COVID-19 has adversely affected the automotive sector. But instead of throwing up their hands in despair, stakeholders in the industry are adapting to new norms and rolling out innovations at a quicker pace in order to cope.

The world is still coming to grips with the COVID-19 pandemic as it overwhelms businesses in almost every industry, not least the automotive sector. The sharp drop in demand and investment as a result of COVID-19 means this sector is facing its toughest challenge yet.

MANUFACTURING STRUGGLES
Car manufacturing plants around the world are struggling to keep afloat, as the pandemic has resulted in enforced safety measures that keep employees from reporting to work. With most assembly activities halted, some companies have been forced to close temporarily, others permanently. The knock-on effect of this has led to orders being put on hold, disrupting supply chains and causing many car dealerships to fold or temporarily cease operation.

An interesting development is that some auto plants have been repurposed to produce emergency medical equipment and protective gear. Working with local governments, car manufacturers such as Ford, General Motors, Volkswagen and Peugeot have used their factories to produce face masks and shields, medical gowns, respirators and ventilators to meet ever increasing demand.

Even as the world is trying to adapt to the new normal and slowly opening up businesses, car companies still face a shortage of essential raw materials and parts from overseas suppliers. These suppliers have either ceased production of materials or face problems getting restarted because of the pandemic, further slowing the recovery process.DEMAND WANES
As mobility remains restricted and economic uncertainty prevails in many parts of the world, sale of cars has plummeted, resulting in record losses for markets in China, Europe and the US. Dealerships that have managed to keep afloat face the challenge of luring customers back as COVID-19 prevention measures are still in place in many countries, and people are encouraged to stay home. With economies suffering and uncertainty surrounding employment and job security, many would-be customers are staying away from big-ticket purchases, adding to the bleak outlook for automakers.

Workshops and other car-related services — such as car washes and detailing services — are also feeling the brunt of the pandemic. Even though car repairs were deemed essential services in some countries during lockdown, the impact would be telling in the months to come. With fewer cars on the roads and more people working from home, these services are in a bind, and face closure if things don’t improve.INNOVATIVE EFFORTS
In Singapore, car dealers have to deal with a backlog of car inventory over the Circuit Breaker (CB) period. With COE biddings suspended during the period, car sales came to a stop, and dealers faced storage problems as stocks piled up due to shipments ordered prior to the chaos.

Becoming pro-active, car companies have taken their marketing online in an attempt to kick-start sales after the CB period. Though retail digitalisation isn’t new, the pandemic accelerated and expanded its process and application. Car buyers now have the option to virtually visit a car showroom to browse favourite brands and models. Well-known names — such as Peugeot, Toyota and Suzuki — have introduced online virtual showrooms that offer potential buyers the ability to check out the car’s interior and exterior in a virtual walkabout, run through the car’s specifications and equipment levels, and have online ‘live’ chats with sales staff.

To make sales even more convenient and attractive for those in the market for automobiles, some car companies offer other incentives: doorstep pick-up service for a test drive, big discounts, allowing online payment of deposits, and doorstep delivery of the vehicle after the consumer signs on the dotted line. Although local car buyers have responded positively to these efforts, it remains to be seen how successful these steps are at closing a sale.

Nobody really knows when things will go back to normal — if that’s even possible! But dealing with the pandemic through innovative solutions bodes well for the future of the automotive industry.