The coronavirus outbreak and COVID-19 illness have spread quickly across Asia and into North America and Europe this year. As of late March, automotive plants have been idled, workers are furloughed, and much of the logistics of the supply chain has slowed. While we await the impacts of reduced vehicle production on the “make” side of the automotive industry, companies like Ford, GM, Volkswagen, and Tesla have shifted to aid in the manufacture of medical devices and surgical equipment to produce these scarce items.
How long will this last?
While most major automotive manufacturers have stated their intention to close plants, and in many cases sanitize them, by early April, stay-at-home orders in the United States will delay many plant re-openings to non-essential personnel until at least mid-April. These re-openings are subject to review and change across the industry.
McKinsey and Company offer several scenarios with a quick recovery scenario – enabled by work from home, social distancing, and stay-at-home orders – indicating a return to typical work levels by the end of Q2 globally. (Based on early recovery models observed in Wuhan and other cities in China, the crisis impacts appear to linger for three to four months from start to finish during this initial wave.)
Automotive leaders are navigating their recovery based on once-in-a-lifetime uncertainty across their companies, their employees, and their own families. While vehicle sales volumes will be off for the year, automotive brands will work quickly to capture market share and drive deeper brand loyalty among customers. These portfolio shifts will have an undeniable impact on IT spending, creating a much higher emphasis and importance on the value of initiatives to separate from other portfolio priorities as the overall wallet shrinks.
The automotive industry has long shown its ability to respond in the face of crisis and challenges as the arsenal of democracy. This time around, it will be known as the arsenal of health. We will see this through together, and together we will build the next normal for the industry.
Be well, be positive, and be informed.
A helpful industry perspective, “COVID-19: A Quick Response Guide for Automotive Leaders,” provides a number of no-cost support options during this time, including a Work Pulse survey, remote training assets, and access to sourcing platforms. Please contact William Newman if you have any questions regarding responding during this time of crisis.