We have presented how COVID-19 has impacted the financial performance of the automotive sector. We have also taken 3 companies as example to verify our points.
2. Discuss the impact of COVID-19 on the
performance of companies. Take any
three companies from the same sector
and evaluate the impact of COVID-19
on financial performance
3. COVID-19 is an infectious disease caused by a newly
discovered corona virus.
The World Health Organization declared the outbreak
a Public Health Emergency of International Concern in
January 2020 and a pandemic in March 2020
Tourism is one of the worst affected sectors due to
travel bans, closing of public places including travel
attractions, and advice of governments against travel
The retail sector has been impacted globally, with
reductions in store hours or temporary closures
Hundreds of millions of jobs could be lost globally
4. As well as serious implications for people’s health, COVID-19 is
significantly impacting businesses and the economy
The COVID-19 pandemic has brought fast-moving and unexpected
variables, some of which existing crisis plans and teams weren’t
prepared to handle.
The impacts of COVID-19 have touched nearly every facet of an
organization, from payroll to auditing standards to how organizations
conduct day-to-day operations.
As business activities slow, some companies are seeing lower revenue
resulting in less cash flow. During the economic uncertainty, managing
cash and liquidity positions may be crucial in the weeks ahead.
Almost overnight, many organizations shut their doors and turned
remote to conduct business.
5. The Indian auto industry became the fourth largest in the world
with sales increasing 9.5 per cent year-on-year to 4.02 million
units
The Two Wheelers segment dominates the market in terms of
volume owing to a growing middle class and a young population.
domestic automobiles sales increased at 1.29% CAGR between
FY16-FY20 with 21.55 million vehicles being sold in FY20.
Indian automotive industry (including component
manufacturing) is expected to reach Rs. 16.16-18.18 trillion (US$
251.4-282.8 billion) by 2026.
6. The auto industry was also hit by the novel COVID-
19 and a lot of companies struggled to cope up.
In order to target the first time vehicle buyers, a
segment that has shown increasing preference to
personal mobility, the government and the GST council
could make cars cheaper by temporarily reducing the
GST rate to 18% from the present 28% and reducing
the compensation cess rates.
Earlier this month, the finance minister presented a Rs
34.5 lakh crore Budget for 2021-22 in the backdrop of
the COVID-19 pandemic.
7. The Honda Motor Company, Ltd. is a Japanese public
multinational conglomerate manufacturer of automobiles,
motorcycles, and power equipment, headquartered in
Tokyo, Japan.
Sales revenue: 2,123.7 billion yen (a year-on-year decrease
by 46.9%) due primarily to a decrease in sales revenue
from all businesses.
Operating loss: 113.6 billion yen (a year-on-year decrease
by 366.1 billion yen) due primarily to a decrease in profit
related to changes in sales volume and model mix.
Loss before income taxes:73.4 billion yen
The impact of the COVID-19 is estimated to be
approximately 440.0 billion yen.
8. The Hyundai Motor Company, is a South Korean
multinational automotive manufacturer
headquartered in Seoul.
Sales revenue: ￦47,178,439 a y-on-y increase of
0.77% as per last year’s ￦50,953,432
Operating expense: ￦1,454,097 a y-on-y decrease of
22.5% decrease as per last year’s 2,062,596 due to
decrease in sales and increase in sales cost
Loss before income tax:￦51,110
Due to covid-19 Hyundai Motor India sales fall 47%
9. The Ford Motor Company, is an American multinational
automaker that has its main headquarters in Dearborn,
Michigan. It was founded by Henry Ford and incorporated
on June 16, 1903.
Sales revenue: $155.9B a y-on-y 2.74% decrease compared
to last year’s $160.3B due to primarily decrease in sales
Operating profit: $22.3B a t-on-y decrease of 3.46%
decrease compared to last year’s $23.1B.
Loss before income tax:$500M
Ford Motor has said it will close three plants in Brazil and
stop producing automobiles in the South American country
after the losses incurred due to COVID-19.
