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Automotive sector: a recovery driven by the energy transition?

Terminal roulier du HavreThe automotive sector, although weakened by the health crisis, has managed to adapt and put its production capacity at the service of health equipment. The logistics of the sector have also been organised to contain the impacts of the crisis. So what are the prospects for this flagship sector today?

A sector that has not been spared by the crisis

The automotive market has been hit very hard by the health crisis. Production stopped abruptly in France and around the world. Plant shutdowns or slowdowns represent a production loss of more than 2.4 million vehicles in Europe.

The shutdown of industrial sites has not been without consequences for jobs in Europe: 1.1 million jobs have been affected by plant closures in car manufacturing. Not to mention the impact on jobs throughout the automotive supply chain.

With the closure of concessions during lockdown, sales have also come to a standstill. New car sales fell by 26% in Europe in the first quarter of 2020. Forecasters expect global sales to decline by about 22% for 2020, but they are expected to rise again as early as 2021, although they will still remain below the 2019 level.

A logistics organisation adapted to the context

In maritime terms, the health crisis has only added to tensions in a sector already in difficulty since the 2008 crisis. As a result of decline in demand for shipping, volumes of vehicles handled are expected to decline in 2020. Ro-Ro shipping companies have adapted their operations by reducing the frequency of their maritime services.

In this complicated context, HAROPA ensured the operational continuity of Ro-Ro services throughout the whole lockdown period.

As such, maritime activity never stopped at the Le Havre Ro-Ro terminal. Handlers continued to load and unload Ro-Ro vessels while applying the necessary health measures. The port  even welcomed vehicle traffic initially destined for other French - or even European - ports whose activity was at a standstill or their terminals saturated.

Vehicle finishing activity also continued as long as the dealerships were open and operators could deliver vehicles to them.

With 104 hectares filled up, the Ro-Ro terminal allowed operators to store as many vehicles as possible during the crisis. Additional berths on the port area of Le Havre have also been offered to some shipping companies pending a resumption.

The automotive industry engaged in the fight against the crisis

In the face of the crisis, a large number of car manufacturers have helped by organising the conversion of certain industries to produce health equipment.

So there are many examples of actions taken by players in the sector:

  • Repurposing their production tools to put their facilities and industrial know-how to good use manufacturing care equipment;
  • Making labour available to respirator manufacturing plants to meet urgent needs;
  • Providing vehicles for first responders and front-line volunteers.

A comprehensive recovery plan for the sector

Within this complicated context for the sector, the French government has committed a plan to support the automotive industry to the tune of 8 billion euros, while being part of the ecological transition. A series of measures aimed at safeguarding the French automotive sector and helping it bounce back have thus been announced.

First, the government will put in place massive financial guarantees for businesses. As a result, Renault will benefit from a guaranteed loan from the State of 5 billion euros.

Other major announcements to support demand while renewing the French fleet in favour of clean vehicles: the increase in premiums for converting polluting cars and increasing the bonus for purchasing electric vehicles. These two measures, amounting to 1.3 billion euros, have the dual objective of selling unsold stocks and encouraging purchases of new electric vehicles that emit less CO2.

Finally, this plan also includes measures to encourage French production, in particular that of electric vehicles: a fund amounting to one billion euros has thus been announced.

What are the prospects post-crisis?

To date, automotive activity is slowly restarting, both in terms of production with the gradual recovery of factories, and in terms of sales with the reopening of showrooms that are once again receiving deliveries from operators.

Ro-Ro maritime activity is returning to an almost normal pace. As proof of the sector's confidence in the recovery, HAROPA plans to expand its Ro-Ro terminal by 20 hectares.

 

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