Coronavirus, which has infected almost every country on the planet, has a global impact on all nations and economies. Many of them have imposed restrictions that have slowed, crippled, or even halted the economy. China is responsible for more than 80% of the global auto supply chain. China's car sales fell by 18% in January 2020 (Barua, 2020). According to the China Passenger Car Association (CPCA), sales could drop by 40% or more in the first two months of 2019 compared to the same time last year. There will be an impact by Global automakers will be by production reductions caused by supply chain interference in China. Hubei, China's four leading car producing bases, with over a hundred automotive suppliers. Hubei's automotive industries remained closed until 11 th March.
Vehicle sales in China have decreased especially Chinese exports. It has spread across Europe, impacting large-scale manufacturing. Assembly plant closures in the United States are harming the economy and are straining the global supply base. The pandemic has caused a drop in global demand due to customers losing faith, resulting in sales and profit losses for automakers. It has also prompted automakers to consider diverting resources to shore up ongoing operations, thus depriving advanced technology R&D funding. Exiting unprofitable foreign markets and vehicle segments is a strategic move. As there is the consolidation of manufacturing capacity, production will be accelerated, lowering performance. Suppliers experiencing financial issues could succumb to rapidly decreasing market conditions, causing many disruptions and potentially catastrophic effects in the vast automotive industry. Finally, as dealers cannot pivot rapidly enough to changing market conditions, a considerable amount of consolidation can be required in the sector. To address the global threat in the automotive industry, executive boards should develop critical questions. As a result, the coronavirus pandemic has hurt the automobile industry in China, Europe, and the United States, causing demand and supply shocks. As a result, looking for a solution to the problem should be vital.
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Wuhan, China's first city with reported COVID-19 cases, was quarantined from January. The entire country had imposed strict lockdown measures, forcing citizens to stay at home and factories to close. There was a disruption of China's economic activities during the lockdown. With a negative growth rate of forty percent in the first half of 2020, China's E.V. sales volume was bound to fall sharply ( Wen et al, 2021). Monthly China's E.V. sales in 2020 Feb was lower in the last initial years, basing on the information from the China Association of Automobile Manufacturers. Even though it has been improving since March, In April and May, China's E.V. market share fell below 4%, suggesting that COVID-19 had a more significant negative impact on China's E.V. in the ICEV market. The Chinese authorities acted quickly. It declared the NEVs to Countryside policy, providing considerable government support for small-scale electric vehicles in rural areas. COVID-19 has a direct and short-term influence. The decline in travel demand, especially during the lockdown era, could reduce consumer willingness to purchase automobiles. Buyers are more vigilant when buying costly durable goods like cars due to a lack of faith in economic growth following the pandemic. According to J.D POWER, there was a cancellation of one-fifth of car purchases because of COVID-19. The risks of pandemic infections posed by public transportation could increase people's aspiration to purchase private cars, promoting potential car sales to new-time car consumers. China's modern car bazaars have become soaked, transitioning from a seller's mart to a buyer's mart with diverse customer liking. Improving electric vehicle sales would require an emphasis on either meeting new selections or tapping into upcoming bazaars. China's E.V. bazaar has been hit harder by the pandemic in the half of 2020 for many motives. First, public use has accounted for roughly half of China's E.V. sales, but just ten percent of ICEV sales (Wen et al 2021). Finally, to minimize infection risks, people prefer to avoid public transportation, such as buses, taxis, and ride-sharing vehicles, which were once significant applications of E.V.s.
Sales of passenger E.V.s for rental from 2020 January to April were down seventy-one percent compared to the same timeframe in twenty nineteen. It was due to a sharp fall in end-users in the secondary sector. Second, small and middle-income users used to be the primary buyers of E.V.s in the Chinese state, as they are more susceptible to income and price volatility. Economic entities and SMEs suffered significant losses during the pandemic lockdown era, resulting in spread income collapse and job losses. The drop in oil prices induced by coronavirus has eroded E.V.s' cost advantage over ICEVs (Wen et al, 2021). Finally, as an emerging new product with some technical issues like range and charging concerns, the E.V. market is more susceptible to external shocks. Refueling an E.V. is far more inconvenient than refueling an ICEV due to a lack of charging infrastructure, particularly during the coronavirus when private charging Starks are more challenging to get approved and installed. In the second half of 2020, though, things have changed. China's economic activities and transport are steadily recovering under coronavirus effective control. E.V. sharing is becoming more common. The "New Infrastructure" program has begun to take effect, which could allay future E.V. buyers' fears about charging. There are observations of coronavirus effects on China's E.V. revenues and customer willingness. After the pandemic, the commercial E.V. market volume remained small and steady. While there was a backward increase rate in the first half of 2020 because of manufacturing disruptions and exchange restrictions. There was recovering the lost revenue in the second part of 2020 once mitigation of coronavirus. There is tracing underlying motives back to China's targets for electric vehicle adoption, which keeps commercial E.V. sales constant. Even severe market sales destruction in the passenger E.V. category resulted in backward monthly growth rates of 30% less from January 2020. But, the "NEVs to Countryside" strategy has boosted this trend. During the second half of 2020, China's monthly passenger E.V. sales continued to break records. Finally, the crisis impacted the market value of electric vehicles in China in terms of sales and, in particular, the export of various parts abroad, causing demand and supply shocks.
In Europe, the automotive industry accounts for the bulk of the manufacturing industry in each state's economy. It contributes to creating jobs and a flag bearer and a valuable measurement for the global economy's current wealth. For example, the United Kingdom's automotive industry generates over £82 billion in annual revenue, contributing £18.6 billion to the economy and employing over 823,000 people (Belhadi et al,2021). Because of the current coronavirus crisis, established car companies have been firing workers and reducing their sales. Aston Martin Lagonda Global Holdings Plc announced a twenty percent layoff in its employees. Government-instigated lockdown measures have forced the shut of some plants all over Europe. Vehicle manufacturers, like Lookers Plc, have been forced to shut twelve centers and retrench atleast1500 of their employees due to the closures. In the U.K.also, sales have fallen by nearly eighty-nine percent compared to the past year (Belhadi et al, 2020). The coronavirus pandemic has stopped the goals of significant car company producers. It entails the disruption of a $1.6 billion Mazda-Toyota merger, the building of various Fiat Chrysler Automobiles projects in Detroit, and Ford Motor Company's $740 million projects to revamp an old Detroit train station. Due to the safety and lockdown protocols, G.M.'s manufacturing plants have reduced production due to their piled-up expertise in handling supply chain interruptions. The auto industry has historically played an influential role. As a result, COVID-19 had an essential effect on the European automotive industry. A critical supply chain's response in managing drawbacks caused by the pandemic can serve as an example of how to create resilience in the automotive manufacturing supply chain in general.
In the U.S., the automotive sector is experiencing a significant reduction in demand and investment shyness by investors. It's also dealing with an immediate and spread stop in economic activities, with employees staying indoors, supply chains grinding to a halt, and manufacturing companies shuttering. A significant contraction is due to restrictions on people's movement and a sudden break in the gross domestic product (GDP). There is a projection of Factory closures in North America and Europe that has impacted the demolition of 2.5 million passenger cars from production, costing car and parts manufacturers US$77.7 billion in lost revenue (Barua, 2020). Backward and forward linkages have adverse multiplier effects on the economy, especially in countries like the United States, where the automotive industry is a significant economic growth driver. Small and medium-sized businesses (SMEs), which employ most of the sector's workers and provide intermediate inputs and services to multinational automakers, backward linkages are predicted to have a significant impact. Transportation, land passenger transport, charter buses, and services such as passenger car rental and car repair are likely to be impacted by the automotive industry's closure by forwarding linkages. The pandemic has resulted in an alarming increase in joblessness in the automotive industry's supply chains. If governments, employers, and employees do not move quickly to ensure SMEs' survival and worker safety, there will be losing many more jobs. General Motors, Ford Motor Company, and Fiat Chrysler Automobiles (FCA) have temporarily closed all of their factories in the Americas. Automobile producers in Argentina and Brazil recently declared the closing of factories. In the United States, at least 150,000 unionized employees and hundreds of thousands of non-unionized workers are affected by the pandemic. Finally, the pandemic has had a significant impact on the car industry in the United States, resulting in closing many factories and losing jobs and revenue.
During the coronavirus pandemic, executives and boards should be asking questions like: How can creativity be a market enabler, fueling organizational fitness programs in a disrupted industry? In this case, innovation enablers allow an innovation team to perform agile innovation work within a company. Innovation is no longer just a means of achieving economic and social development or gaining a competitive edge. Companies must innovate to survive, which necessitates reorganization and the creation of new goods. Simultaneously, since product life cycles have become shorter, innovation should work at an ever-increasing pace to keep up with market changes and requirements. There is a growing interest in improving the management of innovation processes (Johnson 2016). Should companies use autonomous vehicles (A.V.)? The longer it takes for a company to introduce new innovative activities, the lower its innovation output, such as self-driving vehicles and delivery vans. Human-operable controls, for example, are required by current safety requirements .
A second question might be, to what extent is social distancing changing consumer behavior, and what role does digital technology play in sustaining customer engagement in the future? . These crises alter the underlying basis of purchasing conduct that applies under normal circumstances. Consumer expectations of price and quality in these cases, such as multiple financial and health crises, have been found to differ significantly depending on the situation (Parson &Vancic, 2020). During the global financial crisis of 2008, there was a discovery that customers have different perceptions of price. Consumers became more price-sensitive due to uncertainty such as job stability, and their buying habits changed as a result. The current COVID-19 pandemic has had an immediate impact on businesses and families, putting them at risk of bankruptcy and increasing unemployment on a larger scale. Economists expect the pandemic would result in a worse recession than the 2008 financial crisis. Unlike other problems, the pandemic has brought the world to a complete and unexpected halt, making it, unlike any modern history situation. The board should ask such questions and come up with a solution, particularly a digital one. Using I.T. knowledge, we can reduce human interaction while also solving the problem in the automobile industry. The third question is whether there are opportunities for strategic partnerships and acquisitions to improve competitive positioning and business resiliency. In some instances, forming a J.V. that provides access to new technologies can be more cost- and operationally effective. The automotive industry's continued integration with the energy and technology sectors emphasizes the importance of forming technology-based joint ventures if automotive companies are to adequately meet the demands of today's linked and environmentally conscious customers (William,2020). Creating a joint venture to gain access to complementary or essential technologies allows technology companies to reach new customers while retaining intellectual property and ownership rights. These partnerships, on the other hand, enable automotive companies to concentrate on producing vehicles and parts. Simultaneously, the J.V. partner continues to benefit from the technology's upside in innovation and revenue. The resulting partnership helps both parties because the automobile industry will distinguish itself from its ability to produce technologically advanced goods. As a result, CEOs should consider whether their automotive industries should form joint ventures to combat the outbreak.
What kind of long-term strategic investments? For example, improvements to I.T. infrastructure or the transformation of a digital supply network. Despite the coronavirus and its economic consequences, automakers should not believe that the virus is to blame for most of their problems. Of course, it was a massive setback for all sectors, and there was a force for automakers to suspend production for several weeks to protect their workers from infection. Furthermore, most markets anticipate double-digit revenue declines in 2020 as a result of the economic crisis. The car industry's main takeaway from the problem has been the fragility of its current paradigm; this year's Automotive Manager examines the improvements needed and, more importantly, offers specific recommendations on how to put them in place. The current business model of significant automakers is not resilient as the crisis has shown. Manufacturers' customization has to work in large quantities, which implies high fixed costs but low-profit margins, and profits plummet as volumes fall. However, even in the absence of external shocks, the goods and performance patterns that have served the industry for decades are no longer appropriate for the future (Polawski, 2020). Power trains may be electric in a few years, and there will be the digitalization of driving and automation of production and procurement. And a large portion of the sales process will take place online. From manufacturing to science and supplier relationships to customer relationships, these transformations mean entirely new working ways. Automakers, for the most part, have a clear sense of their industry's potential. Their issue has been implementing reform in a timely and effective manner. We've found a few places to start. In-house "Greenfield" programs are a particularly successful way to get a new model off the ground. They allow a business to set up and test a new model without being hampered by "legacy" units or the need to fully resize those older units, as long as they are profitable. The COVID-19 pandemic will eventually end, but it will leave severe economic consequences in its wake. However, the automotive industry's crisis and transformation problem will persist until manufacturers overcome it. Finally, these are the questions that different automotive companies' executive boards should be asking themselves to come up with realistic solutions against the menace.
Adopting Agile is one of the long-term functional options. Agile software development refers to a collection of techniques that make software development more agile. Customer centricity, such as concentrating decisions on increasing worth to consumers, continuous delivery and progress, and cooperation within teams, describes them. Agile software development is with other approaches such as Kanban, so on. Agile software development's underlying concept on four ideas and values: individuals and engagement, working software, customer cooperation, and adaptation . Although these concepts and ideas are abstract, they commonly use agile software development methodology. Discovering consumer wants and designing mitigations through joint efforts of individual organizing and functional teams, and communicating with end customers are some of the most commonly used approaches. In agile software growth, minimal upfront preparation and maximum customer participation in the development lifecycle are essential. According to some reports, possible flaws include unclear advantages, lack of predictability, ownership, transparency, and deployment difficulties. Although these methods are considered distinct, they share features such as "leanness," which maximizes business results while minimizing waste, such as less utilized resources and unnecessarily complex processes (Hoeft, 2021). Therefore, agile plays a significant role in combating COVID-19 in the automobile industry.
Automobile manufacturers faced instability in various market areas during the COVID19 crisis. the situation has intensified online and direct-to-consumer sales. There was a pressing need to turn a car manufacturer's market quickly. Companies should adopt an agile management system to improve their businesses. An Asian carmaker meets the requirement as the automaker is a national affiliate of one of the world's top automakers in one of the world's booming auto markets (Hoeft 2021). In response to the latest COVID19 pandemic, the manufacturer needs to use agile as a planning tool in their most impacted business field, sales. Since sales divisions are the car manufacturers connect to end customers, including the sales process and vehicle supply and involving their national dealer's connection, they promise to provide rich insights. Finally, many automotive companies could implement agile technologies to sustain revenue throughout the pandemic.
The change in crisis's epicenter from Asia to Europe and North America emphasizes the need for automakers to respond quickly . Supply chain disturbances, involved with substantial and increasing macroeconomic instability fuelled by coronavirus worldwide spread, will make determining the best course of action difficult. There is no overstating of the importance of scenario planning. Companies should understand the pandemic's potential effects across several critical areas and the uncertain economic, policy, and economic environment. The automobile industries should tackle the challenges of reduced production capacity because of supply chain interference and declining customer demand for new vehicles in plans based on the production possibility frontier(2008). Another factor to remember is the government's reaction to the pandemic. Given the unpredictable near-term outlook, automakers should strive to remain as flexible as possible . According to the Bureau of Labor Statistics, automakers and manufacturers hire a million workers in the United States. Corporate leaders should prioritize the well-being of these workers. Many workers work in factories where there are assembling parts and vehicles, so their tasks cannot be remote. If the infection spreads and a significant portion of the workforce become ill, it may substantially reduce production capacity. Thus a clean, balanced force can also benefit the bottom line.
Employee communications must be transparent, concise, and timely, particularly as recorded cases rise because of increased testing. ; It's not only about responding to employees' questions; it's also about exchanging information that helps solve upcoming issues. Workers who can work remotely would most likely need training on new methods and access to new technologies . Expect them to go through a learning process. Clear policies and reasonable communication goals will increase the process and boost confidence. Also, boosting system adaptability to cope with substantially high remote access levels to core systems should be top. During the pandemic, staff and management could be more vulnerable to social engineering goals (Goel et al, 2020). Auto plants should invest in education sensitizations for their workers whose work continues to take place on-site to help workers know and understand how to help control the virus from spreading and handle it if they encounter COVID-19 symptoms. Thus the health of employees should be vital.
The effect of COVID-19 on the automotive industries may be significant. In particular, in China, United States, and Europe, the crisis has hit them, and they account for a large portion of global auto manufacturing. The coronavirus's epicenter, China's Hubei, is also one of the country's foremost automotive hubs. The more significant the impact of the outbreak, the deeper it penetrates the supply chain. While many leading automotive original equipment manufacturers (OEMs) have immediate social media visibility into top-tier distributors, the problem becomes more difficult at the lower levels. Companies with sizeable foreign supply chains can evaluate essential components in short supply and explore alternate sourcing strategies. Although some auto parts are sourced from China by most North American assembly plants, many of these pieces, such as brakes, Steering wheels, and tires, could be reproduced locally. All should be prioritize for discussion, including improvements to car designs and materials as needed (Rowan & Galanakis, 2020). There should be the identification of a lternative suppliers should as part of the planning process. Companies should also consider the possible tax and tariff consequences of changing suppliers. If there is sourcing replacement parts or products internally, these may involve customs and taxes and transfer pricing considerations. Consider taking measures to improve supply chain visibility and information lines so that possible issues can be detected sooner, and there will be the development of remeasure strategies. The pandemic can provide an opportunity for the auto industry to show its mastery of the challenging moments. Learned from Japan's earthquake and tsunami in 2011 that destroyed global auto plants because of paint pigment shortfall traced to a tier 3 supplier. Digital supply chain transparency mechanisms may help identify challenges earlier and allow regular self-reporting with critical suppliers.
In conclusion, the pandemic has caused a drop in global demand due to customers losing faith, resulting in sales and profit losses for automakers. It has also prompted automakers to consider diverting resources to shore up ongoing operations, thus depriving advanced technology R&D funding. Exiting unprofitable foreign markets and vehicle segments is a strategic move. As there is the consolidation of manufacturing capacity, production will be accelerated, lowering performance. Suppliers experiencing financial issues could succumb to rapidly decreasing market conditions, causing many disruptions and potentially catastrophic effects in the vast automotive industry. As dealers cannot pivot rapidly enough to changing market conditions, a considerable amount of consolidation can be required in the sector. To address the global threat in the automotive industry, executive boards should develop critical questions as suggested. As the COVID-19 pandemic, caused by a new coronavirus, is a worldwide health crisis with a direct economic impact. Since viruses have no boundaries, authorities in the affected states had to take stringent measures to stop COVID-19 from spreading., The closing of car manufacturing plants in different parts of the world, mainly the United States, was one of the pandemic restrictions. Since the automobile industry is a cornerstone of the Chinese economy, this halt in production would significantly affect its GDP. From the standpoint of China's, Europe's, and the United States' future growth, as a result, it is critical to take steps to strengthen government administration, establish suitable conditions for the operations of enterprises organizations in the affected countries, and increase potential crisis preparedness. Tax cuts, savings in government administration, and social sector rationalization are examples of such interventions and allowing for more flexibility in the labor market. To follow the principles of public administration's financial policy, which will establish money reserves on top of debt decrease, state funds mainly on funding training and studying at universities of science, medicine, and technology.
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