How Is The Auto Industry Affected By Covid-19?
Covid-19 has entered the automotive industry. Factory closures, deterioration of the supply chain, and decline of demand are present. Just-in-time development processes have spread the effect worldwide. One of the hardest hits is small and medium-sized enterprises, and millions of jobs are at risk.
Car manufacturers are crucial to boosting the global economy. Sustainable industrial policies and targeted funding are keys to a sustainable recovery – to help build back – and decent jobs for more women and people.
The COVID-19 pandemic has rapidly and severely impacted the interconnected car industry globally. Symptoms include delays in exports of Chinese products, large-scale interruptions in European manufacturing, and the closure of the assembly plants in the US. It puts intense pressure on an industry that already faces a decline in global demand and is likely to lead to a rise in merger and acquisition.
The COVID-19 pandemic is a crisis which many of us will never forget, which jeopardizes the health and safety of our loved ones and poses severe economic challenges that threaten many enterprises worldwide. The global automotive industry is not excluded from this, as the worldwide show shutdowns are tough times ahead.
In addition to immediate health threats, COVID-19 indicates global instability concerning the jobs and income of people. If the crisis lasts for a long time, this may impact consumer purchasing power and lead to declining new car sales.
If this occurs, we can see a decent deal of inventory falling on the second-hand market as people sell their vehicles to reach ends or default on bank payments. Customers currently shelter this by massive efforts by banks to stretch car and other auto loan installments by 30 days.
The EV market is also at risk as oil prices plunge and are incredibly vulnerable to sparser buyers relative to cheaper domestic-burning rivals.
If stocks can start to flow in the short term, the local brands such as the Midnight Driver can lick their wounds and go about business. In this scenario, the sales that are powered by aggressive dealer promotions and a buyer “panic buy” attitude will escalate rapidly.
Regardless of the case, one thing is for sure. Dealers do not want to sit around the aging inventory and would expect a wide variety of deals to be made in the pipeline.
Likely, some prospective buyers may still plan to fight against the ECQ if the degree of customer interest online remains healthy, given the lock-out. Although car manufacturers and dealers have stopped sales, they need to look no further than online market results to see if customer demand is still present.
How Is The Automotive Industry Going To Rebound From Covid-19?
How will Covid-19 recover the global automotive industry? The future looks grim even under pressure before the crisis. There will be significant systemic changes within the industry that will impact everything from production, demand for electric vehicles, and supply chains.
- The careful preparation of scenarios is essential. Companies should not only take into account the possible effects of the pandemic in several critical areas listed here, but also the uncertain climate, policy, and financial market conditions.
- Plan proposals will seek to tackle the combined challenges of rising production volumes caused by disruptions in the supply chain and declining customer demand for new cars. Another aspect to remember is policy responses to the pandemic.
- Transparent, clear, and timely communication to employees is essential, especially when the number of cases reported is rising due to improved access to testing. It’s not only about answering questions from staff, but also about exchanging knowledge proactively to resolve new problems.
- Employees who may operate remotely can need advice on new approaches and to be prepared with unfamiliar devices. You can expect to face a learning curve.
- Auto businesses like the Midnight Driver will prepare to invest in educational programs to let workers learn how to mitigate the spread of the virus and what to do if they encounter COVID-19 symptoms. The health and well-being of employees should be the top priority. A comprehensive business continuity plan will be checked and will help to resolve contingencies in the event of a full closure or temporary shortfall in a critical role or roles.
- Companies with sizeable foreign supply chains can need to analyze essential components that may lack supply and consider activating alternate procurement strategies. Although many of these parts may come locally or from other markets, many North American assembly facilities rely on China for some auto parts — especially wheels, brake, and steering components, and electronics.
Anything, including improvements to the vehicle design and materials, should be on the table for consideration when possible. Planning can be more complicated than merely finding potential suppliers.
Companies should also take into consideration the possible tax and tariff effects of supplier changes. Customs and duties could include, as well as transfer price considerations if the replacement components or materials come from within the company.
It isn’t exciting, to say the least, but get used to it better. You hear a lot about the word “new normal,” which the automotive industry looks like now.
Midnight Driver Co has only one mission and it is to help you “Feel the Drive Feel the Clean”. The company is born by drivers who enjoy the midnight cruise at full speed through the city during its quietest hours. Team leader Johnny Chen focuses on the high standards of quality in its services, products, and detailing education to help those to realize the true potential of their own vehicles in the automotive detailing world. Follow us on Youtube.
Post contributed by Johnny Chen.