All in all, the automotive industry is currently being affected by five disruptions that are having an impact on the supply chain for new vehicles:
- Suspension of production car makers have put their manufacturing activities on hold to protect employee health.
- Supply chain disruption more than US$ 34 billion worth of automotive components are normally imported from China each year. Since many factories in China have been severely affected by the coronavirus epidemic, it has been increasingly difficult for car manufacturing plants to obtain the parts they need. Although many Chinese factories are now up and running again, various other countries have since put restrictions in place limiting the movement of non-vital products (including automotive components) across borders.
- Disappearance of sales channels as dealerships around the world are forced to close in order to protect employee and consumer health, many OEMs are finding themselves cut off from their traditional sales channels.
- Closure of registration offices non-vital governmental services are also being shut down, making it impossible to register new vehicles.
- Decline in demand needless to say, there has been a significant fall in demand for new vehicles on the global automotive market.
Thankfully, from the OEM perspective, there is also a silver lining to this situation: the decline in demand is causing a buildup of stock. Although high inventory levels are not always desirable, in this case car manufacturers will benefit from extra agility, enabling them to capitalise on the sudden upswing in demand when the coronavirus situation normalises again.