Impact of COVID-19 on the UK & EU Automotive Industry

The automotive industry contributes significantly to the economy in Europe, which generated around €675bn in revenue 2019. The EU itself is home to one of the largest manufacturers of motor vehicles globally, where it additionally acts as the largest investor in automotive R&D. To further strengthen the competitiveness and global leadership of the EU automotive industry, the European Commission strongly supports global technological harmonisation, in addition to proving over €14.44 billion in R&D funding in 2019.

Prior to the COVID-19 pandemic in 2020, the EU automotive industry was one of the largest employment sectors, employing over 2.6m people and representing almost 8.5% of all EU manufacturing jobs. The EU automotive industry alone accounted for 2.6% of the entire EU value-added in 2019. Since the onset of the first wave of the COVID-19 pandemic in early 2020, the automotive industry was, and still is, one of the hardest hit. In the first half of 2021, the EU automotive industry suffered production losses of 3.6m motor vehicles, accumulating for an overall loss of over €100bn. By the end of September 2020, this number increased to over 4 million motor vehicles, which represents over 22.3% of the EUs total automotive production in 2020. In addition, the demand for cars in the EU decreased by 28.8%, compared to 2019, but the second half of 2020.

Whilst the industry is still recovering in many aspects, the sales of motor vehicles is predicted to increase rise by around 10% by the end of 2021. At an operational level however, the COVID-19 pandemic has accelerated developments in the automotive industry that have been ongoing for several years across Europe. 2020 saw sales of electric vehicles increased by a huge 43% in 2020. In addition, the growth of online traffic in the sector, in addition to the increased support of original equipment manufacturers (OEMs) to cooperate with business and strategic partners. The COVID-19 pandemic has also largely driven an organisational shift in the automotive industry in the UK & Europe, most significantly in the incorporation of new technologies into operations. 2020 has seen a rapid increase in the utilisation of digital channels, application of artificial intelligence in manufacturing, including for the optimisation of assay deployment, and introducing zero-based budgeting. These trends are strongly predicted to continue as the automotive industry moves further from the after-effects of the 2020 pandemic.

Written by:
Anna Cranston

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