How the Auto Market Stands Amid the Coronavirus
May 19, 2020 (Investorideas.com Newswire) The Coronavirus has made a significant impact across the world in dozens of different industries. The auto market is no exception. It's been one of the worst affected markets in both the U.S and the world because of the coronavirus.
This is mainly because many factories have either shut down completely or drastically reduced their production amount. It varies depending on the area and how harshly they've been affected by the virus.
While the current standing of the auto market is grim, there is a bit of hope to be found. Slowly but surely auto-makers across the U.S and the world have begun to reopen assembly lines. This is imperative to help jumpstart the auto market once again.
The key is that product manufacturers will need to keep a close eye on their employees and use state-of-the-art technology and protocols to ensure infection from the virus doesn't spread. If another outbreak were to occur, the auto market would be further devasted. You could even speculate that large, global automakers could begin to permanently shut their doors.
Proper handling of the coronavirus within the auto market has been documented. For example, China has recently come out of a 21-month slump of business in the auto market. While this slump started well before the coronavirus became a significant factor, it proves that bouncing back is possible as the markets were severely affected during initial outbreaks in the country.
It's projected that China's auto market growth will continue unless a second outbreak were to occur.
The Difference Between Now and 2008
The common person often compares the current situation with the auto market to the 2008 U.S recession. The myth must be broken - the two situations are vastly different.
More specifically, the 2008 recession and eventual ravaging of the auto industry and market were due to situations that could be controlled. Mismanagement of employees and finances played a large part in the near-economic-collapse that occurred. Efforts were then made to correct mistakes after giant bailouts were handed out.
With the coronavirus, the situation isn't the same at all. While management of finances and employees are still a hot topic within the auto market, they aren't to blame for the current hardships. Rather, the coronavirus has shut down most production lines and money isn't being circulated. This not only affects the auto industry but the entire economic ecosystem.
If no vehicles are being made, no parts are being purchased. If no parts are being purchased, nobody is buying from resource producers. As you can see, a chain reaction occurs throughout a much different industry when one large one is going through issues.
On the flip side, if the markets were to begin assembly-line production again, even more drastic problems could emerge. Without proper safety precautions, factories and assembly lines are known to be hotspots for the coronavirus to spread. That's because everyone is nearby and hours are often hard to come by, which incentivizes sick employees to show up regardless of their condition.
In the end, the auto market is still volatile and can take another dip at any time. Investors should be wary of what's going on and look to the future to find out more information before diving into a large investment. For a safer investment, look towards commodities that are in high demand during lockdowns - such as cannabis.
How This Impacts You
In the short term, this affects the best time to buy a car. Prices are likely to fall in the coming months as dealerships look to get rid of their inventory and recoup their investments.
Of course, this also impacts the economic prosperity of the U.S, as well as the rest of the world. The supply chain provides hundreds of thousands of jobs to Americans and others around the world.
The sooner the auto market makes a rebound, the better for everyone. Time will tell how it shapes up.
It should also be noted that the auto market isn't the only thing industry being affected. China stocks are being severely affected as well.
Hope is Here
While the current situation remains bleak, hope can be found beyond China's success.
The U.S government understands the economy's dependency on a healthy auto market and is doing its best to bring aid to where it's needed most.
For example, Michigan, one of the nation's leaders automaker cities, is projected to receive help as lawmakers spur to push aid to the industry.
If all goes well, the auto industry can hopefully make it through these trying times until normal production can resume.
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