Analyzing the Financial Impact of COVID-19 on UK Automotive Industry

This report assesses the financial impact of the COVID-19 pandemic on the UK automotive industry. It begins with an introduction outlining the research overview, aims, objectives, questions, rationale, and hypotheses. The literature review analyzes the financial impact, identifies issues, and explores potential solutions. The methodology chapter discusses various research methods. The data presentation and analysis chapter presents and interprets findings. The conclusion summarizes the key findings and provides recommendations. The report highlights the significant disruptions caused by the pandemic, including factory closures, supply chain issues, decreased vehicle production, and reduced consumer demand. It explores the industry's response to these challenges, emphasizing the need for safety measures, innovation, and strategic adjustments to overcome financial impacts and maintain market competitiveness. The report also identifies challenges like decreased sales, reduced purchasing power, and the importance of adapting to changing consumer behaviors. The research aims to determine the major financial impacts, understand the challenges, and identify effective strategies for the automotive industry to overcome the challenges caused by the pandemic.

Assessing the Financial Impact of Corona Virus on the UK Automotive Industry

Contents
Chapter 1: INTRODUCTION..........................................................................................................3
Research Overview......................................................................................................................3
Research Aim...............................................................................................................................4
Research Objectives.....................................................................................................................4
Research Questions......................................................................................................................4
Research Rationale.......................................................................................................................5
Research Hypothesis and Reverse Hypothesis............................................................................7
Description of Case Study............................................................................................................8
Identification of a specific research able topic area.....................................................................8
Importance of the problem...........................................................................................................8
Chapter 2: Literature Review...........................................................................................................9
To analyze the financial impact of corona virus on automotive industry in UK.........................9
To recognize the issues faced by automotive industry due to COVID 19 pandemic ...............11
To determine possible solution to overcome from challenges faced by automotive industries.13
Chapter 3: Research Methods and Methodology...........................................................................15
Various types of research methods and their merits and demerits.............................................17
Chapter 4: Data Presentation and Analysis....................................................................................21
Chapter 5: Conclusion and Recommendations..............................................................................28
Conclusion..................................................................................................................................28
Recommendations......................................................................................................................29
REFERENCES..............................................................................................................................31
Appendix........................................................................................................................................33

Chapter 1: INTRODUCTION
Research Overview
The automotive industry is one of the most important sectors for the country as it
contributes to its overall economic development. But the recent outbreak of the corona virus has
impacted the automotive industry of the country in an adverse manner. This is because all
organizations across various industries had to close their factories and dealerships from the mid
of March with only some of them reopening in the month of May (Abodunrin and et.al, 2020).
The automotive industry is one of the industries that have been affected the most as a result of
the pandemic. The pandemic has impacted the automotive industry of the United Kingdom to a
great extent. There has been an impact on the overall supply chain of the companies as they
export as well as import many parts for their products. Also, due to the lockdown the
manufacturing processes of the automotive has stopped. It can be said that the coronavirus has
long-term impacts for different industries, including the automotive industry of the United
Kingdom. Already the automotive sector in the United Kingdom was being disrupted by various
factors such as new technology such as electrification, artificial intelligence, connectivity and
automation and with the outbreak of the coronavirus, the number as well as levels of challenges
have only increased (Abd Rabou, 2020). This has impacted the overall profitability of the firms
due to which the prices of the products have increased. Organizations operating within the
automotive industry of the United Kingdom have different stakeholders, which means that
companies have to make sure that their needs are satisfied. There was a significant decrease in
the production of vehicles in the month of March. And in order to get the process of vehicle
product to normal would require a considerable amount of time. All the organizations operating
within the industry will have to follow all the safety measures when they resume their business
processes. The automotive industry of the United Kingdom has hit the lowest level since the
financial crisis after the one in the year 1984. The report is based on assessing the financial
impact of corona virus on the automotive industry of United Kingdom. It also identifies issues
faced by the industry as a result of the pandemic as well as a solution to overcome these
challenges.

Research Aim
“To determine the major financial impact of COVID 19 on the automotive industry of
UK.”
Research Objectives
 To analyze the financial impact of COVID 19 on the automotive industry of UK.
 To understand challenges experienced by automotive industry during
COVID-19 pandemic.
 To identify various effective strategies that can be used by automobile industry in order
to overcome challenges of COVID 19.
Research Questions
The recent outbreak of the coronavirus has had a severe impact on the different industries
across the world, automotive industry being one of them. The industry has been dealing with
massive financial challenges and the situation is not expected to go back to normal anytime soon
(Babuna and et.al., 2020). There has been an impacted on the sale of automobiles as a lot of
people have lost their jobs during the pandemic and thus, cannot afford to purchase new vehicles
as of now. This report will explore the financial impact of corona virus on the automobile
industry of the United Kingdom. This will help the researcher in producing valuable conclusions
as well as the readers will also be able to develop a better understanding about the financial
impact of coronavirus on the automotive industry of the UK (de Assunção and et.al., 2020). I am
curious about understanding the type as well as level of financial impact that the pandemic has
had on the automobile sector and how is the industry reacting to the same. The research
questions for the respective dissertation are as follows-
 What are the financial impact of COVID 19 on the automotive industry of UK.
 What are challenges experienced by automotive industry during
COVID-19 pandemic.
 What are various effective strategies that can be used by automobile industry in order to
overcome challenges of COVID 19.

Research Rationale
Industry Rationale
The automotive industry in the United Kingdom is one of the most important parts for it
because it contributes significantly to the overall economy. The industry covers organizations
that are involved in manufacturing, development, marketing as well as selling of vehicles. The
main rationale of the researcher behind choosing this topic is to identify the main impact of
corona virus on the automotive industry of the United Kingdom (Kalantzakos, 2020). Apart from
this, the researcher also wants to identify the issues that are being faced by the automotive
industry as a result of the pandemic. Lastly, another rationale of the respective report is to
identify possible solutions that will help in overcoming the various challenges faced by the
industry. The rationale behind selecting the automobile industry to understand the financial
impact is to produce useful information about the situation. This will be beneficial for both, the
researcher as well as the readers. The coronavirus has created a lot of challenges for the industry
as the overall sales have decreased. After the upliftment of, the lockdown, the industry is
gradually recovering from the impact (Lal, 2020). Various automotive companies are innovating
their products in order to attract a number of potential customers so that they make a purchase.
But with the scarcity of jobs, the purchasing power of the people has declined. The automotive
industry of the country is the biggest exporter of goods and employs a large number of people.
The outbreak of the coronavirus saw various factories as well as dealerships closing. Due to this,
there was a huge impact on the overall financial performance as well as positions of the
companies in the market. those organizations, that were still operating at a small level, had to
face huge losses whereas large automotive companies did not face major financial impacts. Also,
small business organizations had to shut their business activities down as the profits earned by
them were very low.

The automotive industry of the United Kingdom continues to suffer from trouble
throughout the pandemic as well as the uncertainty caused by the Brexit. The above statistical
graph explains that the short-term car purchase intent has decreased to almost 40% in the United
Kingdom because of the pandemic. There was a decline of almost 39% in the rate of car
purchase intent among customers in the country after the upliftment of the lockdown (Moving
forward: How COVID-19 will affect mobility in the United Kingdom, 2020). Also, it can be
concluded from the graph that a survey that was conducted among the customers in the United
Kingdom revealed that 27% of them stated that they plan less on their next purchase of a car.
Also, people who belong to the white-collar jobs, will have a decrease in the need for private
vehicles because of the remote-work option (Liu and et.al., 2020). Apart from this, people who
work in hospitality industry might have an increased need for owning a private vehicle. This
need will increase as most of them will avoid travelling by public transportation. Although their
purchasing power will still remain less by significant levels. Due to all this, the dealers within the
automotive industry are facing a relatively low level of revenue.
Personal Rationale
As discussed, the automotive industry has been largely impacted by the outbreak of the
coronavirus. The rationale why the researcher has focused on this topic is because why are
automobile companies operating within the industry facing a decline in their overall sales of cars.

Poor economic conditions are one of the causes for the same and the problem with this is that
since the economy of the country has been impacted financially, the companies are not able to
generate sales. This is also because a lot of people have a reduced purchasing power as either
they do not have jobs or their wages are very less (Malm, 2020). There are many organizations
that are firing their employees as they have not generated any profits and are finding it difficult
to pay them their salaries. In order to bring back their business to normal, it is important for the
automobile companies to adopt certain measures. This will help them in conducting their
business operations effectively, both within the United Kingdom as well as any other regions of
their operation. The automobile factories have gradually resumed their operations and the
companies are now trying to make sure that they take into account the safety of their workforce
as well as at the same time innovate the products so as to attract a greater number of customers.
Different industries within a country make up its economy and contribute towards
making it strong. The automobile industry is one of the largest employers of the country that
significantly contributes towards the same. There are different factors that can have an impact
over the operations of the company (Markard and Rosenbloom, 2020). But the outbreak of the
coronavirus has been one of the major factors affecting the same. Small businesses are struggling
for growth and expansion whereas many of them have already put a stop over their operations. It
can be said that the pandemic has had an adverse impact over the financial status of the industry.
Therefore, this idea has gained interest of the researcher and therefore, this study is being
undertaken.
Research Hypothesis and Reverse Hypothesis
The pre-investigation assumption of this report is that the recent outbreak of corona virus
has impacted the various industries across the world in a negative manner. It is predicted that the
automotive industry of the United Kingdom is one among the most affected. The expected
outcome of this research is to enhance the overall understanding of the impact of corona virus on
the industry as well as the issues that it has created. The research also expects to provide useful
solutions in which these issues can be addressed in an effective manner (Marta and et.al., 2020).
It has been predicted that the study will help the researcher in understanding the financial impact
of the coronavirus on the automotive industry of the United Kingdom. The researcher’s expected
outcome is to gain an understanding of the topic so as to produce some valuable results. The

researcher wants to test the level of impact that the pandemic has had over the sales as well as
production of the cars in the market. The research hypothesis is testable and will allow the
researcher to gain an understanding of the research topic in an effective manner. also, the
conclusion of the study will be appropriate and relevant.
Description of Case Study
The outbreak of corona virus has impacted the overall economy around the world in a
negative way. The demands as well as supply of products has been affected as the production of
vehicles has gone gown drastically overtime. This study is mainly attempted in order to identify
the issues that the industry is facing due to this as well as potential solutions that can help in
addressing the same. This is also because as a worldwide lockdown as well as social distancing,
people have not been able to visit the showrooms and make purchases.
Identification of a specific researchable topic area
The primary reason behind selecting this particular topic is that the outbreak of the
corona virus has not only impacted the retail industry and hospitality industry, but also the
automotive industry in a negative way (Pashaei and Rezaei, 2020). Also, not many researches or
studies have been conducted to analyze the financial impact that the corona virus has had on the
automotive industry. Also, since the impact of corona virus on different industries is one of the
most discussed topics today, it is important to research about this topic. Therefore, the research
will help in building an understanding of the same in an effective manner.
Importance of the problem
The outbreak of corona virus has resulted into a considerable amount of decline in the
number of vehicle production within the automotive industry. The research will help in
identifying the impact of corona virus on the automotive industry and solution for the same
(Anari and et. al., 2020). There is a need to research about the problem in order to obtain relevant
data as well as information about the same. This will further help in making informed decisions
and implementing the right strategies so that they can be implemented if a similar situation arises
in the future.
Chapter 2: Literature Review
To analyze the financial impact of COVID 19 on the automotive industry of UK.

The outbreak of corona virus has caused a widespread concern not only for the
consumers, but the manufacturer within the automotive industry as well. This has also resulted
into an impact on the overall supply chain of organizations that operate within the automotive
industry. The production of vehicles has shut down due to which the overall financial condition
has also been impacted (Barabari and Moharamzadeh, 2020). The pandemic has posed a lot of
financial challenges for the industry and it is being anticipated that it would require a
considerable amount of time for the companies to get back to their normal functioning. March is
among the busiest months for companies in a year. The automotive industry within the United
Kingdom has been one of the most affected industries with the number of new car registrations
falling by 44% (How coronavirus is impacting sales & marketing in the automotive industry,
2020). This is said to a much steeper decline as compared to the one during the recession of
2008.
Apart from this, a lot of small businesses as well as dealerships have closed down their
businesses due to the pandemic. It can be said that financially, the automotive industry has been
suffering from the consequences a lot (Ranjan, Patra and Gorai, 2020). The results of various
studies that have been conducted show that many people are of the viewpoint that they would not
spend a lot of amount on their next purchase of a car. As far as white-collar workers are
concerned, they will have an option of working from remote areas and thus, their need to own a
private vehicle will also reduce. Companies that initially had plans of growing and expanding
their business operations to new countries have put a hold on the same.
Due to the lockdown and the social distancing, the customers were not able to visit the
car showrooms. This has resulted the customers in not being willing to spend a lot on buying a
car. This is because there is a financial instability within the market. As the consumer demand
for cars is gradually diminishing, it has been observed that a lot of brands have suspended or put
a hold on their production process (Khan, Ali and Aftab, 2020). Major companies to do so
included Jaguar Land Rover, Nissan, Honda etc. A recent study that was conducted, showed that
automobile companies within the United Kingdom were either concerned or very concerned
regarding the impact on operations of their suppliers as well as their respective business on the
whole. Besides these, another major area of concern for the companies is the low demand among
customers and the availability of the raw materials.

Impact of the pandemic
It can be said that corona virus has impacted the operations of the automotive industry in
a negative manner. But, in order to resume their services to normal and attract customers, there
are some car dealers that are offering services remotely (Muzakki, 2020). They are offering
services like home test drives, virtual tours, contactless buying etc. All these measures are being
taken in order to ensure safety as well as security of both, the employees of the company as well
as the customers. Taking into account the financial instability within the country, automobile
companies like Ford are have introduced a campaign named “Peace of Mind”, wherein the
customers can buy the car and make payments up to a time limit of 6 months (Khan, M. F., Ali,
S. and Aftab, N., 2020). This initiative is basically to attract a greater number of customers and
improve overall sales. Although the companies have put a hold on or stopped their production
process, they are still advertising about the products and services in order to keep the customers
engaged with the brand (Ranjan, Patra and Gorai, 2020). Organizations within the industry have
panned the process and instead of investing huge amounts of money in advertising during the
time of financial crisis, they are promoting themselves and their products through various social
media platforms like Facebook, Instagram and Twitter.
The automotive industry within the United Kingdom has reported about a 13% increase
in its overall advertising through various mediums (Norouzi and et. al., 2020). Companies like
Ford are developing and producing ads that are mor inclined towards their response to the corona
virus. The corona virus has also changed the buying behavior of the customers during buying a
car. The United Kingdom has also reported n overall decline in the overall sales by 36% as
compared to the same period during last year. Analysts within the United Kingdom have
estimated the overall income of the country to fall approximately by 26% (Weekly Update:
COVID-19 Impact On Global Automotive Industry, 2020). Although the rate of sale for both
used as well as new cars is constantly declining, the rate for new cars was recorded to be even
steeper, which is not a good sign for the automotive industry. Due to financial instability many
automobile companies have let go of their existing employees in order to save money. Therefore,
it can be said that the outbreak of corona virus has resulted in a very difficult time for different
industries, especially the automotive industry with the United Kingdom.

To understand challenges experienced by automotive industry during
COVID-19 pandemic.
As per the article of PWC (2020), it has been determined that there are various issues and
problems that is faced by company dealing in automotive industry due to COVID 19 pandemic
(Barua, S., 2020). It is essential for organisation to determine and analyse the different factors or
elements which are issue for company as well as lead to have negative impact on automotive
industry. COVID 19 leads to have major negative impact on business practices as well as affect
the purchasing capabilities of customers to buy product (COVID-19 and the automotive industry,
2020). This have impact on various sectors all around the world as well as impact over economic
growth and development. Due to COVID 19 capabilities and potential of company in automotive
industry is affected and organisation is not able to successfully and effectively perform business
practices. There are various large and multinational companies dealing in automotive industry
and their functioning has been affected by pandemic of COVID 19. Different issues and
challenges that is faced by automotive industry is mention below in detail –
 Lack of financial resources – There is lack of financial resources available to business for
conducting different activities for automotive sector. Organisation in respective industry
have to purchase different types of raw material and other resources for successfully
developing high quality products (Sheykhi, 2020). As a result, they are shutting their
businesses down and the United Kingdom is among those countries that have been under
the lockdown for several months. This is because the number of cases of coronavirus was
at the peak during the initial months. However, there has been a decline in the number of
cases, but various industries are still struggling with coming back to normal.
 Potential global recession – Due to COVID 19 there is global recession and this is issues
which is affecting organisation in automotive industry. Due to global recession
unemployment rates increasing as it will lead to have direct impact over the potential of
customers to purchase products. Global recession has reduces the job opportunities and
growth of business. Automotive sector is majorly affected by global recession as well as
increase in unemployment rate as it will directly or indirectly affect the functioning of
company is effective manner. Due to this economic capacities and potential of
automobile companies is also affected.

 Decrease in demand – Another issue that is faced by automotive industry due to COVID
19 is less demand of automotive products in market area. This sector includes luxury
products and during the time of COVID 19 most of the people are focusing on meeting
with the necessary needs and want for their survival. COVID 19 have affected the market
area of automotive sector and it has direct impact in sales and profitability of companies
in this industry (Singh, Parmar and et.al., 2020). Decrease in demand of automotive
products and less sales in major issues for that is faced by business in automotive sector.
Due to this sales and productivity of companies in decreasing and it led to heavy loses to
companies. The lockdown has restricted people from travelling freely and sur to this, the
overall demand for new automotive has decreased to a great extent. It is being estimated
that the aftermarket revenues of the automotive industry are still likely to be low in the
coming year as the industry will take a significant amount of time to recover from the
same.
 Reduction in productivity – Automotive industry is facing major issues of productivity.
Due to COVID 19 pandemic manufacturing and production process of automotive sector
has been stop for certain time period (Barua, 2020). Because of lockdown or direction of
government production practices or manufacturing activities was not conducted and it
lead to major negative impact on business overall productivity as well as raw material of
automotive sector. Increase in these issues have influence over employees and reduction
of staff member. Due to COVID 19 automotive industry has a smaller number of workers
for conducting business process as well as manufacturing of products. This led to directly
impact over the production process of automotive company and this sector have to face
issues of less or lower productivity (Su and et.al., 2020). There has been a loss of jobs
and due to this organizations are currently operating with a limited workforce. Due to
this, the overall productivity of the organizations has also decreased. Also, the production
has stopped and thus, the level of sales has also decreased.
 Difficulties with funding – Automotive industry is facing issue in collecting funds and
investment for conducting business task. COVID 19 issues has affecting capabilities of
automotive industry for assembling funds in order to successfully conduct business task.