More than 80pc of the global automobile manufacturers were back online mid-May, according to Korea Automobile Manufacturers Association (KAMA) as reported by Korea Herald. Most automakers have resumed operations as nations lifted restriction imposed to curb the spread of the COVID-19 pandemic. Globally, 232 plants out of 278 plants in 13 major automobile manufacturing countries resumed production as on May 19.
Auto plants in the US, Europe, Asia and South America have steadily resumed production since the end of April.
In the US, automakers spearheaded the restart of economic activities. The big three — General Motors, Fiat-Chrysler and Ford resume operation at their plant on May 18 while in Mexico, all plants owned by Hyundai Motors and Kia Motors will resume production this week.
Major European auto companies have resumed operations since the end of April. Automakers in Germany, France, and Spain have restarted plants. In France, the government is expected to announce a stimulus package for the auto industry, while distressed automaker Renault is expected to receive EUR5bn in the form of a state-backed loan.
South Korean carmakers Kia Motor, which is an affiliate of Hyundai Motors, has extended the suspension of car production in its domestic units until June 5.
Global auto sales are expected to fall by 20pc due to the COVID-19 pandemic, according to a recent report by Moody’s Investor Service. The agency has retained a negative outlook for the sector. Global sales are expected to rebound in 2021 with a growth of 11.5pc.
In India, most carmakers including the Maruti Suzuki have resumed operations. The slowdown in the Indian economy coupled with the COVID-19 crisis has badly hit the auto sector in Q4. The auto industry in India was also undergoing an emissions transition phase (BSIV to BSVI standards) that had impacted new vehicle sales. The government has announced an economic package of Rs20trillion, which is expected to revive overall economic growth.
Leading auto parts manufacturer Bosch said the already suffering auto industry in India will take at least six years to return to pre-COVID levels. The company appreciated the economic stimulus package and expects a direct auto-industry specific stimulus from the government to support the sector.
India’s auto industry body SIAM has also rued the absence of direct stimulus for the domestic auto industry. SIAM, however, appreciated the 40 basis point rate cut announced by the Reserve Bank of India on Friday which is expected to reduce the cost of borrowing for traders and consumers and hereby boost demand.
The auto industry has requested for a goods and services tax (GST) on automobiles. Automakers opined that a 10pc GST rate cut on 2-wheelers and cars could spur sales.