Almost 60% of automotive suppliers surveyed are using the COVID-19 disruption to capitalize on new opportunities.… https://t.co/87sRYWEeSv
COVID-19 Automotive Manufacturing Disruption Index
Over the last few weeks governments around the world have been increasingly pursuing a suppression strategy over the COVID-19 outbreak, which focuses on increasing social distancing with a variety of measures in order to reverse the pandemic's growth and thus managing healthcare systems' resiliency. These measures have often resulted in stricter "lockdowns" that have had a severe impact on manufacturing operations in non-essential sectors, automotive being one of them. The deployment timeline of the governments' measures has been staggered with different degrees of stringency due to different level of exposure to the pandemic's infection as well as different sensitivities around contagion management.
Whilst the focus of several stakeholders of the automotive industry is on the return of vehicle demand, we expect that once vehicle sales resume in major markets OEMs and suppliers will be presented with a different path in their "return to normal" based on their manufacturing footprint, thus presenting potential competitive advantages or disadvantages for specific OEMs and suppliers as a function of their exposures to countries with more relaxed or stringent measures. We also expect to see fairly substantial time lags in the loosening of measures, in the same way we saw some countries quickly ramping up restrictions while others have lagged. In the context of an extended period in which governments attempt to "flatten the curve" we might face continued asymmetry in terms of supply/demand of parts and vehicles as some countries return to normality while other are still grappling with lockdowns. An example of this asymmetry has recently materialized when several Chinese OEMs and suppliers voiced concerns about their supply lines of auto parts being compromised by the measures enforced by governments around Europe. This is a reversal of fortunes compared to only a few weeks ago when European and US carmakers were dealing with supply chain disruption linked to the lockdowns in China's Hubei province between end of January and February.
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