How Automobile Companies Are Recovering From Varying Disruptions

On May 31st, Elon Musk, the Founder of Tesla, recalled all his staff from working remotely, banning work from home and in June 2022, he laid off 3.5% of his staff strength with a statement to reduce the costs of Tesla per unit after the economy improved.

Ford Motor Corporation and Stellantis followed suit in laying off staff. General Motors and Honda had cut some percentage of workers' salaries and production till the economy improved in 2020.

The global automotive industry, which had anticipated an increase in global automotive sales in 2019 after 74.9 million total sales, went into mass production of automobiles amidst the trends of electric vehicles, autonomous vehicles and the transition to sustainable energy. However, rather than the industry upscaling, it experienced triple blows from the Covid-19 pandemic, Russia’s invasion of Ukraine and supply chain crises.?

The predicted growth in the automobile industry became a slump in car sales for three years straight. Yearly car sales between 71 million units sold 2010 to 2019 each, reduced to 63.8 million units in 2020 and 66.7 million units in 2022 after reintroducing a 0% APR marketing strategy.?

Also, automobile production was halted, and factories were closed to protect staff from the widespread Covid-19 pandemic. Industry trying to wither the challenges of transitioning to sustainable automobiles in the phase of overproduction experiences sales contraction, suspension of electric cars production, and shortages of semiconductors, raw materials and talents.

The shortages of semiconductors for producing electric vehicles have been going on for so long. According to a report, semiconductors will truncate the global production of 8.1 million vehicles between 2021 and 2023 and 18.7 million electric cars between 2022 and 2029.

As a result of these challenges, automation, various marketing strategies, layoffs, and liquidity become the order of the day during post-covid. There are more pressures on the automotive supply chain, as automakers are trying to make up for their losses during the Covid-19 by heightening efforts on electric car production. This supply chain issue became a significant challenge in 2022, as car demands increased among countries.

China recorded a 9% increase in car sales with over 5.5 million vehicles sold, followed by the United States with 3.3 million vehicles and Europe with roughly 2.8 million vehicles amidst supply constraints for various components, as well as ongoing lockdowns due to the Corona Virus, which impacted global supply networks. In contrast, small automobile companies such as Beijing Borgward, Westfield Sports Car and autonomous cars filed for bankruptcy due to low sales and the varying disruptions in the industry.

Although recovering from these disruptions in the automotive industry at the height of it would take time, many automakers are adjusting very fast due to the transformative processes and technologies adopted. These include:

• Flexibility

Companies are trying to make their supply chains more flexible. As a result of this shift in thinking, companies are looking for ways to integrate new technologies into existing processes and services. Many automakers use robots to perform tasks such as welding or painting car bodies without involving humans during production lines. Fewer workers need to be hired overall because they don't need much training or supervision. Tesla looked inwardly for more resources to compensate for chip shortages and countries' updated policies.

• Sustainability

Companies also want their supply chains to be sustainable so that there aren't any negative impacts on our environment once everything is done right (an example: using less energy).

• Auto manufacturers are adapting to the new dictates of technology. Emphasis is on building talents to handle the latest technologies and intensifying cybersecurity on vehicles that include autonomous driving systems, electrified vehicles like battery-electric cars or plug-in hybrids (PHEVs), as well as increasing investments in electric infrastructure.

Conclusively, the supply chain disruption that hit the auto industry in 2017 was unprecedented and has greatly impacted how companies operate today. The industry is undergoing a major shift that will continue to change for years to come, but there are some things businesses can do now to prepare themselves for these changes.