With the swift spread of the novel coronavirus pandemic, the auto industry has suffered the most with the huge drop or dry up in customers’ footfall all over the world due to lockdowns.
Annual growth predictions, and profit forecasts, all went oblivious with the outbreak of the virus from China within the months. Carmakers and car buyers, both are concerned with the looming financial burden. The shut down of the automotive and spare parts industry during lockdowns hugely affected the auto industry across the world.
Though the industry has gradually started manufacturing while working with a minimal workforce, still, all over, the crisis is biting the auto industry.
Thousands of layoffs and slashes are observed as soon as the pandemic hit the US.
The automotive industry is struggling to find a solution to the financial concerns of the army of workers, supply chains, and the disappointed car dealers, retailers, car leasing associates, and car buyers amid the business inactivity in lockdowns.
Trump’s government is pushing the industry to resume the operations, but things are not going as easy as it seems. To lessen the disastrous effects of COVID-19, the auto industry is looking for all the options that can bring the business back on the track.
Here are a few measures that are on the cards for now:
Extending Support Towards Mitigating the COVID-19
Apart from the revenue and profitability, automakers are bearing the
financial burden of workforces and bank loans. To continue the business in one or another way, several automakers leaped into the arena of providing the necessary medical equipment, required to contain the virus.
Some of the leading auto industry giants have repurposed their few plants and supply chains to provide much-needed ventilators and medical equipment:
- ZF North America has partnered with Pontiac, Michigan-based manufacturer Detroit Sewn to help with the fight against the COVID-19 virus. A shipment of 100,000 face masks is expected to be delivered to Detroit Sewn by the end of April.
- Lamborghini is providing resources and equipment from its Research and Development Department for the co-engineering and production of breathing simulators. The company supports Siare Engineering International Group, Italy’s top manufacturer of ventilators, during the health emergency caused by the spread of COVID-19.
- Ford will produce 50,000 ventilators for the U.S. government under the Defense Production Act for $336 million.
- Ventilators began rolling out of the General Motors Components Holdings plant to support coronavirus patients around the country. The plant is now mass producing Ventec Life Systems’ critical care ventilators, and plan to ship out more than 600 of the machines this month. The company is set to produce 30,000 ventilators after signing a $489.4 million contract with the US Department of Health and Human Services.
- Hyundai continues to funnel resources into the fight against the COVID-19. The automaker donated 65,000 tests to detect the disease. Hyundai said the support and tests come from an in-house grant program that’s raised $4 million to support increased testing in the US.
Wearable Social Distancing Devices
The US automaker Ford has resumed operation partially and is trailing a buzzing wristband that alarms the workers to maintain a safe distance from one another. They already have started to take the necessary measures to maintain social distancing among workers and safe and secure manufacturing for the customers.
No-Contract Car Buying Service
By the beginning of April, auto sales have dropped significantly. The US government’s orders to stay inside have crunched the production in plants and businesses at car retailers.
As soon as the pandemic comes to an end, a huge void in between supply and demand can occur.
To mitigate further losses, Geely, one of the largest automakers, has already launched a no-contact car buying service.
The service aims to deliver the vehicle at the doorstep of the customer, disinfected, and then the keys are sent separately via a drone.
Boost in Digital Sales
With the changing trends of production, supply chain, and marketing, all the businesses are heading towards digital sales to cut costs so the customer could be tempted to buy. However, automobiles are not such commodities. They tend to be expensive and exclusive, with lots of sales negotiations and physical visits of the buyer to inspect the car.
In present circumstances, the auto industry has been pushed to gear up into the digital space. It is more likely that we will be going to see the digital shift in the auto industry with the virtual tours of the vehicle and sales negotiation over Skype or Zoom.
One such startup Cazoo, in the UK, is receiving lots of patting and investment in a bid to provide an online platform where digital retailing can be facilitated once the epidemic takes its last breath.
Also, Hyundai India has launched an online retail platform to tap new-age customers.
As the automakers had to take back all the forecasts of the year, and a huge loss in at least Q1 is on the head, they are doing all that they can to limit the damage.
The top gear giants of the auto industry, General Motors Co. and Ford Motor Co.’s finance units, are offering customers one-month lease extensions. In addition to relieving pressure on consumers wary of visiting showrooms, this will delay the influx of off-lease vehicles headed to auctions that are for now operating only virtually.
Due to upcoming financial crux, Volkswagen and the union, IG Metall, have agreed the pay agreement, which had been due to end on 30 April 2020, should remain in force until the end of December 2020 without increases in the pay scales. It is being expected that the practice would sweep in the rest of the auto industry.
Austerity Measures
Volkswagon, GM Motors, Renault, Ford, and several other automakers announce a huge cost reduction and austerity measures for the year 2021–22.
Bottom Line Industries across the board are tiring of the lockdowns and the drop in businesses all over. The experts apprehend recession bigger and disastrous than 2007. Buying a car could burden more with extra expenses of loans and interest rates. Comparatively, a short term car leasing can serve a great deal. Also, if you are looking to get rid of your lease, transferring a lease is an ideal choice to manage your finances in a time of crisis.