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Pandemic hits vehicle industry hard and fast

In what’s shaping up as one of the worst economic crises since the Great Depression of the 1930s, the coronavirus pandemic is wreaking havoc on the vehicle industry across the globe. It’s a crisis of supply and demand, with vehicle production lines shut down and supply chains interrupted amid a sudden drop in market demand.

However, in a rare bit of good news, the disruption to the Australian vehicle market seems relatively subdued. Demand may be weak, but supply is less of a problem. Many leading car companies are still planning to release new models to the market despite the disruption caused by COVID-19.

Production stops

Across Europe, German giant Volkswagen suspended its production across all its plants in response to the pandemic. Many other manufacturers followed suit, suspending production on vehicles and engines, and closing its doors to employees.

However, 5 weeks on and Volkswagen have restarted production in two of its plants. Operations have restarted at reduced speed, and they have announced an initial production of only 50 vehicles per day.

"We all have a historic task to accomplish," said Thomas Ulbrich, Volkswagen brand board member for e-mobility. "That task is to protect the health of our employees and at the same time get business back on track responsibly."

Shows, conferences cancelled

The pandemic has also seen the cancellation of the prestigious Geneva Motor Show, and closer to home, the postponement of the AFMA 2020 Australasian Fleet Conference & Exhibition, which was scheduled for May.

The pandemic could not have come at a worse time for the Australian vehicle industry. Already reeling from months of low sales followed by the bushfire crisis, the coronavirus threatens to prolong that painful sales slump indefinitely.

Australian supply

But on the supply side, at least, it’s business as usual for the major players. Toyota plans to release its new Yaris Hatchback and revamped Toyota Hilux later in the year. Hyundai will roll out an update for its i30 hatch, while stablemate Kia’s new 7 seat Sorrento is still scheduled for release mid-year. Mazda has some limited-edition models waiting in the wings as well as variations on its CX-30. Mitsubishi, too, has some updates to models on the way, including a facelift to its Mirage hatchback.

Ford, Nissan, VW and Honda are also not changing their plans for the year. Mercedes is saying that while it can’t rule out delays, things are still proceeding normally for the moment. BMW says it’s continuing to monitor the situation carefully.

Monitor costs

There’s no doubt, however, that the crisis is creating difficulties for fleet operators.

“For fleet owners and managers caught up in the uncertainty of the pandemic the important message is to monitor the Total Cost of Ownership and utilisation rate very carefully,” said Nigel Malcolm. CEO of Fleetcare.

“If you have high mileage vehicles in the fleet, then swap them for low mileage ones and even look toward car sharing. If you’re doing that then do pay attention to disinfecting your vehicles – that’s absolutely crucial at this time,” he said.

“You can rest assured that Fleetcare will still be here to support you whenever you need us 24/7 throughout these difficult times. We’ve set up systems and procedures to help minimise face-to-face meetings while maximising the use of online meeting facilities. If you have any questions or concerns, please don’t hesitate to contact us.”

“Our thoughts are with you and your family, friends and colleagues as you cope with this crisis. Be patient and remember the wise words of the late, great George Harrison: All things must pass.”

For running updates on Coronavirus fleet news please visit our dedicated Coronavirus Fleetcare page.

IMPORTANT NOTE - This content is current as at 29 April 2020 and provided for information purposes only. The information may not be suitable or appropriate for your organisation’s operations and needs. As such, please undertake your own independent assessment(s) and take into consideration any specific government laws and guidance. Response and advice regarding Coronavirus is changing rapidly and it is important that you keep up to date with all relevant information issued by the Australian Government.

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