Rising "ATMANIRBHAR" sentiment in the Auto-industry - THE ORIGIN

US and China are two of the most important factors that have to be considered when there is a global economic fluctuation as they are the key contributors to the global GDP. If anything seriously goes wrong between the two countries, there is always a global impact which affects every sectors of the different countries in the world. 

China is Known as a destination for low price engineering and is a global supplier of numerous raw materials and finished goods. US on the other hand is a global superpower, which exerts its influence on a global scale.  

In the year 2018, US confirmed that the trade tensions between US and China have broadened and confronted China over its alleged interference in the US politics. Due to this countries such as UK, Germany, India, Singapore and many others that have sought to balance constructive ties with both US and China are under increasing pressure to choose which superpower to support. Now, when Washington started pressing its allies to limit market access to Chinese products, the allies fear that this cold war could give way to hot conflicts in North Korea and South China sea, which is of great significance in the global trade.

On the other hand, in the year 2017, the British government announced its separation from the European union (called the BREXIT), and stated that it would start the withdrawal process in the course of the following year. This in turn increased the apprehensions among the European automakers, who hold a major stake in the automobile technological developments, as it would lead to the changes in the laws and trade policies. 

All these events created a volatility in the global automobile market, and with trade tensions further escalating due to the tariff war between US and China, it only added to the magnitude of impact. Global supply chain networks were intended to achieve lowest cost. Many companies had setup centralized manufacturing facilities in the lower cost economies, where final products are assembled competitively and shipped to higher income markets( Eg: many parts and electrical used in the automobiles are sourced from china)

Due to the unpredictable nature of the global politics the auto-industry started planning changes toward more flexibility and multilevel sourcing. It was intending to establish alternative, flexible and adaptable supply chains, while trying to mitigate the vulnerabilities arising from having a single source. OEMs, component manufacturers and auto sub system assemblers are now looking to strategically source assemble and deliver from within their regional border and are also reconsidering setting up of regional logistic hubs.

Amidst the rising sentiment for localization by the auto manufacturers COVID-19 entered the picture, whose impact made it more definitive and an urgent course of action.