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Auto Industry - Supply Chain

Goals

To provide an overview of the impact of COVID-19 on the auto industry focusing on the supply chain, consumer behavior, potential opportunities, and expected top performers.

Early Findings

The pandemic caused by the coronavirus has severely affected the operations and revenue of the auto industry. Below are some of our findings:
  • In February 2020, car sales in China dropped as much as 80 percent as consumers stayed away from car lots. In addition, wholesales from carmakers to dealerships also plunged 86 percent in February.
  • As the crisis worsened, several automakers outside of China, such as Kia, Fiat Chrysler, General Motors, and Hyundai, decided to suspend auto production citing a lack of supplies from China.
  • Globally, auto sales have been projected to fall by as much as 2.5 percent by year-end 2020, and only expand by 1.5 percent in 2021, according to recent forecasts from Moody's.
  • In response to the pandemic, a number of traditional automakers, such as Volkswagen, Nissan, SAIC, and BMW, have turned to e-commerce using digital tools including virtual reality and live broadcasts to stimulate sales.
  • As the Chinese auto industry gradually restarts from the national shutdown, automakers such as GM, Honda, and Hyundai have resulted to using air freight to transport auto supplies out of China in a bid to reduce short term supply crunch.
  • However, as the Chinese auto industry restarts, its European counterpart shuts down. The European Automobile Manufacturers’ Association (ACEA) recently announced that it is in a dire situation citing collapsing demand, supply shortages, and corona infections among its employees.
  • Consumer demand is expected to take a hit. According to a recent report by IHS, auto sales are expected to fall 13.6 percent in Europe, 10 percent in China, and 12 percent globally.

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