Posted On : 2nd August, 2021 by Nahyan Haissanar
The automobile industry siphoned the braked hard at the start of the global COVID-19 pandemic. The impacts started in China, where sales dropped about 71% in February 2020; by April, sales plunged 80% in Europe and 47% in the United States. However, the manufacturing in automobile plants never stopped running, and vehicles have returned thundering.
Additionally, from the third quarter of 2020, the automobile industry worldwide faced tremendous growth in manufacturing. Similarly, as with several industries worldwide, the pandemic has brought an incredible increase of the trends throughout the mobility value chain ever than before.
Before the pandemic situation
Before the COVID-19 pandemic, sales in the automobile industry rose; even in some segments, new sales records were set. The estimate for vehicle sales in the United States alone was predicted to remain between 16 and 17 million units during 2020. But when March month came, everything went on halt due to the spread of pandemics worldwide.
With the possibility of an antibody or vaccine far away, later on, governments across the world imposed quarantine mandates and lockdowns. All such restrictions forced people to stay at home and purchase only the essential and daily need items. Additionally, the world economy faced the worst-hit than the 2008 Financial Crisis.
Automotive Industry after the pandemic situation
Some reports predict that sales in the automotive industry will make a new record as the demand for personal vehicles has increased at rocket speed due to COVID-19, and we can see this change by looking at the waiting period of vehicle bookings in every car manufacturing industry. However, there are still chances of new waves that can hit the market and misbalance all forecasts.
In 2020, the marketers saw a 15% loss, but we expect a rise of about 9% to 13% shares of the automotive industry in 2021. The experts expect a remarkable recovery from the pandemic by 2023 and expect a sales rate from 16.0 million to 16.2 million by 2021 in the USA alone.
With a lack of ideal macroeconomic situations, continued robust used-vehicle supply, and neutral-at-best credit for sales growth in the future coming from off-lease vehicles, as well as we think sales of new vehicles will grow more after 2021.
In addition, few studies say that the automotive industry increased cost-saving inactivates in 2020, which must result in accelerated asset and resource utilization in the current year 2021. Also, the automotive industry should generate more profits
and ROI for investors.
Potential long-term impact on automobile industry
The impact of the COVID-19 pandemic on the global automobile industry has been significant and swift. Initial issues over a disturbance in Chinese automotive parts exports rapidly turned to large-scale production disturbances worldwide, especially in Europe.
Moreover, in the United States, assembly plant terminations are adding more pressure on the current downshift in the worldwide supply base where industries are in danger of defaulting on their covenants, possibly seeking banks to play a role.
The automotive industry may be compelled to divert its R&D funding for technology enhancement initiatives, investment to support continuous operations, and other operational activities.
Strategic and policy decisions to leave non-profitable global markets and automotive segments may boost up, significantly bringing down output as production and assembling capacity are consolidated or rationalized.
A significant amount of restructuring might be expected or normal in the automobile industry as vendors are not able to turn quickly to changing demand of people.
A delayed truncation of buyer interest as global economies work via several lockdown conditions may bring a global recession, tending to loss of customers’ confidence, significantly affecting automobile manufacturers’ productivity and income.
What should automotive industries do?
Identify, prioritize, and boost cost-cutting measures throughout the organization.
Identify essential and available sources of collateral to safeguard access to required borrowing solutions.
Identify measures to tangible cash flow benefits also optimize your working capital.
Prioritize downshift conditions, revise future forecast assumptions as per the current market uncertainty.
Consider the safety of employees and help them in investing their potential workforce.
The automotive industry is passing through lots of challenges due to the COVID-19 pandemic. According to a survey, 30% of automotive industry leaders stated that they were highly concerned about the speed of technological changes putting them ahead of several challenges such as supply chain disruptions and cybersecurity threats.
Industries that can predict the current situation maintain their cash flow, short and long-term investments can get good returns even in the pandemic situation. All such approaches are vital to bringing transformation industries.