In this article, we’ll take a look at some of the challenges faced by auto plants today. These include a shortage of labor and excessive production. The industry’s past struggles have resulted in massive financial losses and have affected GDP. But the automotive industry will have to change in order to survive. To be competitive, it must embrace industry 4.0 and manufacturing resilience. These changes are not going to happen overnight, but they require the industry to change its approach to car-making.
The pandemic has accelerated the changes in the automotive industry. Some changes are positive. OEMs have become more open to new partnerships. Nevertheless, some have been unable to invest in new areas. For example, some have refocused their production lines and factories on personal protection equipment for medical workers. However, the industry’s current problems are not the only causes for concern. Auto plants are undergoing a crisis that’s forcing them to change how they do business.
The response to this crisis by the UAW and automakers was a joint effort to retrain displaced workers. The three major automakers, including Ford and General Motors, created joint training funds. These funds were initially supported at five cents an hour but later boosted to ten cents per hour. Premiums were also introduced for overtime hours. Before using joint funds, union and management were required to get approval from both sides. These funds were earmarked for retraining programs in community colleges.
Another challenge faced by automakers is the shortage of chips. One piece of the puzzle is missing and the entire production line can halt. The shortage can also cause dozens of suppliers to idle. The shortage of chips and materials is the largest culprit, affecting all auto plants. With prices rising, carmakers are likely to raise prices. As a result, the problem is not only affecting manufacturers, but also the consumers who buy the cars.
In the United States, demand for cars is dropping. GM’s hybrid Chevy Volt isn’t selling well. GM also needs to transition to electric and self-driving vehicles. The auto industry is undergoing a transition phase. This process will require more time and greater effort from all elements. The industry’s competitiveness will be impacted by these changes. But it will still continue to thrive if it can adapt to the changes.
COVID-19 also posed a challenge for the automotive industry. Despite the fact that pre-pandemic car sales were projected to reach 16-17 million units in 2020, the onset of the pandemic reduced the numbers to just under two million. A statewide lockdown, social distancing regulations, and the shutdown of manufacturing units all made car sales plummet. And because a vaccine is not yet available, it seems that car sales will be even lower than they were in the previous year.
While there have been improvements in the industry since the last pandemic, there is still a long way to go before the industry is back to its pre-pandemic levels. A recovery strategy should incorporate both long-term and short-term solutions that protect the industry from further damage. In fact, social distancing has only increased the importance of digital purchasing options. This is because 80% of buyers started their car-buying journey online. In addition to that, COVID restrictions have made digital purchasing options even more valuable.