exhibit 2: ASEAN5 Vehicle Sales, 2016-2020E, ‘000 Units

    Counterpoint; COVID19 ASEAN Annual Vehicle Sales

    Note: The nature of the current global health crisis means we cannot rule out further revisions to the global 2020 automotive forecast.

    Author: Vinay Piparsania

    Week 6: Challenges in Syncing Supply Chain

    As the COVID-19 pandemic broke out in China at the beginning of the year, vulnerabilities in the global automotive supply chain were exposed with nearly 85% of the world’s supplies dependent on China in some way or another. The ripple effect was felt globally, and most auto manufacturing came to a sudden halt as lockdowns shut plants.

    Even before the pandemic, the industry was stressed financially from increased emissions-related upgrade costs and increased R&D investments in emerging technologies. As manufacturing operations resume, the added burden of COVID-19 safety protocol compliance, plummeting demand, and inefficiencies from underutilized capacity are further exposing OEMS and suppliers to severe liquidity issues. Further disruptions are likely to continue, bringing the possibility of major consequences to specific segments of the auto ecosystem.

    Most regions remain vulnerable, and Counterpoint expects substantial volume drops in 2020. For example, in the major markets of North America and Europe, we expect base case sales of 13.4m and 13.6m, a YoY decline of 24.1 % and 25.7%, respectively.

    Below is our analysis around April updates from key global markets.


    China’s April auto sales were up 4.4% YoY to 2.07m units, as reported by China’s Association of Automobile Manufacturers (CAAM). February and March saw MoM declines of 79% and 43%, respectively. With April having apparently turned the corner with an MoM increase, we expect the trend to continue over at least the next two months with potential pent-up demand being fulfilled.  However, even as China is now in recovery mode, CAAM expects auto sales to drop 15% in 2020 to 21.3m units. This is in-line with Counterpoint’s recently downgraded forecasts.


    While US passenger vehicle demand tanked over the past few months, April sales slightly exceeded our expectations falling 46% YoY versus our estimate of a 50% decline. While a catastrophic hit in any other year, the number does offer a glimmer of hope, especially in the context of states and local governments lifting restrictions at manufacturing facilities, dealers opening their doors, and online channels continuing to engage with customers.

    Adhering to new safety norms, i.e. frequent plant sanitization, wearing of face masks, and temperature checks upon entry – Daimler and Hyundai have resumed production at their Alabama plants in the last week of April. The UAW union has also given a go-ahead for its members of the Detroit 3 (GM, Ford, and FCA) to return to work. Other automakers plan to follow similar protocols, including modifying layouts and floor plans of manufacturing sites to have fewer workers at each work station. All these additional safety measures will limit the pace of ramp-up and eventual production line rates. While parts inventory may theoretically be available – with WIP material already in place before the shutdown – it will take time to rebuild and stabilize the supply chain, with component suppliers needing to implement safety measures at their facilities too.

    May should mark the start of a gradual recovery in US output, although volumes for the month are still projected to decline by 65% YoY. Even with all plants back online, subdued demand will result in lower production volumes. As a result, we expect 2020 passenger vehicle sales to remain 24% below last year.

    Europe and the UK

    With lockdown measures in place since mid-March, some markets have registered almost no registrations in April. France’s sales fell by 88% last month, while sales in Italy plunged 98%.

    New car sales in the UK fell 97% as dealerships remained shut. Interestingly, the month’s top-selling brand, typically dominated by traditional automakers such as Ford, Volkswagen, and Vauxhall – was the Tesla Model 3, selling 658 units, outselling the next two best-sellers combined (Jaguar I-Pace and Vauxhall Corsa at 367 and 264, respectively). Overall, however, the numbers were very small when compared to a year earlier, when Ford’s Fiesta topped the list with 5,606 registrations. In possibly a sign of changing times, Tesla’s online sales system, with buyers pre-ordering their cars and being directly delivered with a contactless handover, may have just given it the edge. Britain’s biggest car factory, operated by Nissan in Sunderland, will not resume production until June.

    Overall, Western European registrations fell 80% YoY in April, compared with April 2019, and we expect the declining trend to continue through at least the next six months with risks remaining high on growing unemployment and soaring government debt, as well as the possibility of virus cases picking up as lockdowns are lifted.


    With the lockdown of all showrooms and manufacturing facilities, the Indian auto industry saw zero production and sales in passenger and commercial vehicles (PVs and CVs) in April, which followed March’s 50% and 88% drop in PVs and CVs, respectively.

    The largest carmaker in India, Maruti Suzuki, only managed export shipments of 632 units during the month with port operations having been partially resumed. Similarly, exports of Hyundai and Mahindra stood at 1,341 and 733 units respectively last month, while having reported zero domestic production and sales. Compared to April 2019, when the country reported total PV sales at around 320,000 and exports at 56,800 units, the current lockdown will surely leave some deep economic wounds. With the partial opening of a few plants allowed from last week subject to strict safety and social distancing protocols, every auto manufacturer is working with dealers and supplier partners to rebuild the ecosystem.

    With no clear definitive indication of when the social and economic conditions in the country will get back to normal, Counterpoint is holding to its base case scenario of 20% YoY decline in auto sales, and revising the worst-case outlook to a 35% YoY decline should the GDP growth outlook become negative.


    South Korea remains the industry bright spot as the country continues to be successful in managing the pandemic domestically. Sales increased 8.3% YoY in April, a second consecutive month of YoY growth. However, a recent resurgence of some new coronavirus cases may be a growing concern.

    There continues to be an increased risk that global passenger vehicle demand could drop to 70m or below if the current economic recession becomes further entrenched or a second significant wave of the virus occurs post-lockdown. While economic interventions and industry incentives could have a big impact on reversing demand declines – as we saw with scrappage schemes implemented during the 2008 financial crisis in North America – the success of any stimulus package will depend on the quantum of financial support from governments, the duration of such initiatives, and qualifying criteria for consumers.

    Revised Global Automotive Outlook

    The scale of distress to the automotive supply chain in the current crisis is unprecedented. A general lack of visibility, particularly on the lower tiers of the supply chain, means the weakest links will inevitably be revealed as production restarts and companies scramble to secure components. The most financially vulnerable are the smaller tier 2 and 3 suppliers, specialist tooling suppliers, and some logistics providers. As a result, our global 2020 base case sales growth estimate is around -20%.

    As current FG stocks near depletion, future production planning will need to be revised to the new normal of lower demand. Although the adage ‘with every crisis there is an opportunity’ still rings true, things will be especially tough as the industry right-sizes and become leaner.

    With efforts initiated by automakers and suppliers to consolidate, Counterpoint’s outlook remains cautious. Keeping in mind production already lost, the challenges in returning to work and the risk of prolonged low-capacity utilization from subdued demand, our revised global passenger vehicles sales outlook is around 72m units for 2020.

    Exhibit 1: Impact of COVID19 on Global Automotive SalesCounterpoint:COVID19 Impact on Automotive Sales

    Note: The nature of the current global health crisis means we cannot rule out further revisions to the global 2020 automotive forecast.

    Author: Vinay Piparsania

    Week 5: Digital Auto Retailing to Become More Widespread


    Car sales have traditionally been a single, decentralised sales channel, i.e. automakers/importers sell cars to dealers, and dealers to consumers; COVID-19 is shifting some of this dynamic towards digital.

    We have recently seen dealers ramping up their websites to help buyers select desired models, process payments and complete related paperwork.

    Mercedes Benz has plans to convert 25% of its sales online by 2025, and long term, it is possible some automakers may adopt a Tesla-like business model by going fully online and removing the dealership from the equation.

    However, we believe many car buyers will continue to want a brick and mortar experience, preferring to kick the tires and test drive before buying. Dealerships will continue to account for a vast majority of cars sold globally during the next decade.

    The Tesla Model 

    All Teslas are sold online and delivered to the customer’s doorstep. Company-owned showrooms are limited and located at high footfall places like malls. The purpose of the showroom is not to close sales, but to educate, display the product, showcase the latest technologies, and answer any customer queries. By removing franchise dealers from the buying process, Tesla is able to save on dealer commissions and control the overall buying experience. Maintaining closer contact with car-buyers not only enhances this, but also helps Tesla better understand customer expectations and communicate offerings.

    Tesla is the only major automaker to have shown increasing sales during Q1 2020. An important factor behind the company’s performance was that its supply was less disrupted due to COVID-19 compared to competitors’, which depended on traditional dealerships. The success of the Tesla business model is expected to encourage other automakers to shift part vehicle sales online.

    Exhibit 1: Factors Driving the Shift Towards Digital Retailing

    Counterpoint: Factors Driving the Shift Towards Digital Retailing

    Key Drivers of Online Sales

    • With most car sales in many countries happening online due to COVID-19, car-buyers are becoming more aware and accustomed to the idea of buying cars online. Dealers are enhancing their online selling capabilities and using unconventional ways to communicate with car-buyers, using Zoom calls and WhatsApp for instance. Initial industry feedback has been somewhat surprising, revealing an overall better buying experience via compared to walk-ins.
    • Growth of comparison and buying sites like Cars.com, Carvana and Vroom provide a wealth of information like availability, specifications, comparisons and video reviews to aid buying decisions. Price comparisons influence buying behaviour by helping consumers make informed decisions around costs.
    • The COVID19 pandemic has accelerated the shift towards digital retailing. Dealers lacking online capabilities are now partnering with third-party apps to connect and communicate with car-buyers online.

    Key Hurdles

    • Automakers are bound by franchise agreements and many states do not allow direct selling by automakers.
    • Many state governments require in-person signature on the documents making full online sales impossible.
    • Many car-buyers prefer to evaluate the car in person and take it for a test drive before making a decision.
    • Arranging home test drives would add to extra time and costs for the dealers.
    • In many countries the e-commerce ecosystem is not developed enough to fully support online sales.


    With social distancing unlikely to disappear in the foreseeable future, e-commerce will become an important buying channel for almost everything, including cars. Automakers and dealers are being forced to accept online sales or lose business. An online presence will soon become a ‘must have’ feature. However, dealerships and walk-ins will likely continue to account for the vast majority of car sales through the long term, mainly due to customer preference for test driving and seeing the vehicle in person.

    Author: Aman Madhok

    Week 4: Automotive Industry Creeping Forward

    The COVID-19 pandemic continues to pummel the global auto industry, resulting in its one of the worst performing quarter since the financial crisis of 2008.

    With governments having mandated various lockdown measures over the past few months, both supply and demand have been affected. Automakers in China, Europe, and the United States suspended plant operations, disrupting production, and consumer demand has waned as showrooms have closed and people shelter at home.

    This week, while many production centers globally have announced extending shutdowns further into May, some automakers have also begun the process of re-starting manufacturing, albeit with caution.

    Ensuring Enhanced Safety Protocols

    Automakers and suppliers are taking the required steps for safe operations. These include things like temperature screening, daily health update questionnaires, reconfiguring of assembly lines to facilitate one-to-two-meter social distancing, and requiring the use of facemasks and gloves.

    Some manufacturers are going beyond the requisite measures. Ferrari will offer voluntary blood tests to check for virus exposure, and FCA’s unions are proposing to move mealtimes to the end of shifts, allowing employees to avoid crowded canteens by clocking off 30 minutes early and eating at home or elsewhere.

    Global Plant Openings

    In the United States, several large automakers, including FCA, Honda, and Toyota, are aiming to restart production during the first week of May. In Europe, major automakers are hoping to begin building vehicles again in early May. Other automakers around the world are also publicly releasing opening dates, signaling to their suppliers when to ramp up for restart of production.

    China Already Back to Business

    In China, the initial epicenter of the outbreak and the world’s largest auto market, manufacturers in lockdown since late January resumed operations progressively from mid-February to early March; Volkswagen, Nissan, Hyundai, and Honda announced plant re-openings in mid-February, while General Motors, BMW, Toyota, and Volvo announced re-starting of plants from early April, including those in Wuhan province where the virus outbreak began. Volkswagen has managed to restart manufacturing at 32 of its 33 Chinese plants.

    US Big Three in Re-Start Discussions with UAW

    For the Detroit automakers, the United Auto Workers union (UAW) plays a critical role in deciding when and how plants will restart. Among the union’s primary concerns is to ensure members who report being ill will not be penalized for time away from work. The UAW has already supported GM and Ford’s efforts to launch the production of essential ventilators at their US plants – operations that have allowed the companies and the union to try out new safety protocols.

    Ford, GM, and FCA are looking to restart some of their US plants in early May, and establish regular health protocols like screening, sanitizing, and social distancing. Production of Ford vehicles and engines is expected to resume during this period. Among others, Volkswagen has announced it will restart operations at its Chattanooga, Tennessee, plant. Volvo and Hyundai too hopes to restart work at its US plants by early May. Tesla is going to extend its factory shutdown orders through the end of May, following the extension of shelter-in-place orders in the Bay Area. Hyundai and Kia started operations of in their Alabama and Georgia on May 4.

     European Plants Returning to Normalcy

    In Europe, an estimated one million jobs have been lost, with production losses at around two million vehicles. Several automakers have now started some limited production at their plants. Toyota resumed operations at its French and Polish facilities on April 22, after a month-long shutdown. Volkswagen restarted production in Zwickau, Germany, the first assembly plant in the country to restart operations. Audi restarted its engine plant in Gyor, Hungary on April 21. However, the luxury carmaker from the Volkswagen Group is yet to resume its car production in Germany. VW plants in the UK, Turkey, and the Czech Republic are likely to commence operations by early May. Jaguar Land Rover announced last Thursday it will gradually resume production at its Solihull facility in the UK, as well as its factories in Slovakia and Austria from May 18.

    Hyundai has restarted output at its plant in the Czech Republic, while Renault has reopened its Portugal plant. The French carmaker’s Romanian facility is likely to resume operations soon. Volvo Cars announced its plants in Sweden and Belgium restarted work on April 20. Daimler’s contract manufacturer, Magna Steyr, restarted production of the Mercedes G-Class luxury SUV at its site in Austria last week. Italian sports car manufacturer Ferrari, one of the first carmakers to close its plant, is preparing to roll out cars from its Maranello facility in the next few weeks.

    Indian Auto Industry Given Government Go-Ahead

    Automobile, auto parts, and tractor manufacturers in the country have resumed operations after receiving due approvals from respective state authorities, conditional to following precautionary protocols such as social distancing and ensuring high standards of sanitization and hygiene.

    Bajaj Auto, India’s leading 2W and 3W manufacturer, restarted operations this week at two of its plants, prioritising production of knock-down kits for export markets. Mahindra & Mahindra also commenced assembly at its tractor plant. Truck and bus OEM Ashok Leyland announced a partial production re-start.

    In contrast, and despite having received necessary state approvals, Maruti Suzuki, India’s leading carmaker, has chosen not to resume production at its Haryana facility, as it wants to ensure both its own operational preparedness, and that of its entire supply chain.

    Revised Global Automotive Outlook

    Despite efforts initiated by automakers to resume manufacturing, Counterpoint remains cautious about the practicality, consistency, and effectiveness of these plans. Automotive supply chains are complex, and depend on many suppliers from disparate locations to be in sync. Shortage of even a single component can hold up an entire production line, resulting in inventory and cashflow backlogs. Unless the entire supply chain is up and running smoothly, vehicle production will remain challenging and constrained. Keeping in mind production already lost, extended lockdowns, challenges in returning to work, and the anticipated subdued demand, we have this week further downgraded our global sales outlook to around 73m units in 2020.

    Exhibit 1: COVID-19 Impact on Global Automotive Sales, 2020Counterpoint: COVID19 Impact on Global Automotive Sales in 2020

    Week 3: New Health and Safety Features to Come in Cars

    Safety features in cars have long been considered critical and fitment mandated by policy continues to progress in this area. The COVID-19 pandemic now brings new health considerations and preventative features to the fore.

    Counterpoint Research sees a rising trend over the next few years around health-related features being requested by car buyers – especially amongst vulnerable older age groups, those spending considerable amounts of time in their cars, and drivers and passengers of shared mobility and other public transport options.

    Emerging Health and Safety Features in Cars

    Preventive health and safety features currently offered by popular automakers as well as those under development are outlined in the exhibit below.

    Exhibit 1: Emerging Health Features in Cars

    Counterpoint: Upcoming COVID19 Specific Health Features in Cars

    COVID-19 Specific Safeguard Features

    Recent features developed by OEMs specifically for preventing the ingress of virus and bacterial contagions like COVID-19 include the following:

    • An N95 certified Intelligent Air Purification System which prevents bacteria and viruses from entering the car’s interior environment has been introduced by Geely Motors in China. The OEM is also developing self-cleaning and anti-bacterial surface treatments for commonly used touch points like grab handles.
    • Jaguar Land Rover (JLR) is working on adding a special ultraviolet (UV-C) light sanitizing unit as a part of future models’ HVAC systems to kill germs, bacteria, and viruses.
    • MG Motors recently partnered with Singapore-based Medklinn to explore areas related to car cabin and surfaces sterilisation. Car sterilisation is also gaining popularity in the used car market and workshops.

    Given the current climate, these recently introduced health features could prove to be a key consideration for customers, all other things being equal. For instance, clean-air filtration systems are already popular, driven by a growing awareness around rising pollution levels. Additional safeguards combatting bacteria and viruses could further improve brand image by conveying innovation, safety and customer centricity.

    With the continued spread of COVID-19, we expect other OEMs to follow in the footsteps of Geely Motors, JLR and MG Motors in the introduction of similar health features, though much is currently unknown about the spread of COVID-19 and efficacy of new features will need to be proven.

    Other prevention-related growth areas include aftermarket products of car disinfectants and anti-bacterial seat covers.

    Non-Embedded Connected Car Health Applications an Emerging Revenue Opportunity

    While embedded health systems fitted as original equipment will add to development time and costs, non-embedded connected services (via smartphones, wearables, and personal devices connected to car infotainment systems) can be implemented more quickly and cheaply. These types of applications can become an alternative alert system for drivers, providing important information on things like hospital locations and infection hot spots as well as enabling general health-related services. Increasing consumer awareness around healthy lifestyles may boost the popularity of such apps, opening potential revenues streams for stakeholders across various sectors.

    Exhibit 2: Non-Embedded Connected Health Services Key Stakeholders Counterpoint: Ecosystem of COVID19 Related Health Services

    Author: Aman Madhok


    Week 2: Vehicle Sales Tracking Severity and Subsiding of Outbreak

    Global Update

    With almost all countries having initiated varying levels of COVID-19 lockdown measures in March, a significant decline in global vehicle sales for the month was to be expected. Sales numbers from key markets confirm the impact, tracking the growing severity, as well as subsiding, of the COVID-19 outbreak.

    Exhibit 1: Global Automotive Sales, M Units

    Counterpoint: COVID-19 Automotive Sales Forecast by Region


    With automotive production having stopped mid-March, US car sales for the month have dropped by over 39% YoY to around 1m units, the lowest volume for March in over a decade.

    The biggest losers in relative volume terms are Chevrolet, followed by Toyota, Nissan, and Honda which have declined by over 60,000 units each.  In most states, however, sales figures for the first week of March were relatively normal, so the reported figures may not yet provide an accurate picture of the full virus impact. April and May will continue to be dismal in light of extended lockdowns, counterpoint expects full year US sales forecast to 13.9m units.


    Day-to-day life is now reportedly gaining some normalcy in China, with auto plants cautiously resuming manufacturing operations and consumers slowly coming back to showrooms. Most dealers, however, continue to face inventory shortages; the Honda-Guangzhou JV plant in Wuhan is currently operating overtime to meet demand.

    According to the China Association of Automobile Manufacturers (CAAM), car sales declined 42% YoY in 1Q20 largely on the near 80% drop in February, which saw only 310,000 unit sales. Overall, the Chinese automotive market remains weak and fragile, with last month having seen 1.3m vehicles sold, a 46% decline over March 2019.

    In a normal year, China would have sold more than 6m new cars in the first quarter; this year, the figure is around 3.6m.

    As automakers restart production, boosting demand is now the industry’s main priority. The government has announced cash incentives to stimulate demand and support the industry’s recovery. Several metro cities and provincial administrations are offering cash subsidies of as much as $1,400 per vehicle.

    Earlier in April, Beijing announced extending subsidies and tax breaks for new energy vehicles (NEVs) for two more years. It is now evident that electric vehicles have suffered more than the broader market. In March, only 53,000 NEV cars were sold, less than half compared to a year earlier.  It should be noted, however, this number excludes Tesla, which is pushing hard to deliver to its Chinese customers resulting in some replacement effect.

    In any case, while the car market may rebound slightly in the second quarter, it is unlikely to sustain nor be able to make up for the first-quarter losses. Counterpoint Analysts are holding to their estimates that China’s auto sales decline this year will be approaching double digits, close to 9%.

    South Korea

    The one bright spot in the global auto market is South Korea.  The country saw its domestic industry – comprising of Kia, Hyundai, Renault-Samsung, GM Korea, and SsangYong – bounce back nearly 10% in March after seeing big declines in February, when it was down nearly 20% YoY, on automaker shutdowns. 


    The situation in Europe remains critical. With Spain and France having gone into lockdown in mid-March, new vehicle sales fell by almost 70% in each market. Sales in Germany, the largest market in the region, dropped by nearly 40%. In the UK, where March is traditionally the strongest selling month with new number plate series being registered,  passenger cars and SUV sales declined nearly 45%. Figures for Western Europe as a whole showed an over 50% sales decline in March.

    Counterpoint Analysts expect April sales to be far worse, with lockdowns remaining until at least the end of the month, and likely into May.

    Exhibit 2: COVID-19 Impact on Global Automotive Sales, 2020

    COVID19:Automotive Sales Forecast 2020E, Counterpoint

    Note: The unprecedented and unpredictable nature of the current global health crisis means that we cannot rule out further revisions to the global 2020 automotive forecast.

    Author: Vinay Piparsania

    Week 1: Current Status and Upcoming Challenges

    Recent Developments

    US: The US is the new epicenter of COVID-19, where automotive production has entirely stopped with automakers GM, Ford and FCA not announcing any specific dates for reopening their plants. Other automakers Honda, Toyota, and Hyundai plan to open their plants by mid-April, however, considering the situation in the US, these automakers too are expected to extend the shutdown.

    China: Life continues to gain normalcy in China. Automotive plants have started to resume operations, and footfall is increasing in showrooms. Most dealers, however, are facing inventory runouts and car shortages. The Honda-Guangzhou JV plant in Wuhan is currently operating overtime to meet demand.

    Europe: The situation remains critical in Europe. According to the European Automobile Manufacturers Association (ACEA), the EU-wide production loss now stands at over 1.5 million vehicles, with an average of 18 working days.

    Exhibit 1: COVID-19 to Lead Global Automotive Industry into Recession

    Counterpoint: Coronavirus impact on global automotive growth

    Long Term Impact

    The COVID-19 impact to the global automotive industry will linger for the next few years:

    Exhibit 2: Current and Future Impact of COVID-19 on Automotive Industry

    Counterpoint: COVID-19 Upcoming challenges for automotive industry

    Regional Growth

    • China will recover the fastest considering the sustained steps to curtail the virus from resurging, growing indication of normalcy, and the inherent latent demand for vehicles.
    • Historically, Europe has taken more time over economic rebounds compared to the US. For instance, it took European economy over eight years to rebound to the pre-2008 financial crisis level.

    Each country will have its own economic recovery packages, incentives, and policies to boost consumer demand. Automakers will need to recalibrate sales and launch strategies, depending upon the recovery timeline of each country.

    Cash Crunch

    Early April, Daimler has signed up to a new US$13 billion credit line with banks, improving on its financial flexibility. In March, Volkswagen CEO Herbert Diess had announced that plant shutdowns were costing the company US$ 2.2 billion per week. Small suppliers, who do not have much financial buffer, are expected to suffer most amid plant shutdowns. Many of them will need to close if the shutdowns extend beyond a couple of more weeks. While automakers continue to incur costs such as salaries and debt repayments, sales are seeing a steep decline, impacting revenues. We expect most economic relief packages will be in the form of loans (instead of grants), leading to more highly leveraged balance sheets for the coming years.

    A Shift in Sourcing Strategy

    Having experienced severe supply disruptions during the last few months with an over dependency on China as a manufacturing base, automakers will review their supplier strategy across geographies, and possibly rely more on indigenous suppliers. Japan has earmarked US$2.2 billion to help companies shift manufacturing base from China to Japan, and US$214 million to other countries.

    Product Development Delays

    Product development cycles and new model launches will be delayed due to the financial challenges and supply chain disruptions. The spend on R&D may likely be reduced as automakers look to conserve capital. Investments in new technologies, like autonomous vehicle, will be deferred. On April 7, GM announced postponing launch of updated models – Chevrolet Equinox, Silverado, and Bolt EV, as well as the GMC Terrain, Sierra, and Cadillac XT4 in the US to year 2022.

    Regulatory Changes

    Emission norms could be relaxed for automakers to cope up with declining sales. Automakers are already lobbying European Commission to delay the introduction of stricter CO2 norms. During the recession in 2008/9 the governments in the US and Europe implemented scrappage schemes to encourage consumers to replace older vehicles and inject spending into the auto sector. Counterpoint expects the return of similar schemes, with escalating rebates for the most fuel-efficient cars such as full electric.

    Author: Aman Madhok

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    Verizon’s TracFone Acquisition: What it Could Mean for the Wireless Industry https://www.counterpointresearch.com/verizons-tracfone-acquisition/ Mon, 14 Sep 2020 22:12:02 +0000 https://www.counterpointresearch.com/?p=33250 Verizon Communications announced on Monday that it would buy América Móvil’s wireless service TracFone in a $6.25 billion cash and […]

    The post Verizon’s TracFone Acquisition: What it Could Mean for the Wireless Industry appeared first on Counterpoint Research.

    Verizon Communications announced on Monday that it would buy América Móvil’s wireless service TracFone in a $6.25 billion cash and stock deal. Verizon says it expects this deal to be completed in the second half of 2021.

    The deal will be split into $3.125 billion cash and $3.125 billion Verizon common stock. In addition, following the closing of the deal, Verizon shall pay to América Móvil:

    • Up to $500 million as an earn-out if TracFone continues to achieve certain performance measures during the 24 months following the closing, calculated and paid in four consecutive six-month periods
    • 150 million deferred commercial consideration payable within two years following the closing

    TracFone Verizon Subscriber


    What it could mean:

    • Even more consolidation: If approved, this will further consolidate the industry and catapult Verizon to the largest prepaid service operator in the US. Verizon had 4 million prepaid connections in Q2 2020 and TracFone would add 21 million subscribers.
    • Retail expansion: Verizon would gain share in national retail channels, especially in Walmart via the Straight Talk brand. TracFone has had success in retail channels such as Walmart, Target, BestBuy, and even offers a limited SKU of devices and SIM cards in stores such as Kroger’s and Dollar General. TracFone is present in over 90,000 retail locations nationwide.
    • Network availability: It is unclear if Verizon would switch the new TracFone network over to be 100% Verizon based. There are 13 million TracFone customers who use the Verizon network. This means 8 million customers would have to transition to the Verizon network and use a Verizon compatible device. TracFone has historically had agreements with four major carriers to run its network (Verizon, AT&T, T-Mobile, and Sprint). This created different device SKUs depending on the area subscribers live in and the coverage that was available.
    • OEM opportunities: Verizon is expanding into the value segment with this deal. Verizon’s stealth MVNO Visible has ranged devices from the struggling ZTE and newcomer Hot Pepper and Verizon Prepaid’s lineup includes devices from Nokia and Wiko. These OEMs could benefit from the acquisition by potentially having more of their devices featured in TracFone and its sub-brands.
    • 5G push: Lastly, this move will push Verizon’s 5G ambitions forward, especially when it begins its sub-6 GHz 5G service via dynamic spectrum sharing in 2021. However, 5G will only be truly accessible to a large swath of the US population once 5G devices get below the $200 price point. For TracFone subscribers, the ideal sweet spot would be below $100.

    While the deal was just announced, a lot of regulatory hurdles still need to be overcome before it gets approved. With the T-Mobile-Sprint merger, we have seen already how long large mergers and acquisitions can take in the telecom sector. The FCC will need to be convinced that this move will truly increase competition and improve the wireless industry as a whole. More to come here and we will continue updating on this as it develops.

    The post Verizon’s TracFone Acquisition: What it Could Mean for the Wireless Industry appeared first on Counterpoint Research.

    Qualcomm to Drive 5G in Mass Market Smartphones With Snapdragon 4 Series 5G Platform https://www.counterpointresearch.com/qualcomm-drive-5g-mass-market-smartphones/ Mon, 14 Sep 2020 12:33:57 +0000 https://www.counterpointresearch.com/?p=33213 Qualcomm is the leading supplier of smartphone system-on-chip (SoC) for modem-to-RF-antenna systems and has been extending this lead in the […]

    The post Qualcomm to Drive 5G in Mass Market Smartphones With Snapdragon 4 Series 5G Platform appeared first on Counterpoint Research.

    Qualcomm is the leading supplier of smartphone system-on-chip (SoC) for modem-to-RF-antenna systems and has been extending this lead in the fast-growing 5G smartphone segment as well. 5G smartphone sales grew a massive 1327% globally in June 2020, according to Counterpoint’s Monthly Handset Model Sales Tracker.

    With the launch of 5G capable Snapdragon 6- and 7-series platforms, the share of high-tier ($250-$400) is set to soar further in the second half of 2020. As a result, 5G capability in smartphones will be in the mainstream market this year. This is the fastest ever uptake of any new generation technology in the first two to three years of its rollout. The next obvious step is to bring 5G to the mass market ($100-$250) smartphones and that has been the big question this year – how soon will we see a sub-$150 5G smartphone and shipping in volumes?

    There is a pent-up demand for advanced mobile connectivity experiences as smartphones become central to consumers’ lives. Mobile operators are also looking to quickly roll out the 5G network to boost capacity and coverage and reduce the “cost per bit” to efficiently satisfy the ever-growing data consumption. Considering all this, at the recently concluded IFA 2020, Qualcomm announced that it was expanding 5G capabilities to its affordable 4-Series Snapdragon mobile platforms available early next year.

    The $100-$250 mass-market segment contributes to more than 600 million units of smartphones sold per year. This is a significant opportunity for Qualcomm and its customers to tap into. Qualcomm dominates this segment, controlling more than 40% share. It will look to build on this stronger position to empower these users with 5G smartphones starting next year.

    SoC Vendor Share of $100-$250 Segment Global Smartphone Sales for 2019

    The majority of these mass-market smartphone volumes are driven by emerging markets across Asia, Africa, Latin America and Eastern Europe. So, Samsung, OPPO, Vivo, Xiaomi, Motorola and Huawei have been the key brands driving these volumes with a combined share of more than 90% at the end of June 2020. While Huawei has gained strength in this segment in China via its Honor sub-brand and older models in African and Eastern European markets after the US trade restrictions, the future looks uncertain with the newer set of restrictions. We believe that Xiaomi, OPPO and Samsung will be the major beneficiaries in filling up the big gap to be left by Huawei in these markets next year. In the prepaid markets of North America and Latin America, Motorola has seen growth in its market share and will be important in bringing 5G to the mass market. In Asia, Xiaomi, OPPO, and Realme remain the key brands to drive 5G in the sub-$250 smartphone segment.

    The first wave of partners that have committed to rolling out the sub-$250 5G smartphones with Qualcomm’s upcoming 4-series platform, includes Xiaomi, OPPO and Motorola. These are important wins for Qualcomm to kickstart the 5G adoption in this highly affordable segment in a scalable way starting Q1. This should also ignite Qualcomm’s competitors to bring their affordable 5G solutions to the market.

    We look forward to more details on how Qualcomm will be pushing down other 5G-centric features and capabilities to these lower-tier SKUs in the coming months. Our initial estimate is that the first set of 4-series 5G models to be launched will be sub-6GHz only, considering the target markets and the OEMs on board for the first wave of these models. However, we estimate a 5G mmWave-based smartphone powered by Qualcomm’s 6-series Snapdragon platform should launch in the coming months, bringing advanced 5G experiences to mainstream consumers.

    Qualcomm is already on its third generation of 5G Modem-RF System, including the 5G mmWave module (QTM535), and a clear leader with 100% market share with its solutions. This has also helped it gain a lion’s share of BoM costs in the mmWave designs. As 5G mmWave networks roll out across key markets, especially high-scale markets such as China and the US by early 2022, we could see a rapid proliferation of mmWave designs across the OEM portfolios, targeting differentiation initially in those markets. Further, we estimate the fifth-generation designs should help 5G mmWave capabilities to scale down more. We can expect a first Snapdragon 4-series mmWave model in H2 2022. This will drive the inflection point for affordable 5G mmWave smartphones and newer experiences to mass-market levels, it is a big moment for the mobile phone industry!

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    Huawei UK Ban – Implications and Options for Operators https://www.counterpointresearch.com/huawei-uk-ban/ Sun, 13 Sep 2020 12:03:52 +0000 https://www.counterpointresearch.com/?p=33390 Overview: In July, the UK government announced that UK Mobile Network Operators (MNOs) must replace Huawei 5G equipment from their […]

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    In July, the UK government announced that UK Mobile Network Operators (MNOs) must replace Huawei 5G equipment from their networks by the end of 2027 and are banned from procuring new 5G equipment from Huawei after the end of 2020. This follows an earlier ruling which capped deployment of Huawei equipment in the Radio Access Network (RAN) to just 35%.

    This report provides an overview of the current installed base of Huawei mobile equipment in the UK and analyses the implications, challenges and options facing UK operators as they contemplate how to conform with the most recent ruling while minimizing the impact on their 5G deployments across the country.

    Table of Contents:

    • Snapshot
    • Key Business Assumptions
    • UK Government Ruling
    • Implication for Operators
    • Options for Operators
    • Evaluating Options, Most Likely Scenarios
    • Viewpoint

    Number of Pages: 12
    Author: Gareth Owen

    To view more reports from Counterpoint, click here.

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    Podcast: App Economy and Apple’s Epic Battle https://www.counterpointresearch.com/podcast-app-economy-and-apples-epic-battle/ Sat, 12 Sep 2020 08:39:29 +0000 https://www.counterpointresearch.com/?p=33138 Apple introduced the App Store on iOS as a digital distribution platform for games and apps and revolutionized the way […]

    The post Podcast: App Economy and Apple’s Epic Battle appeared first on Counterpoint Research.

    Apple introduced the App Store on iOS as a digital distribution platform for games and apps and revolutionized the way software is distributed on mobile devices. Roughly, 15-20 years ago, one would have to visit a store to buy a game or software, and the store would charge around 50% as a mark-up fee. The App Store, on the other hand, takes a 30% cut from developers. Google followed the same model on Android. Both Apple and Google tout about the role of the respective app stores in creating new jobs in the “app economy”. And while Apple says it treats all developers equally, there are sops given to the likes of Amazon Prime Video by charging a lower % cut. This has led to a battle royale between Apple and Epic Games.

    Recently, Fortnite creator Epic Games bypassed the App Store payment gateway, after which Apple booted the game out of the App Store and also terminated their account. In return, Epic Games filed a lawsuit against Apple, after which Apple also filed its counterclaims alleging breach of contract. In a court filing, Epic Games accused Apple to maintain its monopoly over in-app payments on the iOS platform and inflating prices. This battle that would eventually hurt Epic Games more as millions of Fortnite players access the game from Apple devices. It will be interesting to see how this battle will eventually resolve.

    In the latest episode of ‘The Counterpoint Podcast’, host Peter Richardson is joined by Dr. Richard Windsor to talk about the App Economy and the problems related to it. He is the Research Director at large at Counterpoint Research, and also the founder and owner of the research company, Radio Free Mobile. In the podcast, Richard deep dives to explain about the battle royale that is happening between Apple and Epic Games. The discussion also touches upon iOS 14 mandating App Tracking Transparency and the implications. He also shares his views on a better way to grow the app economy.

    Hit the play button to listen to the podcast

    Also available for listening/download on:


    Related Posts

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    Research Associate: USA https://www.counterpointresearch.com/research-associate-usa/ Fri, 11 Sep 2020 10:17:04 +0000 https://www.counterpointresearch.com/?p=33171 Research Associate: Anywhere in the United States Counterpoint is a fast-growing global analyst firm. Our analysts produce a significant body […]

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    Research Associate: Anywhere in the United States

    Counterpoint is a fast-growing global analyst firm. Our analysts produce a significant body of research that needs to be optimally presented. We are seeking a talented and enthusiastic research associate to assist our research efforts.

    Job Description:

    As a Research Associate, you will be contributing to our original insights on how the tech and telecom markets are developing. You will have the opportunity to develop skills and insights to become a future star analyst.

    The role will involve:

    • Contributing analysis to create a rich body of qualitative and quantitative research insights.
    • Manage databases within Counterpoint Research model database and ensure timely completion and checkpoints at various stages.
    • Contributing analysis to ad-hoc requests and analysis by working and cooperating across various teams within the company.
    • Working with the team on the Counterpoint Research US smartphone tracker program by researching, interpreting and recording relevant information in proprietary databases.
    • Understanding key drivers and inhibitors in the mobile devices and ecosystems space and how these will impact overall industry trends.
    • Expressing your industry viewpoint through blogging and sharing weekly industry insights within the team.

    Key Skills/Experience Required:

    You hold a B.S. or B.A with 1-3 years of relevant work experience, advanced degree (MBA or other Masters preferred).

    You already have an interest and basic knowledge of tech and telecoms and can express your views clearly and concisely.

    In addition, you can demonstrate the following:

    • Self-motivation and a keen interest in analyzing the technology and telecom sectors. You are ready to interpret trends and can articulate your understanding in an engaging way.
    • The ability to analyze and synthesize the available data and bring out value-added insights.
    • High level of analytical and critical thinking skills.
    • Excellent communication skills both verbally and in written form.
    • Strong Microsoft Office skills especially Excel.
    • Ability to work confidently as an individual contributor as well as being comfortable as a team player.


    Anywhere in the US (home office or shared office in your location)

    How to Apply:

    • Apply via this link
    • Please explain why you are applying and why you are a right fit for the role. Be creative in your application but be concise.
    • We will receive applications until we finish hiring.

    What we can offer:

    Competitive base salary + bonus based on company performance. As a key member of the team, you will have a direct impact on company performance.

    In addition to financial remuneration, you will have the rare opportunity to grow with a young company that is already making its mark.

    * Relocation or working visa not supported. You must be a U.S. worker.

    Desired Skills and Experience

    Market Research, Secondary Research, Microsoft Excel, Microsoft Office, Market Intelligence, Data Analysis, Teamwork, Analytical Skills, Writing.

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    Vivo TWS Neo: Good Battery Life and Decent Audio Quality, With A Catch https://www.counterpointresearch.com/vivo-tws-neo-review-good-battery-life-decent-audio-quality-catch/ Fri, 11 Sep 2020 07:00:35 +0000 https://www.counterpointresearch.com/?p=33111 The Vivo TWS Neo offers 88ms low-latency connection. The TWS earphones support Bluetooth 5.2 and aptX Adaptive codec. Vivo is […]

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    The Vivo TWS Neo offers 88ms low-latency connection.

    The TWS earphones support Bluetooth 5.2 and aptX Adaptive codec.

    Vivo is promising up to 22.5 hours of total audio playback.

    Soon after smartphone brands like Apple and Samsung entered the TWS market, many others are also entering the fast-growing hearables segment. The list of brands includes Oppo, Vivo, Xiaomi and OnePlus. We recently reviewed the Oppo Enco W31 TWS earbuds, which come at below $60, and were impressed with their performance. Today, we are taking a closer look at the Vivo TWS Neo earbuds that were launched alongside the Vivo X50 Pro smartphone and are priced around $80.

    For the price, Vivo is offering Bluetooth 5.2 connectivity along with support for Qualcomm’s aptX Adaptive codec. The TWS earbuds also come with AI noise canceling feature to enjoy crystal clear calls and music listening experience when outdoors. While all this sounds good on paper, does it deliver?

    Compact and Easy to Carry Case

    The earbuds case is small, compact and has a pebble-shaped design. The earbuds magnetically snap inside the case and have the charging contact points at the bottom of the stem. The case has a glossy finish to it, which makes it slippery if your palms are sweaty.

    counterpoint vivo tws neo review case

    It has a USB Type-C port at the bottom for charging and a small, circular button on the front which indicates the charge status using an LED light. Long-pressing the button for over five seconds puts the TWS earbuds in pairing mode.

    counterpoint vivo tws neo review type c port

    Design and Comfort: One Size Does Not Fit All

    The Vivo TWS Neo earbuds feature a half in-ear design, something that was made popular by the Apple AirPods. But this design has a major problem – at least for some people like me. The earbuds are made of plastic and have a glossy finish to them. They have stem popping out of the ear, and while it should offer better support to keep the earbuds in place, the reality is the opposite.

    counterpoint vivo tws neo review earbuds

    The “one-size-fits-all” approach does not work well here. The fact that the half in-ear design does not have silicon tips to attach makes it difficult for everyone to get a comfortable fit. For me, the earbuds would constantly keep slipping out of my ear, even with little movement.

    One of the days, I was having tea with some biscuits and watching a video on the phone with the earbuds plugged in. A few bites of the biscuits, and the jaw movement pushed the earbuds to fall out. On another day, I sneezed a couple of times, and both earbuds fell out. Despite all this, I dared to go on a walk wearing the Vivo TWS Neo. But within 100 meters of walking, one of them fell out, with the other almost on the verge.

    counterpoint vivo tws neo review buds comfort

    This half in-ear design is not meant for my ears. My sister had no such issues. Even after jumping and skipping a few times, the earbuds did not fall off her ears. For my type of ears, the ones with in-ear canal type TWS earphones work well.

    How comfortably the earbuds fit in your ears differs from person to person.

    Gesture Controls: Not Too Intuitive with a Loose Fit

    Vivo has included gesture control features where you can adjust the volume by swiping up or down on the stem of either of the earbuds. This can be changed via the Vivo earphones app on Android smartphones. But if you have a Vivo X50-series smartphone, you can find the settings under Bluetooth.

    For me, as the fit was loose, the earbuds would always come out whenever I used to swipe to adjust the volume. You can also configure the single tap and double-tap gestures to play/pause and skip tracks. There is also an earphone detection mode which will automatically pause music when you remove the earbuds and start the playback as soon as you put them back in your ears. Also, as it does not use a master/slave type of connection, you can also use a single earbud to listen to music or take calls.

    If the fit in your ears is loose, the gesture controls are not too intuitive.

    Performance: Sounds the Best Only on Vivo Phones

    During my review period, I connected the earbuds with the Vivo X50 Pro first for a couple of weeks. Then I switched between the Galaxy Note 10+ and Asus ZenBook laptop. While they are compatible with multiple devices, the one thing I noticed is that the earbuds work the best with the Vivo smartphone. You also get advanced Sound Effect options such as Clear Voice, Mega Bass and Clear High Pitch.

    counterpoint vivo tws neo review gestures

    To get the best audio experience, the fit of the earbuds plays an important role. The half open-ear design also means no passive noise isolation, and so, you will not be able to enjoy the proper audio experience. When connected to the Vivo phone, the audio sounded much better as you get aptX Adaptive Audio codec by default. On the Samsung phone, it did not latch on to the aptX codec, even after enabling it in Developer Options.

    counterpoint vivo tws neo review

    Talking about performance, focus tracks included Miracle Love by DJ Project. I was streaming the track in high-quality on Spotify. Vocals and mids sounded crisp, but the bass was weak. I played the same track on the Galaxy Note 20 Ultra 5G (AAC codec), and while the output was a bit louder, the audio sounded a bit boomy. However, the bass seemed a little balanced here. For the rest of the tracks, I used the Vivo X50 Pro only.

    Moving on, Memories of Love by Synkro offered wide soundstaging, slightly punchy bass and crisp highs. Overall audio experience was good here. Time by Pink Floyd sounded good and I could easily distinguish between the different instruments that were playing in the background. However, that punch in bass was missing, and that could be because the earbuds do not offer proper passive noise isolation.

    Audio on the TWS Neo sounds better when used with a Vivo smartphone.

    Call Quality: Good For Calls, Not for Discord

    I tested the call quality in two different ways. While on voice calls, the person could hear me clearly and I could too. But I cannot say the same when using Discord while playing PUBG Mobile. The recipient always complained about low audio. I tried both on Vivo and Samsung phones, but the issue continued, and I think it could be something related to Discord. But I play daily, and this does not happen when using other TWS headphones.

    counterpoint vivo tws neo review buds top

    Battery Life: Can Go Days Without Charging

    Vivo claims that the TWS Neo can offer a total battery life of 22.5 hours. Individually, the buds can offer up to 4.5 hours. During my testing, I was constantly getting four hours of battery life here. The carry case added three full charges. On average, I was using the earbuds for about two-and-a-half hours a day, and I was easily able to go for one full week without charging. You can check the battery level of individual earbuds in the app. Sadly, it does not show the battery level of the case.

    Average of two hours of usage on full charge makes the earbuds battery last for about a week.

    Conclusion: Good Attempt, With Room For Improvement

    For Vivo’s first attempt, the TWS Neo fares well. It offers good audio experience on Vivo flagship phones, but the experience on other smartphones could have been better. As I mentioned in my review, the half in-ear design may not fit everyone’s ears, so that should be your consideration before buying one. On the design front, Vivo could go for in-ear canal ones for its next earbuds.

    Stable connectivity with Bluetooth 5.2 support and aptX codec on compatible smartphones works in its favor. Battery life is also good for its segment. Similar to its competition, adding wireless charging on the case along with a fast-charging feature could be a good addition for the successor. Vivo could take some hints from competitors such as the OPPO Enco W31, OnePlus Buds and the Mi True Wireless Earphones to make the next earbuds better.

    Also Read: Strategic Reviews and Insights on The Latest Smartphones

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    Galaxy Note 20 Ultra 5G costs $549 to Make and Highlights Qualcomm & Samsung’s Semiconductor Prowess https://www.counterpointresearch.com/galaxy-note-20-ultra-5g-costs-549-make-highlights-qualcomm-samsungs-semiconductor-prowess/ Wed, 09 Sep 2020 15:49:55 +0000 https://www.counterpointresearch.com/?p=33083 Seoul, Taipei, Hong Kong, Beijing, New Delhi, London, Boston, Los Angeles, Buenos Aires September 9th, 2020 The premium flagship smartphone […]

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    Seoul, Taipei, Hong Kong, Beijing, New Delhi, London, Boston, Los Angeles, Buenos Aires

    September 9th, 2020

    The premium flagship smartphone segment has been the flag-bearer for the latest innovations as points of differentiation brands. While the premium segment is dominated by a handful of players such as Samsung, Apple, Huawei and OnePlus, depending on the markets, the competition has never been so intense.

    Product designers at these brands have been meticulously integrating the latest technologies – from chipsets, through multiple system components, to design language, manufacturing techniques, optimized software and services to drive differentiation and boost the top and bottom lines. These efforts create a halo effect around the flagship models that trickles down to the rest of the portfolio to spark consumer aspirations on the demand side and scale on the supply side.

    To help the industry better understand what constitutes a winning smartphone and who is driving the greatest innovations, Counterpoint’s Components research practice has been publishing deep-dive analyses on the latest Bill of Materials (BoM) and corresponding supplier design wins. Counterpoint’s latest assessment is on the recently launched Samsung Galaxy Note 20 Ultra 5G smartphone designed for the mmWave 5G networks.

    Commenting on the research findings, Senior Analyst, Ethan Qi, highlighted, “Samsung has done an excellent job in designing, manufacturing and integrating multiple advanced technologies and components in a very thin and light form-factor compared to the previous generation flagship models, and with a competitive BoM cost structure. The total BoM cost achievement is slightly under $550 with the component cost making up around $468, which is a commendable for a device with a list price of $1299.”

    Samsung has launched multiple SKUs for this model, a Qualcomm Snapdragon 865+ variant for some select key markets such as the USA, China, South Korea, and others, whereas an Exynos 990-based variant is destined for the rest of the world.

    Mr. Qi, adds, “This mmWave version of the Note 20 Ultra 5G builds on Qualcomm’s reference design featuring the most advanced 5G SoC, the Snapdragon 865+, and the Snapdragon X55 5G Modem-RF System. The mmWave variant costs roughly 10% more than the sub-6 GHz variant in terms of total component costs. The device also features one of the most advanced camera sensors in a nicely integrated three-sensor module. Unlike the Galaxy S20 Ultra 5G, the Galaxy Note 20 Ultra 5G features a lower resolution telephoto lens, omitting the DepthVision sensor, and adding a laser auto-focus module optimized for faster focusing. Samsung CIS camera sensors have come a long way and compete fiercely with Sony for design wins.”

    Design wins are a point of validation for component suppliers when OEMs choose their technology for a leading flagship product. For some brands, it also reveals the level of vertical integration or dependence on particular suppliers.

    Highlighting the design wins, Research Director, Tom Kang, commented, “Samsung, with its multiple SKU strategy, has a varied level of dependence on vertically integrated internal suppliers and external suppliers. This requires sophisticated system integration. For example, with the mmWave Qualcomm variant of the Galaxy Note 20 Ultra 5G, Samsung contributes to roughly half of the costs of the total components, whereas, for the Exynos variant, Samsung’s share goes up to almost 70%. It is impressive to see Qualcomm’s share in a Samsung flagship exceed 40%, as it offers a fully-optimized system-level solution from SoC to the modem, RF and antenna system. Other important component design wins include NXP which combines UWB, Secure Element, NFC, and eSIM in a single solution. Other notable contributors include Qorvo, Largan Precision, Corning, and others.”

    The exhibit below summarizes the BoM cost analysis. An expanded version with details of more than 100 key components and parameters influencing the device’s cost structure is available for clients.

    Exhibit 1: SAMSUNG GALAXY NOTE 20 ULTRA 5G 128GB (mmWave) BoM Analysis

    Exhibit 2: SAMSUNG GALAXY NOTE 20 ULTRA 5G 128GB (mmWave) Share of BoM by Supplier



    Counterpoint Technology Market Research is a global research firm specializing in technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects, and detailed analysis of the mobile and technology markets. Counterpoint’s senior team comes from technology firms such as Nokia, Samsung, LG, Vivo, China Mobile, TSMC, Qualcomm, Intel, Microsoft, Ford, NEC, Panasonic, Philips and more. 

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