Coronavirus hits lubes and auto industry

Auto industry faces new thinking as pandemic takes hold.

New BP CEO Bernard Looney has reaffirmed the need to reinvent BP as a net-zero energy company in the light of the global pandemic. BP has already stated its goal of reaching net-zero emissions by 2050 or sooner. However, Looney said his focus is now on the health of BP's 70,000 employees and the financial impact of the crisis, with the company joining many in instituting policies of teleworking and reducing travel wherever possible. 

The importance of managing risk in a global crisis has also been highlighted by Fuchs executive Holger Karnetzky. China is one of the largest suppliers of automotive parts in the world. The answer for the global automotive industry lies in actively managing risk with contingency planning."

Increasingly disrupted by coronavirus, the supply chain to the automotive industry has been subject to the volatility of demand and the different selling environments across the world. Not long after the initial outbreak of the virus in China, Tata-owned Jaguar Landrover has had to import auto parts in suitcases.

On the other hand, the pandemic has created new manufacturing and sales opportunities. For example, Poland's largest oil refiner and petrol retailer PKN Orlen has announced that it will start producing hand santizers to meet the country's increasing demand in the current crisis. "We will start with half a million litres and if needed up to a million litres," said Orlen CEO Daniel Obajtek, referring to actions taken in relation to the coronavirus in Poland. "We have finished the testing phase and will start large-scale production this week." 

Meanwhile, with customers staying away from car showrooms, China carmaker Geely is launching a new online service to boost its sales, joining the likes of BMW, Tesla and Mercedes Benz. Cancellation of the Geneva Motor Show also left manufacturers no option but to resort to virtual launches of new models slated for public debuts for the show.

In the UK, the Prime Minister has been in discussion with automakers and other British manufactuers to produce NHS ventilators. "We need to step up production of vital equipment such as ventilators so that we can all help the most vulnerable, and we need businesses to come to us and help in this national effort," Boris Johnson said, although analysts questioned the readiness of the manufacturers to switch production.  

Elsewhere, Fiat Chrysler Automobiles (FCA) has been hit hard by Covid-19 and has announced the temporary closure of its plants across Italy. The $108bn automaker has facilitated remote working, suspended non-essential travel, minimised interpersonal contacts and screened visitors to facilities.