Weekly Brief: Automotive’s Virus Lockdown a Time to Reflect

The threat of a widespread lockdown across the automotive industry turned into a reality last week, as the coronavirus continued to unleash chaos around the world.

All major automakers in the United States suspended production at their factories in North America. Most automakers, including General Motors, Ford, Fiat Chrysler Automobiles, Honda, Hyundai and Toyota, closed down last week and plan to keep their plants shuttered indefinitely, or for a minimum of two to three weeks. Tesla, after some controversy (what’s new?), will close both its Fremont, California, and Buffalo, New York, plants starting March 23 and is likely will not reopen until California’s lockdown orders lift, currently scheduled for April 7. The outlier is Subaru, which plans to close its one US facility in Lafayette, Indiana, starting today and only keep it closed until March 29. Don’t be surprised if that six-day suspension doubles come Saturday and then doubles again a week from now. We’re all in this for the long haul.

It was a similar story in Europe, where BMW, Daimler, Volkswagen and Audi all halted production at their facilities. Renault closed its facilities across France. PSA Group did the same across Europe. These are bleak times indeed. The only ray of hope is that similar suspensions in China have now been lifted and production has recommenced. It took three months but life eventually returned to something resembling normal. So it will in Europe and the United States, as Maya Angelou once wrote: “Every storm runs out of rain”.

Until infection rates flatten out, however, the production and economic fallout will continue. What that means for the auto industry in the short term is unclear and, ultimately, may not matter. When humans are faced with an existential threat, such as the coronavirus, things like a company’s Q2 revenue and latest stock price fade from importance. However, cash on hand matters because it allows companies to weather the storm until production returns to normal and consumer purchasing picks back up. Admittedly. that may take a while given that a protracted global recession now seems likely but automakers are in a better place financially today than they were in 2009 before the Great Recession and the President Obama’s $80Bn auto industry bailout in the US.

President Trump said last week that his administration’s $1.8Trn stimulus plan to bolster the economy would cover the auto industry. “We’re going to be helping them out at least a little bit,” he said.

In the meantime, some automakers are looking at how they can help immediately to the crisis at hand. Daimler and Volkswagen pledged last week to donate 300,000 protective face masks to clinics and health authorities in Germany. VW said it is willing to use its industrial 3D printers to manufacture ventilators but needs designs. GM and Ford both said they would consider re-opening their factories in North America to manufacture ventilators and protective medical equipment, although that would likely take months.

These are heartening moves in disheartening times. Nothing similar has happened since World War II. Let us hope that nothing similar happens again anytime soon. The question is, while we’re in the thick of it, how can we rise to meet the challenge of the moment most effectively, for our families and ourselves, as well as our communities both local and global?

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