Congress Conversations Supplement - S4

FORGING
COMMUNITY
AMID

CRISIS
While companies today are better positioned
financially than they were during the Great
Recession of 2008 and 2009, overleveraged
businesses will find it difficult to withstand the
fiscal shock waves created by the pandemic.

Although the COVID-19 pandemic prevented us
from gathering for the 44th annual Automotive News World Congress in Detroit, we - like
so many businesses - took things virtual instead with a series of weekly discussions that we
dubbed Congress Conversations.

"I would expect there will be bankruptcies,
consolidations and restructurings," Casesa said.
"Merger activity will get more intense ... because
smaller companies can't afford to invest in new
technologies while maintaining their legacy
technologies."

During these eight virtual town hall meetings,
experts from all facets of the auto industry
weighed in with critical insights on and analysis
of trends and issues stemming from this
unprecedented global pandemic. These virtual
get-togethers were a great success, garnering
more than 8,600 total plays online, including
6,000 live views.

Moreover, cash shortfalls will force companies
to be more selective about which technologies
they opt to keep developing. The upshot: More
specialized product portfolios, Telang predicts.

On the following pages, we're sharing some of the
key trends and thought-provoking insights that
emerged from these virtual conversations. We
hope you find these experts' perspectives helpful
as we all negotiate the tumultuous "new normal"
- and that we see you in person the next time
around.

"Investments in technology will be subject
to more rigorous ROI calculations," he said.
"Technologies without an immediate ROI will
be deprioritized. We'll also see partners getting
together that we haven't seen in the past in order
to share the investment burden."
A survey of North American automotive suppliers
conducted by the Automotive News Data Center
during Congress Conversations appears to
validate Telang's predictions. More than threefourths (78 percent) of respondents indicate
they are likely adjusting budgets for capital
expenditure projects and R&D.

New Paradigms:
Reassessment, Retrenchment and
Restructuring
In the wake of the COVID-19 pandemic, the
American auto industry will grapple with a wave
of consolidations, mergers and restructurings as
financially strapped companies strive to share the
burden of technology research and development
costs, as well as resolve their own liquidity woes.

Companies will be faced with hard decisions,
Casesa said. "On a macro level, big incumbents
will have no choice but to reduce their overall
spending levels. ... While the boat is in the water,
you have to focus on patching that hole."

That's the assessment of Ray Telang, U.S.
automotive leader at PwC; and John Casesa,
a senior managing director at Guggenheim
Partners and former group vice president of
global strategy at Ford Motor Co.

The pandemic also will likely reverse a roughly 30year trend toward global partnerships and supply
chains in favor of regional and national affiliations.
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Congress Conversations Supplement

Table of Contents for the Digital Edition of Congress Conversations Supplement