MSc-Global Supply Chain Management (ISLI) - Literature Review on The Impact of COVID- 19 In Automobile Sector - Economics Assignment Help

Assignment Task

Introduction

COVID-19 shook the economies across the globe, started as a health crisis; it swiftly turned into an economic crisis.  The pandemic spread at an enormous rate, infecting millions of people across the globe, and the restrictions to stop transmission caused contracting of the economic activities, France was highly affected. The lockdown measures were adopted by the country to reduce the effect of the spread of infections. The restriction imposed caused people to stay at home, closure of businesses, and curtailment of economic activities other than essential economic activities, the expected fall in GDP in 2020 is 12.5% for France (IMF, 2020). The effect of the COVID-19 pandemic and the measures to stop the transmission were not just limited to the particular sector but impacted all the sectors across the economy, the automobile was highly hit.  The anticipated shrinkage of the automobile industry due to COVID-19 for the financial year 2020 is 12% -15 % (Meticulous Market Research, 2020)

Problem Statement

The title of this study is “the impact of the COVID -19 pandemic on automobile sector in France. COVID-19 which initiated as the health crisis adversely impacted the economic activities and resulted in the global economic depression. The containment and the lockdown measures restricted the movement of goods and services as well as the movement of people. Therefore, the automobile sector was adversely hit. The purpose of selecting this topic for research purpose is to analyse the impact on the automobile sector since the automobile sector contributes highly to the Gross Domestic Product of a country and provide employment opportunities to millions of people and to forecast the future growth rate in this industry and analyse how effective are the government policies in boosting this sector.

Aim and Objectives of Research
The aim of this study is to analyse the impact of the COVID -19 pandemic on the automobile sector of France.
The objectives of this study are as follows: 
•To understand the reasons behind the downfall in the automobile industry.
•To understand how the demand and supply for automobiles were impacted.
•To compare the pre COVID condition of the automobile sector and the condition after the lockdown measures were eased.
•To thoroughly analyze the effect of government policies of the French government on the automobile sector.
•To recommendation on the future growth in this sector based on the policies.

Literature review
In this section the researcher provides a summary of the already published research, this is done to provide a background for this topic being considered.  It also shows what recent progress has been made in this area of study and indicates any gap in the study.The automobile industry is one of the growing industries in France along with it is an attractive automobile destination as it is endowed with geographic location, excellent infrastructure, and skilled manpower (Business France, 2019). The government is promoting this sector and took measures to fasten the work for the Mobility policy act as well as developing strategies for using self-driving vehicles.  The automobile sector employs 4,000 individuals and a turnover of 155 MD €, which is approximately 18% of the manufacturing industry turnover (Business France, 2019). The automobile sector is responsible for 49 billion € exports (Business France, 2019).

French automotive industries have been experiencing major challenges since the end of 2018 this was caused by strict environmental regulations. The tier 1 and Tier 2 businesses were mainly hit by this decision as a result the profit for these firms has reduced drastically. According to the report of Altradius (2019), the automotive sector contribution to GDP was 0.6% in 2018, 3.6% in 2019 while the expected forecast for 2020 is negative at 7.4% (Altradius, 2019). However, COVID-19 posed more severe challenges to this industry. The light commercial vehicle market declined by 24.8%  to 240,923 units, in the first eight months of 2020, however, the French market for vehicles that were more than 5 tonnes reduced by 34.1% in absolute term it is 25,462 units (CCFA, 2020). Passenger vehicle registration has been declined enormously in 2020, with the highest decline of 72% in the month of March followed by 58% in the month of April ( OECD, 2020). With government policies to stimulate this sector, there has been a rise in the number of passenger vehicle registration which started to rise from the month of May 2020 (OECD, 2020).

According to the survey conducted by Federation of Vehicle Equipment Industries (FIEV, 2020), in France 73% of the equipment producers witness stagnancy in their commercial activities, 47% had to curtail their production as they found it difficult to maintain the social distancing. The government has adopted fiscal policy stimulus to support the automobile sector that comprises pushing €8 billion to this sector by the means of policies that comprise of the promoting renewal of the French car fleet emphasis on less carbon-emitting vehicles (Ministre De L'économie Et Des Finances, 2020). Along with it, the focus is technologically advancing and promoting digitization of the production chains and encouraging support to organizations as well as employees. The employees are encouraged to upgrade their skills by the means of vocational training schemes (Ministre De L'économie Et des Finances, 2020).

The automobile industry across the globe is impacted by the COVID -19 pandemic, however, timely actions by the government will prove to be beneficial for this industry. In the case of France, the demand and supply of automobiles were impacted. There is no significant literature available in this context as to how the changes in demand and supply of automobiles impacted the industry and in turn impacted the entire economy. Moreover, the potential impact of government measures to recover this industry will be studied.

Research Question

• The primary research question is, “How the automobile sector was impacted by the COVID – 19 pandemics in France?
• The secondary research questions are: 
• •Why the automobile sector was hit? 
• •Compare and contrast the position of the automobile sector before it was hit by the pandemic and after the easing of the lockdown measures. 
• •What are the potential effects of the government policies that were taken to recover the automobile sector?
• •What are the future growth prospects for this sector?
• •How the findings of the study can be use and how the results can provide a new direction to stimulate the recovery process in this sector?

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