How COVID-19 has Brought an Industry to its Knees

We often use words like “unprecedented” too casually, sometimes even out of context. However, the impact of COVID-19 on the automobile industry is no less than ‘unprecedented’. Particularly the automotive sector has never faced such a crisis during peacetime, that too in such a large scale. Thanks to the lockdowns, low demands and disrupted supply chains, the entire industry is nearly down to its knees.

The Most Vulnerable Ones

Companies that are most vulnerable are those, who rely heavily on their Chinese counterparts for various parts and materials. In the wake of the Coronavirus lockdown, these companies are being forced to source the needed parts and materials locally, mostly due to the increased pressure in order to reduce the dependency on outsourcing. Currently, the global automotive sector imports more than $34 billion in automotive parts from China, annually.

Few manufacturers with their plants outside of Mainland China, have already had to cut production. FCA was forced to halt its Serbian plant due to non-availability of Chinese parts. Also, many other manufacturers have said, they are closely monitoring the situation and will take decisions on their available products.

Manufacturer like BMW had to cut its profitability forecast for passenger cars, as the company is expecting a hit in demand and earnings due to the COVID situation.

Also, the worst part is, China the ‘next big thing’ in automotive sector with one of the largest markets has seen a massive drop in car sales, which has impacted the industry severely. Also, a new study has shown that global vehicle sales has witnessed a steep decline of 39 percent.

So, at the end one can easily say that, post COVID-19 there would be a major change in the automotive sector, with automotive sector moving online, lesser productions and stuffs like that.

Also, companies in India have reopened few of their dealerships in green and orange zone, whereas Yamaha and VW Group has announced that their employees have donated a day’s salary in the country’s COVID relief efforts. Also, most of the companies have extended their product’s warranty.