North American auto part suppliers said they welcomed Carmakers’ decision to restart and accelerate production after the coronavirus-related shutdown. However, they also noted that longer-term uncertainty had tied their hands to invest and hire more. Auto plants began to reopen late last month after governments relaxed some restrictions aimed to control the health crisis. They are expected to ramp up production of highly profitable SUVs and trucks this month.
However, car demand is not expected to return to pre-pandemic levels until 2022 or 2023, analysts at Bank of America said. With slow demand recovery in mind, aluminium parts maker Aludyne has reduced more than 10% of its staff. Canadian auto supplier Magna International said demand was good at the time, but future demand remained uncertain. There are also concerns regarding smaller parts makers that they may fail to restart operations.
Most auto suppliers will likely adopt disciplined financial approaches. Workers layoff, hiring freezes, and investment deferrals are expected to be common among them in the rest of 2020. However, analysts expect that the development of electric vehicles would shed light for some auto suppliers.
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Published on June 12, 2020 5:46 PM (GMT+8)Last Updated on June 12, 2020 5:46 PM (GMT+8)
