How the Coronavirus is Affecting the Automotive Industry

By Lisa Armstrong

With everything going on in the world today with the COVID-19 coronavirus
many of us are feeling the impact already on our day-to-day lives.

Firstly, Supermarkets toilet paper panic buying is not the only shortage that has
companies bulk buying.

Secondly, the share market prices plummeting.

And lastly, the general slow down of business transactions.

How is the short supply of automotive parts going to affect you?

As a result of countries going into quarantine the supply of automotive parts will be greatly affected.

Consequently, many of the suppliers for the major car manufacturers are in China. Even if the factories are located outside of China, the spread of the virus has led to a slow down of production.

Hence, there are automotive companies bulk buying and holding stock of parts for current production and spare parts.

Image: Reuters

How does the Coronavirus effect you and I?

If your vehicle requires a part to be replaced, is there going to be a part of the shelf available?

Not only will this affect genuine parts market but also aftermarket parts. If orders are unable to be filled from your local distributor due to factories not producing then what happens next?

This may not be something that affects you this week but what happens in 6 or 12 months time when there is a backlog of spare parts orders to be shipped?

What can you do about it?

Unless you have a crystal ball under the hood of your car it may feel like you can’t prepare for this. However, if you are aware of parts or service items that your mechanic has given you an indication, best to do it now.

Sometimes we tend to put off some items on our car for repair because it is expensive to fix, unable to find the time to be without the car or it is not an urgent item so you can tend to it next service.

Knowing that the shortage of spare parts will be affecting Australia sooner rather than later may be the motivator to tackle these repairs as soon as possible.

Now, I am not suggesting that you go and bulk buy all possible parts that could fail on your car. However, getting a mechanic to do a check over even if your service is not due is advisable.

How does this affect Car Sales?

With the media reporting more and more quarantined countries it is not surprising that sales have absolutely plummeted in the new car industry. Jaguar Land Rover reported they have been hit with a massive 85% drop in sales in the past month. (As reported in The Guardian 6^th March 2020).

A company representative has commented, “In the first half of the month about 20% of dealers were open (In China) which has since improved to now over 80%, although most are still operating with reduced staffing and facilities.”

“Jaguar Land Rover expects this to improve over the course of March, however, retail sales are expected to recover more gradually”.

What about supply of parts for production?

Jaguar Land Rover’s plant has reopened on 24^th February and faces the challenges now of the supply chain of parts for production.

So how are other manufacturers coping with the crisis?

Upon reading statements from various automotive manufacturers it is apparent that they have all created “War rooms” to combat the battle for parts.

In these War Rooms as one can imagine would have the key people in the supply chain calculating exactly what products can be retrofitted to the vehicles in order to get orders out the door.

There is no doubt a list of must have items that stop production all together. Most manufacturers are making comments on the supply being okay for the month of March. We are yet to see any comments about April onwards.

How are manufacturers protecting their employees?

General Motors has made a statement that they have enough parts to continue production without disruption deep into this month.

However, General Motors have taken precautions to protect not only their production but also their staff.

Following the link on their website: https://www.gm.com/coronavirus.html, General Motors have a health screening questionnaire that is required to be filled out before any visitors may enter any of their facilities.

Questions such as “Have you returned from any of the countries listed on gm.com/coronavirus within the last 14 days?

The countries listed on the site are:

China
Italy
Iran
Japan
South Korea

There are other questions relating to the close contact with diagnosed COVID-19 persons within 14 days and if the potential visitor has any of the cold or flu-like symptoms such as (Fever, cough, sore throat, respiratory illness, difficulty breathing)

General Motors have restricted staff travel to ensure the safety of those that are employed by the company. At this stage they have no staff that are infected with the COVID-19.

Most companies have restricted the travel of executives to protect their staff from possible infection of the virus.

However Toyota is not as lucky. A staff member at a Toyota dealership tested positive for COVID-19 in Seattle.

The dealership was in direct contact with the Centres for Disease Control and Prevention and conducted a thorough clean of the facility.

In conclusion, the worse is still yet to come. This is a problem that is not going to be resolved overnight. In fact, most experts are saying that it is going to get worse before its gets better.