How COVID-19 has affected the automotive industry
The automotive industry was confronted with one of the most massive crises in history when the coronavirus pandemic emerged from Wuhan, China, in December 2019. And, it continues to be one of the economic sectors most affected globally.
As a sector, automotive is a significant consumer of iron, steel, petroleum, plastics, glass and energy. More importantly, it supplies and maintains vehicles necessary in vital activities such as agriculture, tourism and construction. To rural communities, the car is not a convenience but a lifeline. And, it employs a lot of people. All-in-all, an economic accelator
Not only did demand for vehicles drop, so did the supply of the necessary materials and parts to build those vehicles and keep them moving. The inevitable consequence was a battle to meet the needs of customers with a workforce under jeopardy and production lines vastly reduced.
Whether in Turkey, across Europe or other countries connected directly, or indirectly, to the automotive sector, the reliance on China may be variable, but it cannot be ignored. Overall, the inter-related matrix of traditional supply and production of existing models has, effectively, ground down to a snail’s pace. The reducing factor being new models with massive investment to recoup and the pressing need to introduce more environmentally friendly vehicles.
The financial impact is staggering. In a report published by Meticulous Market Research (May 2020), the damage to the automotive sector, worldwide, amounts to US$5.7 billion. Europe, the largest region, accounted for US$2.5 billion. Note, that was in May 2020. Whilst there is optimism for a return to normality, even the most gifted economic forecasters paint their pictures mostly in grey.
Despite the gloom, the automotive industry has demonstrated brilliance in ideas and production. Large scale manufacturers like Ford, plus niche specialists such as McLaren and Ferrari, have quickly turned their highly regarded research and development teams to rapidly design and manufacture medical ventilators, essential equipment and personal protective items. At the earliest stages of the pandemic, inspirational innovation and effort demonstrated a side to an industry we are seldom exposed to.
As human beings, we value the freedom and independence of personal mobility. COVID-19 may have placed barriers but will not stop the desire. In fact, that desire may increase and be even more cherished. It is a positive note to the automotive industry.