Impact of COVID-19 on the Automotive Relays Market
Automotive relays are designed to be used for switching a high current circuit by using a low current circuit. This application is used when a switch cannot handle the current required to switch a high current electrical system. The automotive relays industry has been impacted negatively due to the spread of the COVID-19 virus. However, the impact of this pandemic has been indirect due to restrictions on the import and export of automotive parts. The lockdowns imposed to control the spread of COVID-19 have had varied effects on different industries. The demand for automotive relays is estimated to decline this year, mainly because manufacturing operations have been put on hold in many countries, and the supply chains have been disrupted, resulting in reduced economic activity. The COVID-19 pandemic has created intense pressure on the globally integrated automotive industry, especially due to disruptions in the supply of automotive parts exported by China, the closure of assembly plants in the United States, and large-scale manufacturing interruptions across Europe. Besides, there are several challenges already being faced by the auto industry, such as strict government regulations and the need for heavy investments in the development of new technologies.
In the manufacturing industry, original equipment manufacturers (OEMs) and parts suppliers are yet to return to full production capacity. The slowdown in production and subsequent delays in deliveries might impact the market at multiple levels from postponed product launches and financially drained SMEs to dampened vehicle sales in the second quarter of 2020. The three leading automotive manufacturers—General Motors, Ford, and FCA, have decided to put operations on hold at their plants in North America. Further, Honda, Toyota, Nissan, and Tesla have also suspended production in North America, leading to a decline in the sales of automobiles and, consequently, in the sales of automotive relays. As per MRF, it is estimated that even after the pandemic is controlled, it may take at least two quarters to reach the pre-pandemic level of economic activity.