The Impact of COVID-19 on the Automotive Industry

The new COVID-19 pandemic has brought the already difficult situation to a different level. Disruptions in both supply and demand are happening at a global scale and at an unprecedented level.

Fremont, CA: As we entered 2020, the automotive industry was already facing a perfect storm – two consecutive years of global growth and major change in market models due to the CASE megatrends. The new COVID-19 pandemic has brought the already difficult situation to a different level. Disruptions in both supply and demand are happening at a global scale and at an unprecedented level.

In this blog series, we will explore ideas about how data and analytics can help car companies transform and adapt in order to meet the new challenges of the post-COVID world.

Supply Chain

When the pandemic began to affect China in early 2020, the supply chain was the first sector to have had an impact. Almost 80 percent of the global automotive supply chain has ties to China in one way or another.As production stopped in China, capacity evaporated within weeks and began to affect global auto manufacturing facilities. As manufacturing returns, many suppliers facing liquidity problems can succumb to market conditions. This can potentially cause significant disruptions and have dire effects across the global automotive manufacturing ecosystem.

Supply chains perform a juggling act between cost and quality and constantly adapt to deliver reliable service in the most cost-effective way. Supply chains also understand lower costs by applying lean practises and "only in time inventory" policies.Although these approaches function well under most normal operating conditions, they do not react well when they are subject to major disruptive events.

After COVID, we expect a renewed emphasis on the supply chain strategy. Some of the areas that OEMs can concentrate on include deep and near-real time visibility through the supply chain, advanced supply chain risk modelling, early event identification capabilities, component replacement and automation-ready processes. In our next post, we'll address some of these in depth.