The Pandemic Will Change the Auto Industry


Source: Excerpt from extensive Jack Ewing post on The New York Times Wheels page about how the pandemic will impact the auto industry. And, any major impact on the overall industry will affect major suppliers like those in the braking segment.

FRANKFURT — Some automakers may emerge stronger, others too weak to survive on their own. Factories will shut down. The pressure to go electric could become more intense.

People may travel less now that they have discovered how much they can get done from home. Or they may commute more by car to avoid jostling with others on crowded buses and trains.

The auto industry was bracing for a brutal year even before the coronavirus idled factories, closed dealerships and sent sales into a free fall. Now, things are about to get really Darwinian: The industry is expected to realign in ways that could have a profound effect on the eight million people worldwide who work for vehicle manufacturers.

It took almost a decade for car sales in the European Union to recover from the recession that began in 2008. The United States market took about five years to bounce back, but sales have been flat since 2015. Explosive growth in China initially helped compensate, but the market has been in decline since 2018. As Volkswagen, Daimler, Fiat Chrysler and other companies slowly restart their assembly lines, people who work in the car business are beginning to ponder what the repercussions of this crisis will be.

“We shouldn’t be too optimistic and expect that in 2021 everything is going to go back to normal as if nothing happened,” Ola Källenius, the chief executive of Daimler, told reporters during a recent conference call. The pandemic, he said, “will probably have a huge effect on the economy and we have to prepare.”

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Here’s a look at what to expect (the sub sections within the rest of the post):

Factory closures and labor strife.

Electric cars could come sooner (maybe).

An opening for start-ups.

Pair up or perish.

Rethinking globalization.

The pandemic exposed just how interconnected the world is and how a factory closure in one part of the world can shut down an assembly line in a different hemisphere.

“What we are all learning, and I talk to a lot of managers and C.E.O.s in Germany, is that we all have to rethink our logistics and supply chains,” said Olaf Berlien, chief executive of Osram, a German maker of lighting products for autos and other uses.

“Because of the price pressure that we are all under, we took the cheapest provider wherever in the world it might have been,” Mr. Berlien said. “We undervalued the provider who was just around the corner.”

Others are not so sure that carmakers will be more willing to buy local. Mr. Källenius of Daimler said supply chains were already built to withstand disruption and had stood up well during the crisis. Not a single Mercedes went unbuilt because of a supply chain problem, he said.

“I wouldn’t come too quickly to the conclusion that we have to regionalize supply chains,” Mr. Källenius said. “The globalization that we have achieved in the last 20 years has led to enormous productivity gains. I would see it as a mistake to back away from that.” The entire post, with the sub-sections, can be viewed by clicking HERE.

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