The COVID-19 pandemic has taken a toll on every industry as businesses are forced to adapt to the crisis or face the risk of going under. But how has COVID-19 affected the automotive industry? Let's take a look at the current state of the industry, potential risks it still faces, and how well it’s been able to recover as the light at the end of the tunnel finally comes into view.
During the beginning of the pandemic, the demand for raw materials declined, and suppliers had to reduce capacity as a result. Now that the new normal has settled in and the crisis tentatively begins to improve, demand for raw materials is beginning to rise. Thus, the price of the materials that remain, such as steel, has risen sharply. This has caused many suppliers and manufacturers to face issues with supplying enough materials to meet demand, as the higher prices are making it more difficult to turn a profit even if manufacturers are able to obtain the materials. For customers, now is not a great time to buy because cars are subsequently rising in price as they become more difficult to replace. The lack of microchips, in particular, has led to many production shutdowns. Instead, preserve your current car’s condition by replacing parts with new ones. For example, you can obtain new Acura TL sport rims that will keep your car running smoother for longer.
Continuing with supply and demand, the potential risks of another spike or “wave” of COVID cases have been projected to further negatively impact the automotive industry. Another surge in cases will cause more employees to be absent and further harm the international supply chain, potentially leading to even greater shortages and disrupting the available supply even more. On the other hand, with more COVID cases, many more dealers will be unable to continue operations and will be forced to close down. As this will happen to other industries as well, the ramifications will further depress economic and business outlooks.
So, how will COVID-19 affect the automotive industry in the near future? As it currently stands, the automotive industry is on a promising rebound in China. As the country has managed to contain the disease, their economy has recovered faster than anticipated, and Chinese consumers have resumed normal spending habits. As for Europe and the United States, the EU has faced greater difficulties during the second wave of COVID-19 and is recovering much slower. The US, on the other hand, is beginning to show promise as the economy has begun to recover rather well thanks to stimulus checks and looser restrictions.