Coronavirus on automotive industry

There is no need for any introduction here on the coronavirus and we are swamped with information and updates every minute on the epidemic, the fear and anxiety of the people around the world, the devastating effect it is having on the world economy, lives that have been turned upside down, and the agony of not having any clue as to how long this effect will take. If the SARS and MERS experience can be any sort of reference, then this epidemic and the impact is likely to go on for another 6 months or so.

How is the epidemic affecting the automotive world? The immediate effect is that sales fell like a cliff. No one is coming to the showroom out of fear and government shutdown. However, business has to continue, so many dealerships have started to connect with potential buyers online and carry on the sales activities. “智能展厅上线，让您足不出户逛展厅”, shouts the headlines. You can go their websites, social media links, hotlines, the dealerships can provide all sorts of advice and can even pick up the car from the customers location to bring back to the dealership for servicing, maintenance and repairs.

Many new QR codes have been launched to assist the customers, and to provide information neatly categorized and arranged for the customer’s convenience. Dealerships also contact existing customers regularly to provide general and specific updates on the situation and dealership services for the customers, and to give advice on how to maintain the cars during the prolonged periods of inactivity. Many dealerships also provide consultation services on ways to disinfect the cars. “非常时期，非常的爱”, one dealership sends out messages to their customers, giving them moral support, and even offering groceries shopping for the customers if needed. Daily checks with the customers on their well-being is also common.

Insurance renewal is made simpler and government allows, during this period, just digital approvals and insurance certificates. Road tax renewals are also extended for the car owners’ convenience. I think the Chinese government has acted very quickly and decisively, most of what we have seen so far shows a very well-coordinated effort by the various government agencies and ministries, kudos to the Chinese government’s handling of the crisis in spite of the immense difficulty and challenges they faced.

Many of the auto production parts come from China, so with the lock down and shutdowns, supply will soon be affected. We can expect automotive production to fall sharply due to the shortage of parts and accessories. Even automotive service tools and equipment supply will be affected as most of them come from China too. With all these coming together, expect sales to plummet this year especially for the China market. So, what would happen after all the upheaval, when things gradually get back to normal?

One of the expected outcomes is that the auto makers may take advantage of the situation to quickly transform themselves and move faster towards car electrification. There would be less existing baggage allowing for swifter actions. There would also be pent up demand so the second half of the year will see a spurt in sales activities and transactions, though the full year would be still be down compared to the year before.

We wish everyone good health and resilience in this difficult period, but as history has taught us, it will soon pass, and we can look back stronger and more determined