It is no longer news that COVID-19 has had catastrophic effects on the economic front. Consumers and producers worldwide, with no exemption, are experiencing hardships as a result of this outbreak. No one in the automotive and related industries has been spared. Just recently, the price of oil took a sharp fall and treaded in a world-record low.
In the automotive sector, the story is a little bit different, but not better. Production hubs and primary links in the supply chain have been profoundly struck. Luckily for some automakers, contingency plans have been handy in cushioning the weight of the punches caused by this pandemic. Most, if not all, of us, are consequently worried if or whether this pandemic will bring about a shortage of car parts.
Coronavirus & Car Production
COVID-19 has posed several challenges for automakers globally. Many were forced to shut down the operations of most of their factories. However, recently we have seen some reopen their doors, especially in areas where coronavirus has been contained. Even so, that brief closure cost companies quite a fortune, not to mention taking them back in attaining their annual targets.
Will the Coronavirus Cause a Shortage in Supplies?
On the issue of car parts, it is only prudent to expect a shortage. Car and car parts production is typically a collaborative activity that involves several industries located in different regions/countries. As such, a disruption in one industry significantly throws the rest of the process out of balance.
China and Italy, which are among the most hit countries, are also the significant suppliers of car parts. In the US, for instance, China provided roughly 10% of the 2019's imported auto parts. This percentage translates to $14.2 billion. On top of that, the US acquired 5% of tyres from China, which was around $7.9 billion.
Ergo, industries that depend on parts from these countries are affected. With most automakers falling behind schedule, supply chains being disrupted, and workers staying at home, the shortage of parts is almost inevitable. The closure of some manufacturing plants might also result in some 2021 models may be delayed.
Developments around the World
Here are some of the recent developments across the majorly affected companies and nations. Note that most of them bear a reflection on the current situation.
New vehicle sales in the country (China) declined by about 43% in March relative to the same period last year. The data released by CAAM (or China Association of Automobile Manufacturers in March 2020) show that only 1.43 units were sold compared to 2.52 in 2019.
GM foresaw a potential parts shortage and turned to airspace to deliver supplies for the North America truck production as per the United Auto Workers officials. The spokesperson deviated from giving specifics but revealed that plants are going on with normal operations.
Another automaker, Fiat Chrysler, disclosed that it has explored alternative suppliers. Automotive stocks are also being affected. GM, Tesla, and Ford shares have all recently trended downwards.
Back in January, when the novel coronavirus disrupted the supply of parts from China, automakers were considering other suppliers. However, the pandemic spread fast to other countries, thereby crippling most of the automakers. Governments in many countries have imposed lockdowns and curfews, aggravating the situation further.
Today, some automakers in China have started reopening factories in an attempt to compensate for the losses witnessed in the market. "Local governments are putting their full weight behind helping businesses open," Ker Gibbs, President of the American Chamber of Commerce in Shanghai, stated.
Toyota opened up two of its factories with plans for more to follow. Chinese-brand Geely, GM, Nissan, Ford, Volkswagen, and Mercedes have also resumed operations as reported.
Nonetheless, the fight against this pandemic is far from over. Automakers have laid down measures to prevent further spread. They are testing employees for the virus by measuring body temp and also ensuring those who have been to Wuhan stay away from the factories.
Last week, Tesla officially opened a virtual store on Alibaba – China’s Tmall.
Hyundai halted operations in one of its major plants Ulsan, South Korea. The company also revealed it was slashing the executive salaries by a fifth (20%). Hyundai’s output this month has been considerably low.
Kia Motors also plans to temporarily halt production in 3 of the 9 assembly plants in Korea this month as a result of the decrease in demand.
After closing for about a month on March 26th, Volvo is reopening its primary car manufacturing plant in Gothenburg. Audi is expected to resume operations of its plants in Europe anytime in the coming weeks.
Nissan Motor announced that it was halting operations and closing down its global headquarters for 16 days despite the government allowing businesses to open.
Honda has plans to extend the closure of its plants in Mexico until the end of the month.
Volkswagen is shutting down the majority of its European plants for a fortnight on low demand and uncertainty in the market. The company’s business in China, on the other hand, is opening up.
Herbert Diess (the company’s CEO) asserted that in China, "sales are increasing and the showrooms are open" after the effort and measures put in place by Chinese authorities seem to have contained COVID-19.
Precautions to Take for New Car Parts
Here are some precautions to take when buying car parts or when having the parts installed by shops/mechanics.
1. Do your shopping online to maintain social distancing and avoid interactions. You can use our request-a-part tool to order auto parts for your car.
2. If possible, consider the home delivery option.
3. Confirm that the dealership or store you are getting car parts from has measures to prevent coronavirus infection.
4. Ask the mechanic installing the parts for you to do disinfecting measures.
5. Clean your car after any major repairs had been made.
6. Make a habit of disinfecting car components such as the car keys, door handles, and the steering wheel.
By Sam O.