The auto industry, like the rest of the economy, was plunged into sudden recession when the world essentially shut down in the attempt to stop the spread of a deadly virus. This was not like the downturn in 2008-’09 that was about 18 months in the making. Coronavirus threw down the hammer in mere weeks.
Automakers emerged from 2009 wiser and more financially prudent. So, what will the industry look like in 2020 or 2021, post-pandemic?
Some changes have been immediate and practical; others are mind shifts that will reverberate through the industry for years to come, until the next tumultuous event forces another major zigzag.
The first impact after the coronavirus began to take hold globally is that automakers stopped making vehicles and dealerships were forced to close their showrooms. Service departments remained open because they were deemed an essential service for those still venturing outside their homes as cities, then states, provinces, and counties, and finally whole countries told residents to shelter at home.
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Almost overnight the industry had to conduct business differently. Vehicle development continued, with designers, engineers, and all their colleagues, working out of home offices. Meetings were conducted by video; product unveils were livestreamed with digital walkarounds. Car sales went digital.
Manufacturing ceased. Some idled plants were retooled to make masks, hospital gowns, ventilators, and other forms of protective gear. Others were disinfected and modified to create more space around workstations, erect plexiglass, even pitch giant tents for testing employees when it was time to return to work to ensure only the healthy continued through the plant’s gates.
“What happens on the other side of this pandemic? How are people going to react to this, coming out the other end?” asks Julian Thomson, design director for Jaguar and a man who has spent most of his career thinking about the future in automotive advanced design studios.
“There’s one indicator to say that people are going to be increasingly concerned about health, air quality, pollution, traveling,” Thomson says. “It’s going to affect everything like that. Are people really going to want to get into some automated Uber pod, squeeze in there, and go down the street in this thing, or are they going to want their personal space in their own car now? I don’t know.
“Will it make people more modest in their purchasing decisions? Will it make them think more about the whole rat race and their work-life balance? Or, on the other hand, will it just go nuts? Will they just suddenly say, ‘Life’s too short. Spend, spend, spend,’ and they’re going to go out there and grab it.”
What is becoming clear is that it will not return to business as usual when an all-clear is given. “We’re never going back to the way we were,” says Sandy Schwartz, CEO of Cox Automotive. His sentiment is being echoed throughout the industry.
Ford won’t overlook the opportunity the crisis poses to make changes to accelerate launches and work to reduce fixed costs and warranty costs, says Jim Farley, Ford’s chief operating officer. The goal is to run profitably at a lower production and sales level.