The Effects Of COVID-19 On The Global Automotive Industry

COVID-19 has severely impacted our way of life, and there is no doubt that this pandemic will significantly affect the development of both national and international policies. Interwoven into such far-reaching policies are several private sectors, the automotive industry is one of them. This article discovers how vehicle production, vehicle exportation, and vehicle sales have all changed significantly.


Among the essential things to consider, however, was presented by Laura Hawryluck, MD. She states that “the need for social support is greatest in times of adverse situations and events such as the current pandemic; hence, severing social support as part of an imposed quarantine or isolation strategy can threaten an individual’s sense of connectedness and may take a considerable toll on mental health.”

Major Challenges To The Automotive Realm Due To COVID-19

Many industries have received significant blows financially and are having a hard time staying afloat. Fears of a global recession are just around the corner, and numerous problems are currently surfacing. Among the issues faced by the vehicle industry, there are four that ultimately stand out.


  • Limited Supply Of Parts 


Suppliers worldwide have come to a complete halt in production lines due to mandatory policy or voluntary closure for safety reasons. On top of this, stricter legal and trade regulations have increased the shortage of supply and decreased distribution channels.


  • Temporary Closure Of Manufacturing 


Quarantine measures and reduced workforce policies have forced most manufacturing establishments to close. The need to secure liquidity has also brought about closure.


  • Decline In Capital And Liquidity


The circulation of cash reduced overall due to the pandemic. It has resulted in an extreme drop in demand for vehicles.


  • Drop-In Fresh Vehicle Sales


Implementation of several measures such as stay-at-home orders, curfews, closure of factories, and reduction of workforce and operating hours, and the need to prioritize the bare necessities such as food and shelter have all contributed to the sharp decrease of total sales.


Situations Across the Globe

Research has provided critical details for the key countries in the automotive scene. In general, most states have shut down in response to the pandemic, looking into ways to make a safer working environment once operations resume. 

Original Equipment Manufacturers (OEMs) have all shut down operations in North America after a particular American electric vehicle company ceased operations as per a shelter-in-place order. This widespread halt also happened in all of the USA, Canada, and Mexico.

In China, the Chinese plants and most leading OEMs, having been the first to suffer from the pandemic, have moved forward and restarted operations to bounce back from significant losses experienced during the shutdown period. 

In Europe, all OEMs have shut down production for several weeks, and most have announced a short-time work and overtime reduction for specific departments.

Responses by the Automotive Industry, Constituents and Partner Entities

Sacrifices and quick decisions were necessary to ensure the survival of the automotive industry. As such, they enacted the following:

  1. Safety Measures – First and foremost, employee safety was established. The key to thwarting COVID-19 is to flatten the curve, and to effectively reduce the rate of infection, leading automotive entities worldwide have decided to redirect their efforts to making ventilators, disinfectants, face masks, and other protective equipment.
  2. Supporting Companies, Jobs, And Income – Governments and other financial institutions have activated stimulus packages and loan offers to safeguard the industry and to maintain stability in the global economy.
  3. Stimulating The Economy – The International Monetary Fund, an international agency partaking in a total of 193 economies, recently convened and committed to the protection of lives, the safeguarding of people’s jobs, the revival and growth of private sectors, and the elimination of disruptors to trade and global supply chains.
  4. Social Dialogue, Brainstorming, And Policy Development – The best way to keep the confidence and build trust is to enable policy measures that allow communication between crucial figures who represent different populations in society. In several countries, proposals have been made to emergency collective agreements to protect every individual from the economic drought brought about by the pandemic.


COVID-19 took all of us by surprise, but several countries and organizations stood up to the task. In the automotive industry, leading vehicle manufacturers have taken a step beyond what is usually expected of them to help steer the global economy in the right direction. The responses made have been nothing short of masterful, and we must unite as one to defeat the pandemic.

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