Corona virus causing major disruption to the automotive industry
Coronavirus is severely hitting the automotive industry in ways not seen before.
The global car manufacturing industry and all other related industries have had a severe hit since the outbreak of the covid-19 virus in Wuhan China.
Coronavirus is now starting to seriously affect all car manufacturers all over the world, particularly in countries that are at the epicentres of the outbreak.
Many companies are doing their civic duty to try and contain the outbreak in whatever ways they can. As everyone is aware, people who have contracted the virus are getting the required medical attention, while the ones who have been in contact with them are quarantined. Even with all the safety measures being put in place, the virus has spread throughout continents.
He fear of an even bigger outbreak is certainly damaging to many industry sectors but one of the most affected sectors is the automotive industry and all the associated supply chain companies connected with it.
China is a global vehicle manufacturing hub and unfortunately it is the centre of this Balck Swan event. Some of the major car manufacturers that were forced to stop their production facilities in China were Honda, General Motors,Nissan,Renault, Tesla and Volkswagen. Now that the Chinese plants are coming back on line, the automotive accessory market supply chain is fully intact or either back to normal production.
All the supply chains that rely on Chinese production have taken a huge hit in the past few months and this has disrupted car production in China with a knock on effect with production in other countries. The problem is that there is no solution or alternative supply line to replace the sudden shortage coming out of China.
The outbreak has had the added effect of putting more pressure on the Indian car market and it doesn’t help that the Indian car market has been declining in the past year anyway. Coronavirus has created a problem for India's big car manufacturer, Tata Motors Limited. Car sales in India were down to 2.94 million units in 2019, while sales amounted to 3.35 million units in 2018. This is a decline of 12.3%.
The rest of 2020 does not look so good for many automotive businesses. For example, MG Motors is probably the largest importer of Chinese cars to the United Kingdom. India is having troubles due to battery supply and Hector components for the ZS electric car.
The disruptions have affected the launch of new models. Public events have been cancelled in many regions which has contributed to the disruptions and cancellations of public events. These events are crucial for car manufacturers, as they used these occasions to show off their latest models and innovations for the media and the general public.
One of the most prestigious automotive shows, the Geneva International Motor Show, has been canceled along with the Qatar MotoGP bike championship, and also the Thailand MotoGP was also called off due to the coronavirus outbreak and has been rescheduled for Oct 3-4. The opening round of Formula 1 is also in question.
Author
Justin Kavanagh
Justin Kavanagh is a recognised leader
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