Over two-thirds of Britain’s car industry has delayed auto production for the time being amid the global COVID-19 crisis. Jaguar Land Rover is Britain’s biggest auto company and is the only one that still has operating production facilities, making it central to this area’s car production volume. On the contrary, BMW, Honda, and Toyota are among auto companies that have ceased operations for the time being. Others temporary closures have included Daimler, Fiat, Ford, Mercedes Benz, Peugeot and Volkswagen which are of course further impacting the UK’s low automobile production.
The auto manufacturing closures are impacting around 20,000 employees, which contributes to the UK’s production of 1.5 million automobiles each year. The global COVID-19 crisis is unlike anything we have ever seen and the auto industry is currently hanging in the balance because of the interruption in supply and demand.
The UK has been no stranger to ambiguity, especially in regards to the car industry. The Brexit ruling has introduced heightened complexities within the region. Plunging sales in areas like China have made things even worse. The COVID-19 crisis has disrupted auto businesses and companies in this particular industry stand to experience incredible losses. Even as various markets recover, auto companies will experience major setbacks related to future innovation opportunities and will have to reevaluate their long-term business models and global production facilities.
Each carmaker in Britain is forecasting the economic disruption related to COVID-19 differently. The closures between BMW, Honda, and Toyota alone are impacting over 11,000 workers and their corresponding facilities in the UK area contribute to over half a million cars each year. However, the largest auto production facility in the UK has belonged to Nissan, which has also announced operation suspensions.
The UK based Nissan facility employs over 6,000 employees, contributing to the production of over 400,000 cars annually. Employees were not given much notice to the pause in production. Nissan still plans to move forward with its modern Qashqai Sport SUV despite the ambiguity in the auto industry the company’s acknowledgment that the COVID-19 situation is an absolute emergency.
BMW stated that obviously company revenue will be much lower in 2020 because of production disruptions. Along with its stoppage in Britain, Toyota has paused operations at facilities in the Czech Republic, Poland, Turkey, and Asia. Jaguar Land Rover is continuing to follow government recommendations and guidelines as the COVID-19 situation evolves.
With so much economic uncertainty, it’s clear that UK carmakers will have to continuously evaluate their losses as it is unlikely that they will recoup missed revenue as a result of the COVID-19 situation. UK carmakers must focus on value-add opportunities as industry demand continues to change and consumers refocus and re-prioritize based on their needs.
Because of shifts in demand, additional car production suspensions are inevitable. Low demand aside, it would be incredibly difficult for employees in the car production facilities to maintain social distancing guidelines as they work in such close proximity to each other.