Coronavirus: How COVID-19 Affects The Automotive Industry

  • Facebook

Following the World Health Organization (WHO) classifying the coronavirus disease 2019 (COVID-19) virus outbreak as a pandemic, there are increasing numbers of events (auto shows) being postponed and even cancelled. Its impact on the car world sees fuel prices fluctuate, auto shows and sports events canceled, and we are bracing for a slowdown in car sales and new-car launches. 

Big automotive events like the New York auto show being postponed, the first time it was cancelled/postponed since World War 2. “We are taking this extraordinary step to help protect our attendees, exhibitors and all participants from the coronavirus,” Mark Schienberg, who is the president of the dealer association that runs the show, said in a statement. 

Back in February, the Geneva Motor Show in Switzerland was called off just days before it was to begin in early March after the Swiss government banned public gatherings of more than 1,000 people until March 15. After the Geneva Motor Show was canceled most of the automakers that had planned to unveil their new cars did so anyway, albeit with small events broadcast over the internet.

Last week, American oil giant ExxonMobil cut pump prices by three cents on Wednesday afternoon (March 11), its second reduction since the plunge in crude oil prices.

Petrol at Esso stations are $2.14 a litre for 92-octane, $2.18 for 95-octane and $2.58 for 98. Diesel is $1.83 per litre. All the rates are before discounts, and are three cents lower than most prices posted by its rivals, which are likely to start matching Exxon’s cut. 

With the latest adjustment, Esso’s 95-octane – the most popular grade here – is now 7.2 per cent lower than its price in mid-January. Photo Credits: ST, KELVIN CHNG

The impact of COVID-19 ripples through the industry and has even directly or indirectly impacted the COE prices. As of 18th March 2020, Premiums for small cars (up to 1,600cc & 97kW) went down by 4.55 per cent to S$31,210 while large cars (above 1,600cc or 97kW) saw premiums go down from S$32,801 in the previous bidding exercise to S$30,012.

The situation for manufacturers has become even more challenging with the COVID-19 outbreak, which is affecting supply chains and disrupting manufacturing operations around the world. Worldwide, the car industry imports more than US$34-billion from China every year.

The most vulnerable companies are those that rely heavily or solely on factories in China for parts and materials. Many of these companies have been forced to source production in this region due to increased pressure to reduce supply chain costs through offshoring and outsourcing. 

Car production at Vauxhall’s Ellesmere Port factory was due to shut down this month because of coronavirus, so it will be free to make ventilators. Photo Credits: Bloomberg/Getty

With these cost-cutting measures, a disruption in the supply chain results in a quick stop to manufacturing due to a lack of parts .Companies throughout the supply chain are already being forced to make tough decisions – slowing or halting production, resourcing products and reevaluating revenue.

Leave a Reply

%d bloggers like this: