Analysts at ABI Research published a white paper analyzing various industries and the potential impacts of COVID-19. glassBYTEs.com breaks it down in a few key areas including automotive sales, transportation and logistics and manufacturing.
First in the area of smart mobility and automotive, ABI researchers predict a bumpy road ahead.
“The struggling new vehicle sales market is being sent into a tailspin by the impact of COVID-19 on bricks and mortar retail, while the fragility of the globalized automotive supply chain is being painfully exposed,” said the report. In the short term, analysts say this will have a devastating impact on new vehicle sales. In China, the largest single market for new vehicle sales, the market had already begun to falter before the onset of COVID-19, due to a general macroeconomic cooling, trade war concerns, and a shift in policy for new vehicle subsidies.
“The impact of COVID-19 on vehicle sales was made visible in February 2020, with sales falling by 81.7%. Some vendors in the industry expect a global contraction of 5% in automotive sales in
2020, following a contraction of around 4% in 2019,” according to the white paper.
In the long-term, the news is better as the analysts say “the impact to vehicle sales should be confined to the short term and will likely recover once the outbreak has subsided. This will likely be followed, in the mid-term, by above-trend growth in car sales, as consumers execute on the vehicle purchase/renewal decisions that have been deferred by concerns over infection.”
ABI warned OEMs to avoid the temptation “to simply shuffle manufacturing locations and instead purse investment in technologies like AI, robotics, and Collaborative Robots (cobots) to minimize their exposure to infectious outbreaks in emerging economies.”
On the manufacturing side, the report says, “the impact is both global and unpredictable, and the supply chain shock it is causing will most definitely and substantially cut into the US$ 15 trillion worldwide manufacturing revenue currently forecasted for 2020.”
In the long term, manufacturers will need to conduct an extensive due diligence process, as they need to understand their risk exposure, including the operations of their supplier’s suppliers.
“To mitigate supply chain risks, manufacturers not only need to be flexible and not source components from a single supplier, but also, as COVID-19 has highlighted, should not source from suppliers in a single location,” the white paper states.
Finally, in the areas of transportation and logistics, ABI Research makes some predictions as well.
In the short term, “there has been a 4 to 6-week delay in shipments for cargo sourced from China. Other markets from Vietnam to Mexico often rely on Chinese components and raw materials, creating a knock-on effect to the supply chain, including transportation and logistics.”
In the long term, the virus is now impacting the global supply chain, with a current estimate of 113 countries identified as reporting cases. “Transportation requirements will be hard to predict,” according to the white paper. “Both capacity and pricing swings are anticipated across transportation modes, with the associated impact to shippers worldwide.”