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Car Companies & Mobility Providers are Suffer from the Crisis

by Nicole on March 24, 2020
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Nicole Scott
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The effect of the Corona crisis on the automotive and mobility industry is considerable. It could cause massive shifts in the market.

If you want to watch a video version of the podcast we’ve got one here for you!

If you look at the market pre-corna, you couldn’t say that car manufacturers were doing particularly well. The switch to e-mobility was expensive, the diesel scandal and digitalisation have put companies under pressure for a few years now. Although all German manufacturers still reported a profit for the fiscal year, it was significantly lower than in recent years. After production and sales in China stopped for January and February, Europe is now following suit. The production lines for all manufacturers have come to a halt and car dealerships have closed their doors.

The losses that now arise will be difficult to cope with. Especially as it also looks at the moment as if the crisis in Europe will last longer. The production losses are immense. In Germany alone, 4.7 million vehicles are produced every year. That is around 390,000 vehicles per month. Many of them have already been ordered and cannot be delivered now and thus paid for in full.

Since the OEMs are no longer producing, production at the suppliers also comes to a standstill. Although some components can be produced on stockpile, just-in-time supply chains are not designed to store large quantities of components temporarily. In total, 14 million jobs in Europe are affected by the standstill and small suppliers in particular will quickly run into financial problems.

However, there is one small ray of hope for the manufacturers: China.

There, where the crisis originated, things seem to be getting under control so slowly. The city of Wuhan is still completely quarantined, but in the rest of the country industrial production is starting up again. Since German manufacturers generate between 30 and 40 percent of their sales in China, this is a silver lining.

If the situation is already extremely difficult for car manufacturers, it is almost desperate for almost all mobility providers. The providers of e-scooters in particular are facing major problems. In Europe, many states and cities have imposed strict exit restrictions, and on top of that, many people work in their home offices. Some providers have therefore already taken their scooters off the road.

The problem of most start-ups is scarce financing. So far, the companies live on the financing and the operating costs are higher than the revenues. The time for further financing is very bad. Therefore, it can be assumed that at the end of the crisis some providers will have to close down.

Not much, but at least things are looking a little better for ride and car sharing providers. Their business is also down, but not as much as with others. Uber has recorded a decline of almost 30 percent in bookings in the USA, but the figures are from last week. The situation is similar with car sharing, where bookings have also collapsed. However, the large providers either have sufficient cash reserves of their own (Uber, Lyft) or are on the manufacturers’ drip (ShareNow).

After all, there is one area that is currently growing. Providers of rental bicycles are experiencing a boom. This is partly due to the slowly rising temperatures, but also because many commuters are now doing without public transport. So it’s not all bad.

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Coronapodcast
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