As if 2020 hasn’t already been rough enough on the manufacturing industry overall, new survey results from the automotive industry suggest the expectation of revenue declines across the board and most expect those declines to exceed the 20-percent range.
A recent industry flash survey undertaken by a partnership crafted between The Right Place in Grand Rapids, Dykema, and MICHauto delivers the tough news just released.
The sobering survey shows the vast majority of respondents reporting those declining projections as well as negative forecasts for 2021 at this point.
Last month, in July of 2020, Dykema, MICHauto and The Right Place canvassed automotive executives, professionals and service providers to gauge their perspectives on the U.S. economy and the automotive industry and, particularly, the effect of the COVID-19 pandemic. With the automotive industry being a critical component of the U.S. economy connecting a wide range of industries, from part and raw material suppliers to providers needed for the day-to-day sale and operation of vehicles, the survey is an important one for industry forecasters.
In the survey’s Executive Summary, the collaborators sum things up this way:
“The automotive industry is a critical component of the U.S. economy, connected to a wide range of industries, from part and raw material suppliers (such as steel, aluminum, copper, glass, rubber, special fibers, plastics and chemicals) to providers needed for the day-to-day sale and operation of vehicles (such as dealerships, repair shops and mobility services). Given this key role automotive industry participants play in the economic ecosystem, survey participants noted a negative outlook for the short-term over the next 6-12 months, as their businesses have not been immune to the effects of the COVID-19 pandemic. Looking forward long-term over a 24-month span, respondents provided a significantly more positive outlook. This was true for respondents’ outlook for both the U.S. economy and the rate of new supply chain orders.
References to ‘automotive industry respondents’ in this survey includes OEMs, Tier 1 and Tier 2 suppliers, and vendors of technology and other products to the industry, who represented a majority of respondents. Survey results differed for this group in several areas, with automotive industry respondents reporting or anticipating more profound negative effects from COVID-19, especially in:
- The curtailment of their operations at pandemic onset
- Short-term view (12 months) of the supply chain’s recovery
- Anticipated declines in revenues for 2020 through 2nd quarter 2021
- The short and long-term views of the U.S. economy
- A more positive long-term view (24 months) of the supply chain’s recovery
While 84-percent of automotive industry respondents suspended or shutdown their U.S. operations during the pandemic, only 20-percent reported suspending or curtailing U.S. operations after reopening. Virtually all automotive industry respondents expect revenue declines in the next year, with a majority expecting those declines to exceed 20-percent.
Respondents have seen or expect the COVID-19 pandemic to result in:
- A material increase in expenditures to keep their workers safe
- A suspension of existing orders
- The elimination or consolidation of automotive suppliers
- Supply chain interruptions
- Price reductions from their customers
The survey polled respondents in six revenue categories, from under $1 million to over $1 billion, for 2019 sales.
Approximately 60-percent of the automotive industry respondents fell in the mid-range between $10 million to $1 billion. A significant majority of our respondents, including our automotive industry respondents, were business executives, with the remainder consisting of lawyers, accountants, investment bankers, commercial bankers and other professionals and service providers.”
To see the full report, including the executive summary, click the link below:
COVID-19-Automotive-Outlook-Flash-Survey-Results
For an infographic explaining the survey results, click the link found below:
