The Impacts of the Automotive Crisis and the Supply Chain
The Coronavirus pandemic has resulted postponed production,reduced imports of parts from China and several other problems related to the supply chain. Several of them, unfortunately, originated from the lack of reliable information.
Car manufacturers in North America, Asia and other continents had their parts supply affected by the Coronavirus outbreak because China is (or at least was) the largest production hub for a wide variety of products, including automotive parts, exporting and distributing them to the whole world.
Before the virus, the stereotype about the Chinese people already existed, and after the emergence of the infection, it ended up intensifying. Thus, in addition to the country reducing or even stopping production for safety, other countries lost their confidence in China, based on rumors and fake news.
You may be asking yourself: What does this have to do with the supply chain? Well, we’ll talk about that below, so read on!
The Automotive Crisis and the Supply Chain
As we already know, Supply Chain is a set of processes involved in the production, storage, distribution and delivery of every product and service.
Right, Supply Chain is present in just about everything in our daily lives, from the food sector to children’s toys, clothes and, of course, cars.
China produces a wide variety of the products we use, due to the cheap labor and also production efficiency.
Therefore, we can see the impacts the pandemic have on the automotive sector and also on the supply chain that serves this same sector.
The impacts in Brazil
The Coronavirus pandemic caught Brazilian automakers at a delicate moment, just as they were recovering from an internal economic crisis. Until March, before the disease spread, the concern was with the lack of parts coming from China, which was already in quarantine.
After the outbreak was classified as a pandemic and all trading stopped, automakers stopped their production, dismissed or entered into workforce and wage reduction agreements for a large number of employees. In return, some assisted in producing and fixing respirators.
The production of automobiles in Brazil fell 99%, the lowest mark in history in the country. The remaining alternative was to use the internet and social media as sales channels and offer promotions.
It is important to note that when China resumed production, other countries were still in quarantine, which was a problem for both sides.
As we can see, any unexpected change, such as the Coronavirus outbreak and its consequences, like quarantine, can negatively affect the supply chain and bring numerous adversities to the majority of business sectors.
Regarding the automotive sector, the most optimistic forecast is for recovery within approximately 3 years, while others believe that the numbers for 2019 will only recover in 2025.