How Coronavirus is affecting the automotive industry on the global stage

COVID-19, also known as the Coronavirus, has made its presence felt on the Indian subcontinent, authorities have gone into overdrive to contain the outbreak of this contagious infection. Infected cases are being treated while all those who have come in contact with them are being identified and quarantined as a safety measure. But the looming fear of a mass outbreak has had aspersions across sectors and one of the most affected is the automotive and related sectors.

The automotive sector is networked across the globe and the international sanctions have already taken their toll. First two rounds of the MotoGP championship, the QatarGP and the Thailand GP have already been cancelled. The inaugural round of Formula 1 is still being discussed and so are countless events that include international travel and congregations. The Geneva International Motor Show, one of the oldest and prestigious automotive exhibitions across the globe has been cancelled. Car manufacturers across the world who had planned to showcase their latest innovations have lost the stage and the millions of eyeballs and press, resulting in losses to the tune of millions.

China is a global manufacturing hub and the pandemic has slammed brakes on the industry. Supply chains that have evolved employing Lean manufacturing and Kaizen philosophies have taken a big hit, disrupting manufacturing processes across the globe. Carmakers have no alternate solution to cater to the sudden shortfall sending markets into a tizzy amidst the ongoing economic slowdown.

The Indian automotive market has been in tatters since the downslide over the past year. Car sales in the calendar year 2019 have shrunk 12.3 per cent over 2018, 29.36 lakh units in 2019 versus 33.49 lakh units in 2018. And the 2020 numbers are even lower compared to 2019. Adding to this, the supply chain issues and related losses are going to put more pressure on carmakers. MG Motors is already facing issues in India with the Hector components and batteries for the ZS electric car. One of India’s largest automobile manufacturers Tata Motors, too, has reported being affected by Coronavirus resulting of a drop in vehicle production and wholesale volume. It will certainly put jobs at stake, especially the ones in the pipeline for expansion plans across OEMs.

New product launches have also been affected. With an impending advisory against holding public events in the offing, launch events, press conferences and media drives are sure to get hit. Like for instance, the new Mercedes-Benz GLA drive to understand the yet-to-be-launched car has been cancelled. With a slew of launches slated for the next few weeks, a lot of drives and events are expected to be held and all of which will be now under the scanner. Without these drives, buyers will be starved for authentic opinions about new products to make their buying decisions. Crores of rupees worth of marketing expenditure including campaigns might lose their effectivity due to the lack of on-ground push.

Coming to the COVID numbers, according to a University of Minnesota study, the fatalities due to the infection are at 2.3 per cent with most of them either being seniors with weaker immunities or patients with underlying conditions. World Health Organisation, on the other hand, has pegged the mortality rate at 3.4 per cent, with their latest sampling and have said that 80 percent of the affected area from only three countries and almost 30-odd countries have reported singular cases. But, again, it all boils down to us along with the government and how we work in tandem to stem this pandemic from wreaking havoc on our soil. Being responsible and smart and cautious, it is possible to minimize these losses and instead of fear-mongering, a balanced approach should be adopted.

We will have to watch as the COVID chapter unfolds and see how it pans out.

Font: Firstpost

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