- A sneak peek into the global automobile scenario
As the Coronavirus spreads its wings across the globe, it has begun to ax the automobile industry putting thousands of jobs at stake. A projection estimated a loss of 94,400 jobs vaguely and $7.3 billion in total earnings of the sector for every week of compromised purchases. Large companies such as Ford, Fiat Chrysler, Hyundai, Toyota, and General Motors have shut down their operations. The factory closure is having a significant impact on each of these big companies in multiple ways. On the other hand, we have major sports leagues suspending their seasons, schools being shut, large gathering being discouraged and the travel trend at a standstill dousing the travel industry with heavy losses. Let us have a look at these in detail
- Big Bang for the Big three and others: Ford, Fiat Chrysler, General Motors and others shut down operations
The first automaker to confirm a coronavirus case recently was none other than Fiat Chrysler Automobiles. While the victim of the virus is now receiving required medical attention, a number of workers that were in contact with the victim are being quarantined. This number has not been revealed yet.
While Ford, Fiat Chrysler, and General Motors have put their white-collar employees on a work from the home mandate, Detroit’s Big Three Automakers formed a task force with the United Auto Workers Union to contemplate new ways to safeguard their working on an hourly payroll from the coronavirus outbreak trying their utmost best to keep their U.S. parts and assembly lines functional. However, the Big Three have ultimately shut down their plants over coronavirus concerns for sanitization purposes until the 30th of March. Morgan Stanley now predicts the U.S. demand for new cars will plummet to 15.5 million, down from last year’s 17.1 million vehicles.
- Coronavirus impact on the other Automotive companies in Europe and other parts of the world
Factories in Pomigliano d’Arco, Melfi, Atessa and Cassino are temporarily shut by fiat while plants in its home market, Italy have been indefinitely closed. A compilation of these facilities produces about 600,000 vehicles on an annual basis. This makes for about 4 percent of total European output.
As the pandemic spread across Europe, Volkswagen is shutting down most of its assembly plants for two weeks, announced the German automaker, recently. CEO Herbert Diess confirmed a shutdown across the continent for fourteen days, Friday is the last shift for its employees.
The root place of the coronavirus, China, has however started seeing a significant decline in the cases of COVID-19 now. Plants that were shut down in late January and early February have been reopened recently by their respective automakers.
It is still impossible to predict how soon everyone will acquire its normal shape in China’s automobile sector. As of now, multiple shutdowns have caused struggle forcing closures of Hyundai plants in South Korea due to the automaker’s heavy dependence on Chinese parts suppliers. Most manufacturers in the United States had been clutching on to industry backlogs to minimize the impact. However, experts suggest that the same may no longer be possible.
- No more. Crowding means no more auto shows
Discouragement of large gatherings has led to unfortunate delays or cancellations of multiple auto shows that historically help build excitement among potential buyers. The popular Geneva International Motor Show was scrapped for the first time in 90 years, this month. The Beijing Motor Show is being indefinitely postponed while the New York International Auto Show will be postponed from April to August. The North American International Auto Show in Detroit is uncertain of going ahead as per plan. This year it was to take place in June instead of the usual January.
- Things turning out positive
On the brighter side, Toyota has reopened one of its Chinese plants in Guangzhou. This, however, doesn’t change the fact that the automobile sector is witnessing an extended series of gloomy days in the United States as well as globally.
Michael Dunne, the founder of automotive consulting firm ZoZo Go, informed NBC News that, “Companies are starting up operations but they are far from full strength. Still, millions of migrant laborers are making their way back to work, passing through quarantine procedures.”
- What we feel
Charles Dcosta, a vice president with Matrack suggests, “There’s no telling how widespread or long-lasting the ripple effect of the coronavirus will be for the automotive industry. But it is true that the impact will be a long way from recovery in the short run. Compare will have to be brave and face the situation and come out of it in a gradual and phased manner. ”
According to data from the Centre for Automotive Research in Ann Arbor, Michigan, due to the effects of COVID-19, a dip in auto sales in the U.S. for a single week could have staggering ripple effects on the broader economy. A week of zero sales in the automobile sector would mean a loss of 94,400 jobs vaguely and $7.3 billion in total earnings of the same, roughly.
- The verdict
It is being expected that this virus outbreak may slow down global economic growth by 0.2%-0.3% in the year 2020. The Coronavirus has surpassed the severity level of the SARS outbreak that took place in 2002-2003, and it is expected to have an impact on China’s GDP significantly.
It is still too early to gauge the complete impact of the outbreak of Coronavirus on the new as well as an established business. But still, several companies have accepted the fact that the virus is affecting their business in varying degrees.