Impact of COVID-19 on the automotive industry, the crisis is boosting innovation

COVID-19 has impacted unprecedently the whole planet that evoked countries and territories have enforced lockdowns of varying degrees, and only essential “vital” businesses are allowed to remain open.

This crisis impacted industries differently, some of them suffered from heavy harm, others remain stable and other industries have widely benefited and created fortune like pharmaceutical industry, sanitary equipment producers, etc.

This article summarizes our analysis, deductions and experience about the impact of COVID-19 on the automotive industry, the volume of vehicle sales, OEM’s and Tier’s innovation capabilities, and essentially the impact on automotive software development and testing services, our main activity in Primatec Engineering.

Coronavirus impact on the Automotive industry

Consumers having suffer from unemployment (total or partial) or economic crisis, uncertainty, budget restriction, in the addition of the complete lock down, postponed/cancelled any plans to buy vehicles, as a consequence, vehicle sales are dropping dramatically.

“Consequently, 80 percent of automotive and related companies report that Coronavirus will have a direct impact on their 2020 revenues.” – Dieter Becker, KPMG.

The sales decrease, the existence of a big vehicle stock, the difficult economic situation of vehicle buyer and car producer and the uncertain situation make all the industry players make a step back and tighten their resources disposal

Consequently,

PRODUCTION STOPPED

• The production process of making cars, parts and components was completely stopped

“Some of those big plants in Europe are going to really struggle,” said Peter Wells, director of the Center for Automotive Industry Research at Cardiff Business School in Wales.

SOFTWARE DEVELOPMENT & PLANNED INNOVATION

• Innovation plans are kept in hold or at least slowing down
• Software development projects designed to increase the competitiveness of OEM’s sustained different impacts. Some in progress software development projects are not impacted by the crisis, some others are cancelled or postponed and some other planned software projects are facing incertitude.

AUTOMOTIVE TESTING PROJECTS AND PLANS REMAIN STABE

automotive testing comes behind the heavy duty and extremely costly research & development efforts and it is the stage before the final release to the mass production.

Although the several challenges exposed by this outbreak to the automotive sector, we noticed that there isn’t, at least in our company and some partners, a negative impact on automotive testing. Projects are ongoing, plans remain unchanged, but perhaps customer expectation in term of milestone deliveries become higher due to the increase of productivity during the confinement period.

At times of crisis, there are always innovations to fight against and faster the recovery plan

Behind the heavy economic damage caused by the COVID-19, there are efforts to create new ways of innovation adapted to the context to increase OEM’s competitiveness.

In fact the crisis generated new needs, new car comfort and safety functions that aim to overcome the current Coronavirus, and prevent against other sanitary crisis that humanity can face in the future.

There are new functions and RD efforts, to offer:

• Intelligent Air Purification System which prevents bacteria and viruses from entering the car’s interior environment
• Self-cleaning and anti-bacterial surface treatments for commonly used touch points
• Special ultraviolet (UV-C) light sanitizing unit as a part of future models’ HVAC systems to kill germs, bacteria, and viruses.
• Car cabin and surface sterilization

Given the current situation, these recently introduced health features and innovations could prove to be a key consideration for customers leaving behind the classic planned innovation.

This new context created new competition areas that go beyond offering more comfort, safety, fast In-vehicle Networking and advanced autonomous driving.

Primatec answers to this sanitary vehicle new functions challenge

As an expert company in automotive electronic components testing with a proven experience working on complex project for premium OEM’s like BMW, Audi, …, we are prepared to meet the latest disruptive trends and demands in the industry using key emerging technologies, by:

– Apply and scale our proven testing expertise, services (from component testing to acceptance testing) and technics to meet the new ECUs designed to fight against sanitary crisis, in addition to those we are used to test the Electric Vehicle et Autonomous Driving.

– Maintain high level of test automation (95% of our test are running automatically) to increase time to market, reduce cost and increase customer responsiveness and competitiveness.

 What recovery plans?  

From beginning of 2020 the automotive industry is suffering from a crisis that was deepen by the COVID-19. Now, Governments and different automotive players are looking for a quick recovery plan to get rid of at least the damage caused by the Coronavirus.

OEM’s and Tier’s are looking for some governmental measures to dynamize car selling, like tax reduction, indemnities, …, and also looking for governmental fund injunction to overcome the impact of the crisis and reboot the industry.

There are not yet clear governmental measures regarding countries whole economy recovery plans and what plans for automotive industry which is classified as heavy industry.