© 2020 SAP SE or an SAP affiliate company. All rights reserved. 1

THE IMPACT OF COVID-19:

A QUICK RESPONSE GUIDE FOR AUTOMOTIVE LEADERS

© 2020 SAP SE or an SAP affiliate company. All rights reserved. 2

While companies execute contingency plans

during this unprecedented time, opportunities

exist for quick recovery.

.

A Quick Response Guide for Automotive Leaders

During this time of unprecedented uncertainty, SAP

is concerned about the safety and well-being of our

families, colleagues, customers, partners, and the

many friends who make up SAP’s vibrant global

family. Our hearts are with those who have been

affected personally by the outbreak of coronavirus

(COVID-19), as well as the many communities

around the world that are facing extreme measures

in attempt to slow its spread.

For nearly 50 years, SAP has been honored by the

trust our customers, suppliers, and partners place

in us to run mission-critical business processes.

In today’s challenging environment, we want to

provide you more information on how to prepare

for the eventual recovery in the automotive

industry and what steps can be taken now to

endure the COVID-19 crisis.

© 2020 SAP SE or an SAP affiliate company. All rights reserved. 3

PREPARE FOR IMPACTS ACROSS THE AUTOMOTIVE ECOSYSTEM

IMPACTS TO THE MAKE SIDE OF AUTOMOTIVE

Since mid-January, significant impacts on both the make and sale of traditional automotive passenger, commercial

vehicles, and products have occurred, first with plants in China and then across Asia-Pacific going offline as workers

were isolated with various work-from-home and shelter-in-place mandates. While China exits the end of Q1 with a

gradual recovery of manufacturing operations, most of Europe and the Americas will face similar “rolling shutdowns”

planned into Q2 of this year. Many companies are planning to close plants and operations at the end of Q1 to allow for

employees and contractors to take care of their families and personal health and to help stop the spread of the virus.

During this time some idled plants will be sanitized, according to Automotive News on March 18, 2020..

However, as part of preparing for COVID-19, most countries identified many parts of the automotive industry

ecosystem as “essential business,” allowing the transit and flow of parts and supplies, including across many

international and trading borders. Suppliers should contact their customers to determine their updated production

and fulfillment schedules as needed on a plant-by-plant and operation-by-operation basis. Then, suppliers can be as

prepared as possible when production resumes and employees return to production operations.

IMPACTS TO THE BUY SIDE OF AUTOMOTIVE

While it is difficult to contemplate the impacts on the buy side of the automotive industry, there will be opportunity for

those who can weather the storm of reduced consumer spending balanced with the availability of historically low

financing options. Dealer analysts are expecting 0.7 ppts decline in the long-term price for new vehicles, as

highlighted in Forbes on March 16, 2020, which could deepen based on recovery scenarios.

Brand companies will have the opportunity to buy market share in many sectors as their capitalization will allow

through incentives, longer financing windows, and the introduction of high content and value platforms. Suppliers

should remain in constant communication with brand companies as there is a likelihood for the delay, pivot, and

acceleration of programs as the pandemic impacts reach steady-state levels.

Finally, the impact to the traditional showrooms remains a big wild card. Brand companies could see an uptick in

online car configurators, sales platform use, and prequalified finance application approvals as customers experience

early reluctance to return quickly at normal levels to automotive dealerships.

SPECIAL IMPLICATIONS FOR AUTOMOTIVE PARTS AND SUPPLY CHAIN

The automotive industry is supported by a number of strategic suppliers – remaining in constant contact with all of

them to ensure they apply comparable mitigation practices with their teams, while still maintaining service levels, is

imperative. Maintaining a database of updates and feedback from suppliers to ensure quick confirmation of

documented information outlining COVID-19 protocols and practices they are supporting will be important to

mitigate risk and prepare for recovery scenarios.

A particular area of opportunity for leaders in the automotive service and customer care space will be the availability

and tracking of critical spare parts. We have worked with a number of companies in this space and our most recent

Digital Aftermarket Study (co-sponsored with AASA) is available here. Coming out of the COVID-19 crisis, companies

serving this space will have an opportunity to review their capabilities in the area of availability tracking of critical

parts, how well their systems and processes handled the uncertainly of the crisis, and what preparations can be made

to minimize the impact of future supply chain disruptions.

© 2020 SAP SE or an SAP affiliate company. All rights reserved. 4

AUTOMOTIVE LEADERS CAN MAINTAIN

CRITICAL BUSINESS OPERATIONS

HOW CAN SAP HELP?

SAP has made several resources

available to its customers, partners,

and members of the industry:

Remote Work Pulse by Qualtrics

helps organizations understand how

their employees are doing and what

support they need as they adapt to

new work environments, helping

organizations close experience gaps

and maintain business continuity.

The SAP® Ariba® Discovery solution

allows for the quick search of

potential alternate suppliers as

needed. This commitment will help

buyers and suppliers connect quickly

and effectively and minimize

disruption caused by shipment

delays, capacity issues, and

increased consumer demand in

times of crisis.

SAP Litmos® solutions help support

businesses that are having to work

remotely. SAP Litmos is offering a

completely free remote readiness

and effectivity academy, with training

content for anyone, anytime,

anywhere. The ready-to-watch,

video-based courses are designed to

help establish best practices for

remote work, maintain the highest

levels of hygiene and mental wellness

for workers, and develop leadership

during times of change and

challenge.

Business Continuity Plans: Business

continuity plans respond to

disruptive incidents, such as COVID-

19, while safeguarding the health of

employees. These plans minimize

the impact on the delivery of

products and services to customers

across the automotive industry.

Automotive leaders can put

measures in place for all company-

owned and co-located operations.

Below are some of the steps that

SAP has focused on, but we believe

this advice is helpful to automotive

leaders on a company-wide as well

as industry-wide basis.

Remote Working : For many

individuals, work can be conducted

through remote connections, which

enables teams to work off-site for

most tasks. However, this may be

significant change in work

environment and team interaction

for some individuals. Automotive

leaders should consider the impact

of working at home on their teams,

how they interact, and if the proper

remote work tools are available to

them. Additionally, the lack of team

interaction can reduce the sense of

connectedness in the workplace.

Understanding the sentiment of

employees is critical, and using tools

such as Employee Work Pulse can

help management identify where

employees may be challenged given

these changes.

As remote access resources strain

at an ecosystem level, workers will

onboard to electronic platforms,

education will move online globally,

and streaming services such as

Netflix and Amazon Prime are

serving an upward spike in use.

Ensuring good connectivity for

remote workers across virtual

private networks (VPN)

environments for each company in

the automotive industry is needed to

ensure at least some degree of

business continuity in remote work

environments.

Learning will also need to change –

there needs to be online resources to

help educate workers who may be

having trouble transitioning to this

new work approach.

On -Site Safety: Where on-site work is

required, staff who have to be on-site

should be with the minimum amount

of workforce required. In addition,

there should be strict hygiene

protocols and protective equipment

available.

As automotive leaders, each

company will need to determine what

is appropriate in terms of precautions

based on their business operations.

Studio SAP | 68376enUS (20/03)

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