Coronavirus is now starting to seriously affect the global automotive industry. Countries and companies around the world are trying to contain the outbreak in any way they can. Infected people are getting required medical treatments, while the ones who have been in contact with them are quarantined. Even with all these safety measures, the virus has managed to spread throughout continents.
And the fear of an even bigger outbreak did and is making quite a lot of damage to the majority of industry sectors. One of the most affected sectors is the automotive industry and its associated businesses. Companies like Honda Motor Co., Ltd. (NYSE: HMC), General Motors Company (NYSE: GM), Nissan Motor Co., Ltd. (OTC: NSANY), Renault SA (OTC: RNLSY), as well as Tesla, Inc. (NASDAQ: TSLA) and Volkswagen AG (OTC: VWAGY), were forced to stop their production facilities in China. Some companies like Franchise Holdings International (OTC: FNHI) active in the automotive accessory market said their supply chain is fully intact or either back to normal production.
Automakers Global Position
For many reasons, automakers span their production networks across the world. And the global manufacturing hub is positioned in China, the center of this Black Swan event . All the supply chains reliant on Chinese production took a big hit and disrupted both car production in China and production in other countries which depend on parts produced in China. So, once an advantage, the global production network only ended up being more vulnerable, and even more than others. And there is no alternate solution to replace this sudden shortage.
Additional Pressure On The Indian Car Market
The virus made its presence almost everywhere, including on the Indian subcontinent. The Indian car market has been declining last year. Car sales were down to 2.94 million units in 2019, while sales amounted to 3.35 million units in 2018. This is a decline of 12.3%. And 2020 does not look good. Coronavirus outbreak added more pressure on carmakers and their supply chains.
MG Motors, that is probably the largest importer of Chinese cars to the United Kingdom, is having troubles in India with its batteries and Hector components for the ZS electric car. Coronavirus has also created a problem for India's big carmaker Tata Motors Limited (NYSE: TTM), which announced both decreases in production and sales numbers.
New Model Presentation
All of this affected the launching of new models. One of the most common safety measures is to cancel all public and mass events. Events like the MotoGP championship has canceled its Qatar GP and the Thailand GP as well. One of the most prestigious automotive shows, the Geneva International Motor Show, has also been canceled. Even the opening round of Formula 1 is in question.
Events of this sort are crucial for car manufacturers, which planned to show their latest models and innovations for the media and the general public.
Not Only The Automotive Industry Is Affected
Carmakers are not the only ones hit by the outbreak. Many other industry segments, including tech companies, also had to change their plans, stop production and cancel events. For example, Facebook, Inc. (NASDAQ: FB) had to cancel its F8, and Google (NASDAQ: GOOG) canceled its I/O conference, both scheduled in May. Luckily for them, the blow was far less severe as they are absent from China ‘production-wise) and like Apple Inc (NASDAQ: AAPL), they have money aside to keep going. We will have to stay tuned and follow the latest happenings on COVID-19.
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