The start of the new decade looked extremely promising. Car makers showcased a slew of futuristic mobility solutions and geared up to display their innovations at global platforms. Well, fast forward by a month everything seems to have turned upside down. Over a hundred countries are affected by the novel coronavirus and car makers are finding it hard to continue operations due to logistical hurdles and a plunge in demand thanks to the sharp rise in COVID-19 cases.
Volkswagen AG is facing interruption in supply chains and a rapid decline in demand due to this global pandemic. The German carmaker announced this Monday that the European plants operated under Volkswagen Passenger Cars brand will suspend production for two weeks. VW’s production facilities in production facilities in Germany, Slovakia, Spain and Portugal are affected, and many of their component manufacturing units too will halt production.
Another victim in Europe is Toyota. Toyota Motor Europe is facing ‘difficulties in logistics and supply chains’ and their sales projections for the coming months appear bleak. Consequently, TME has decided to organise a ‘progressive suspension’ of its vehicle and engines/transmissions production plants in Europe starting March 18 until further notice. TME’s plants in France, UK, Poland, Czech Republic and Turkey will be the ones affected.
Ford’s American, Canadian and Mexican manufacturing facilities too will halt production after Thursday evening’s shifts to March 30 to thoroughly clean and sanitize the company’s plants. Kumar Galhotra, President, Ford North America, said, ”We’re continuing to work closely with union leaders, especially the United Auto Workers (UAW), to find ways to help keep our workforce healthy and safe – even as we look at solutions for continuing to provide the vehicles customers really want and need.”
Fiat Chrysler Automobiles has also taken similar actions, suspending production across North America in response to the COVID-19 emergency. With the production being paused, the company will also work with UAW to facilitate changes in shift timings, structures and enhanced cleaning protocols. General Motors Co. too is sailing in the same boat, by announcing orderly suspension of production across North America until March 30.
While most world leaders are downplaying the consequences of this global catastrophe, halting production of cars puts multiple elements at risk – the most important of which is jobs. According to a report by NBC news, the US alone risks of losing close to one lakh jobs in the automotive sector, alongside a dent of 7.3 billion USD in earnings.
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India is battling a crucial stage 2 (infection limited to travelers and their peers/kin) of COVID-19 spread and any further damage can hamper our auto industry, which is already dealing with a sharp decline in sales since early 2019. Close to 10 per cent of India’s GDP comes from the automobile sector and we hope that the spread is well contained so that manufacturers can avoid such extreme measures.