- Right now Auto Industry is doing similar to a certain car once driven by Mr. Richard Hammond

How CoVid 19 affects the Auto Industry

I’m sure that most of you have seen plenty of articles about coronavirus at this point. So, let me add a little to the doom and gloom that many of you might be experiencing during the quarantine.

It’s no secret that most of the world is practically on lockdown at this moment. What this means for the Automotive industry in-general is that almost all the auto manufacturing and assembly plants are shut down for now (excluding the essential commercial trucks and defence systems). The big three automakers in the US shut their plants and Europe is in a similar situation where many places are under complete lockdown. Almost no new cars are being produced at this moment. Also, nobody is rushing to any dealerships to buy any new cars. Before this happened, the auto industry was already having a tough time due to dwindling new car sales. Now, that coupled with the whole coronavirus situation means that the automakers will be facing billions of dollars in losses and lost revenue.

What this means for the average consumer is delays. If you were excited about an upcoming car launch later this year or early next year, consider it delayed by at least 6 months. Projects that were planned for the next 3-5 years can also have some kind of delay.

Also, people who do not have the capability to work from their homes (e.g. assembly line workers) might not get paid during this time and there will certainly be layoffs and a loss of income in many industries. This means lesser people buying cars which means less production of cars which means even more redundancies in manufacturing and the whole cycle goes on. In the worst-case scenario this can lead to some car companies going into bankruptcy or even worse: shutting their doors permanently. Although, thanks to government bail-outs and financial stimulus plans this won’t happen. But, the workers at these companies might still end up paying the price.

What this means for the adoption of electrification. I think it’s too early to tell but due to their bottom lines suffering, big companies might be less inclined towards investing in research and development for new technologies. This might set the electrification wave back a couple of years.

There is some light at the end of tunnel though. Hopefully, most Automotive plants will resume some activity towards middle of May (might operate at a lower capacity). And, the projections for car sales indicate that the industry will start to grow again in late 2021. For now, all we can do is wait for this coronavirus pandemic to pass. Maybe if you keep sitting at home and stop the spread, the industry will recover quicker. I personally just hope that people don’t get laid off and the car models that I’m waiting for hit the markets soon. Until then YouTube and Netflix it is.

Let me know in the comments your thoughts on how this will affect the world and how you are spending your free time.

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