The COVID-19 pandemic has hit us all in different ways. Some businesses were hurt worse than others, but there is hardly any business entity or an individual that did not suffer. And it is too substantial to be ignored. Speaking of the U.S Automobile industry, this sector has sure seen quite a downfall as well. Millions of dollars were lost within the span of a year and more than that, a substantial loss in the amount of personnel, or workforce.
One of the most selling SUVs in the segment, the 2021 Ford Explorer saw a price hike of $4000 as compared to its predecessor, despite minimal changes, to make up for the losses the company faced. Moreover, the chip shortage issue led to many carmakers delaying the launch of their products, like the deliveries of the 2021 GMC Yukon were delayed, purely because of the issues that kept cropping up!
Also, the union which represents the workers of Ford Motors, clearly stated that they are integral to the entire system and hence should not be completely thrown off their positions. However one of the most popular American auto brands, General Motors also witnessed quite a heavy loss which they desperately tried to recover by increasing the sticker prices of the recent additions.
But GM has also restarted production, in the northern manufacturing units and hence see slow yet steady growth. That said, there were still some companies that managed to maintain their head above the water where some manufacturers had to shut production down. However, in today’s article, we’re going to leave the gloomy past behind and look at how the U.S auto industry came back with bravado.
The pre-COVID scenario
To give you a glimpse of how important the U.S. auto industry is to the country, 4.5 percent of all jobs in the country are supported by the automobile market and its related sectors. The total income generated by all the people combined is well over $500 billion, which is a very significant amount in any economy. However, with the onset of the COVID 19 pandemic and the subsequent lockdowns, the industry saw a heavy fall.
In 2020, the market saw a production downfall of over 15 percent, which is quite the downfall. However, some companies like Tesla made the most out of it as they were given an astounding valuation of $208 billion, which definitely would have made Mr. Musk happy. However, the overall auto industry saw quite a gloomy result as the virus spread across the international borders.
How does the U.S auto industry plan on making a comeback?
After a two-month cold lockdown, the manufacturers have started reopening their assembly lines. People were both excited and worried to restart work again, but the people fortunate enough to still earn return happily to their jobs.
Companies like General Motors, Ford Motors and FCA have been preparing to restart their assembly lines and did so in May 2020. Subsequently, the shares of these companies rose by 9%, 6.7%, and 7% respectively. The post-COVID scenario is not exactly happy-go-lucky but isn’t bad either. Also, a lot of companies started working on bringing out new generation models for the 2022 model year, which is an act of bravery in the given time frame.
Amidst this global pandemic, the U.S auto industry took well-calculated steps to reopen and now has started full-fledged production. However, the initial few months were closely monitored and regulated by temperature tests, mandatory mask usage, and strict social distancing laws. However, after a month of reopening, the working environment became quite similar to what it was before, with a few careful precautions here and there, say workers.
Speaking of logistics, this industry fuels 6% of the entire U.S economy, which is not a small number. After the reopening of factories and manufacturing plants, the workers witnessed quite a lot of changes in the assembly lines. With more glass shells and spaced-out positioning, manufacturers took apt precautions to help and stop the spread. However, when the workers were interviewed, they expressed fear and concern for COVID affected workers of this industry and also the dismal environment due to frequent death news around.
Local Ford Worker Union spokesperson came out and stated, “ultimately we’re in this together, if we don’t build trucks Ford Motor Company is gone”. However, after the critical reopening, Ford has also been hiring temporary workers to cover absenteeism. GM also honored 1600 hourly workers back on plants to get the work going, however, this is only permitted for one shift, which is a good decision considering the current situation.
Some analysts say that since there is a 45-day settlement period for the material suppliers, some of the suppliers might find it difficult to stay above water as the industry slowly recovers. The slow and sluggish growth of the industries since the lockdown was lifted is definitely not as pleasing as the pre COVID period, but it’s as they say “Something is better than nothing”.
Vision for 2021
Most of the manufacturers have already announced 2022 model year lineups to be launched in late 2021, declaring full-fledged work progress. Also, some of the companies came forward and announced new generations and facelifts of the 2021 model year lineups, which goes to show how brave these manufacturers are. The auto industry is surely taking place in terms of both demand and supply.
After the vaccines came out, people have been worrying less about the virus strains and returning to work. Restarting the automobile industry has also shown a decrease in the number of people unemployed due to the pandemic.
However, the risks have not diminished completely yet, because of which the market is working on a day-to-day basis to try and increase the work output. We soon hope to see the Us auto market flourish as it did back in 2019.
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