As COVID - 19 continues to spread, the us and European auto industry is in a "severe winter". Car companies have been forced to halt production or cut production due to the sharp contraction in demand and the disruption of parts supply chain. Major auto producing countries in the United States and Europe have successively introduced financial and tax rescue policies, and the auto industry has also started to save itself in various forms, such as cutting expenditure and transferring production capacity.


In the United States, Germany, Italy, France, the United Kingdom and other important us and European automobile producers and consumers, COVID - 19 epidemic situation is severe. Affected by the market demand downturn, supply chain tension, the major automakers suddenly increase the pressure of survival. According to the analysis, the outbreak has made the us and European auto industries, which are already facing trade disputes and their own transformation challenges, even worse. How the auto industry can save itself and how the governments of various countries can help have become an important factor affecting the future development of the auto industry.


Stagnant production and sales bring severe tests


In North America, ford, general motors and fiat Chrysler have suspended production for about two weeks. Honda motor Co. said it will temporarily close all its north American plants for six days. Some automakers and the united auto workers agreed to improve safety and protect workers from COVID 19. In Europe, Germany's big three carmakers Daimler, Volkswagen and BMW announced they would close their European production lines until the end of march. Renault and psa Peugeot Citroen, two big French carmakers, have also closed plants in France, Spain, Portugal, Germany and eastern Europe. Fiat Chrysler said it would suspend production in Italy, Serbia and Poland.


Carmakers that have not yet shut down are also facing a series of thorny problems, such as parts shortages, with upstream suppliers and downstream dealers badly damaged. Europe's two largest auto parts suppliers, Bosch and continental, said they would stop production of some of their products. Another major supplier of body panels and internal combustion systems, France's all-resistant plastics, also announced the suspension of domestic production lines. BMW will stop production at its south Carolina plant on April 3 for at least two weeks because of a shortage of parts imported from Europe.


With the suspension of non-essential commercial activities in many countries, the automobile dealers in the automobile consumption terminal are facing a cash flow crisis. "They usually sell eight to 10 cars a week, but now they're only selling two a week," said David rolon, head of galaxy sales in Lexington, ky. It will get worse and I will have to lay off five people."


In 2019, 17 million vehicles will be sold in the United States. Under the best-case scenario, if the outbreak ends by may and the government's economic stimulus package kicks in, U.S. auto sales are expected to reach 15.3 million by 2020, according to auto industry analyst ALG. The worst-case scenario is that if the outbreak continues into the summer and leads to an economic downturn, and the stimulus has limited impact, car sales will remain low at 11.2m.


New car sales in Europe fell by 7.4% and 7.2% respectively in the first two months of 2020, the worst annual performance since 2013, according to recent figures from the federation of European automobile industries. The worst-affected countries were Germany, Italy and Spain. Recently, royal bank of Canada capital markets analyst buck significantly cut the price target of 22 car companies. He thinks tesla's sales will fall this year, ford will post its first annual loss since 2009 and gm will lose $3.5 billion, which "was considered impossible before the outbreak".


The government and enterprises took measures to solve the dilemma


The automobile industry is one of the important pillars of the European economy. In the face of difficulties, the European Union and the governments and enterprises of its member states have introduced active rescue and self-help measures.


The European central bank recently announced an €870bn bond-buying programme to stabilise the eurozone economy and the European Union is to relax rules in competition law to allow member governments to provide more aid to companies. The French government has unveiled a 300 billion euro government loan guarantee scheme and tax deferral, according to the European automotive news. The German government also recently announced a package of economic support measures, including more than 500 billion euros of loan guarantees through the federal bank for reconstruction, as well as tax breaks, simplified procedures and reduced prepayments to help German companies, including carmakers. In addition, Spain, Italy and other governments have issued a total of tens of billions of euros of economic rescue programs to prevent corporate bankruptcy.


The U.S. senate on March 25 passed a $2 trillion fiscal stimulus package to deal with the impact of COVID 19 on the U.S. economy. The plan would set up a $500bn pool for loans, loan guarantees or investments to companies affected by the outbreak, including the auto industry. The move comes after a coalition of leading us carmakers, parts suppliers and car dealers called on congress and the administration to provide "strong credit facilities" for carmakers to ensure the industry maintains sufficient liquidity in the face of the outbreak.


At the enterprise level, manufacturers are also cutting costs, capacity transfer and other ways to save themselves. Volkswagen is researching how to make masks, ventilators and other life-support devices from 3d-printed devices. McLaren and nissan have designed a model of the emergency breathing system that is expected to be in use this week. Ferrari and fiat-chrysler are also in talks with Italy's biggest ventilator maker to expand capacity. Ford announced it is working with 3M and general medical to make masks, respirators and face masks.


Automakers and dealers are offering consumers a range of incentives in the wake of the outbreak. Ford, for example, offers customers a three-month car subsidy, gm offers some customers zero-interest loans for 84 months and 120 days of deferred payments, and kia offers zero-interest loans for at least 60 days. Some dealers are even trying to deliver cars to customers' homes so they can pick up new cars at home.

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There are still challenges ahead


Industry insiders believe that under the outbreak of no car companies can be immune from the situation, the large-scale emergence of the phenomenon of supply cut, production stop shows that many car companies in the supply chain optimization there is room for improvement. "The supply chain is designed for long-term demand. Once they are established, it is difficult to change them quickly.


'before the outbreak, the global auto industry was already facing a number of challenges, including slowing sales and falling margins,' said Meg Whitman, director general of the federation of European automobile industries. Governments and companies should prevent the outbreak from causing irreversible and fundamental damage to the auto industry, resulting in the loss of production and research and development capacity.


In the future, Europe's auto industry faces a number of challenges, such as the outbreak and resulting decline in demand, the negative effects of trade disputes with the U.S. and Europe, and the industry's own increased costs in the process of technological change, according to a senior auto industry expert at the university of st. gallen. 'the capacity lost during the shutdown is expected to recover quickly after the outbreak ends,' said jose Marco, a Spanish auto analyst. 'the real problem is the shrinking demand side of the car market in recent years.' How the automobile industry can achieve technological innovation and adapt to new consumer demand is a difficult problem.