Covid-19 is causing changes to traffic patterns globally but long time frames and robust supply chains will keep the automotive sector motoring.
Having its technology embedded in millions of cars around the world puts Irish company Cubic Telecom in the driving seat when it comes to industry insights. Right now the outbreak of Covid-19 is resulting in trends across the automotive and transportation sectors which could be with us for some time, believes Richard Springer, the company’s Director of Commercial Strategy.
The global connectivity platform company offers solutions for leading Internet of Things (IoT), machine to machine (M2M), and device manufacturing companies across the globe. Its customers in the automotive sector include Audi, Volkswagen, and Skoda, as well as Panasonic Automotive, one of the world’s largest manufacturers of car infotainment products.
They also include German electric car maker e.GO Mobile and Microsoft, whose intelligent solutions deliver end-to-end automotive manufacturing support.
In the transport and logistics sector, the company works with a variety of innovators, from Irish drone deliverer Manna Aero to UK electric van maker Arrival and US satellite communications company Kymeta. It’s a customer base that gives fast-growing Cubic Telecom a perfect vantage point from which to see the post-Covid road ahead.
“We get data from so many cars around the world, we are in a good position to see what is going on,” says Springer.
Reducing rush hour
One of the immediate impacts of Covid-19 and the lockdowns that followed internationally was a significant change in driving patterns. “The daily rush hours disappeared very fast worldwide. A day after the lockdowns were imposed you had half the numbers of cars on the road, so the short term impact was massive,” he explains.
As countries adapted to the changes, however, new motoring patterns began to emerge. While the traditional morning and evening rush hours reduced, different peak driving phases arose at various parts of the day. In the late afternoons, typically between 3 pm and 5 pm, these included short runs for essential goods such as shopping.
A second new phase arose in the early evening, attributable to social visits and trips to parks or gyms, if open, for exercise.
Trips on public transport fell, however, indicating that people want to travel but prefer to do so in their own car during the pandemic. Trips to these mainly non-city-central destinations, such as for exercise, better suit private motoring than public transport too, he suggests.
Making ‘remoting’ work
With elements of remote working likely to continue, such traffic patterns are likely to remain a feature for some time, possibly “two to three years” he predicts.
Cubic Telecom partners with leading automotive brands and helps them to connect and monetize their devices on a global scale. It also enables these brands make informed decisions based on data and predictive analysis available through its PACE platform.
Its solution enables customers to remotely monitor devices, providing diagnostics, or making over-the-air software updates, eliminating the need for drivers or device users to travel to garages or support centers.
The advent of Covid-19 saw remote working rolled out at both speed and scale. The impact of this mass roll-out will result in a longer-term change to commuting patterns, he predicts.
But while car sales have fallen, China, an early casualty of the virus, has already seen its automotive industry show some signs of recovery.
Avoiding public transport
“It had been thought that demand for car sales would dry up but with people nervous about traveling on public transport, they want to go in their own car. We have also seen some pent up demand there after the lockdown,” says Springer.
Overall, however, “the car industry in China will still be down, it is estimated, by between 20% and 30% this year.”
The fact that Europeans may be allowed to cross borders for their summer holidays by car, but not by plane, will also have an impact on travel patterns.
Looking further ahead, while the health impact of Covid-19 will abate, its impact on economies will take longer to heal. “The economic impact will last longer than the Covid impact,” he predicts.
Dampened demand for travel will continue to affect not just airlines but car hire and major transport companies, as has already been seen. Some will be “in serious trouble over the next while and in some cases business models will change as – kicked off by Covid – people relook at the way in which the travel industry operates.”
Cubic Telecom’s main market, auto manufacturing, is better positioned to weather the bumpy route ahead, however. This is thanks in part to the fact that carmakers work on long term time frames of up to five years.
This will help insulate it from some of the shorter term gyrations of the market, he believes, including in France, which saw a 95% fall in car sales in April.
“When consumer demand fell 12% for cars in 2008, it was an unprecedented event. This year we are looking at likely fall off figures of around 22%,” he says.
Supportive supply chains
The industry’s supply chains will remain robust.
“There may be a little more centralization but these companies are not going to suddenly build component manufacturing facilities. Supply chains in this industry are driven by cost per component. The job of procurement is to get the cost of each element as low as possible, and as ‘in time’ as possible.”
The auto sector is one that relies on a complex and finely balanced supply chain. Regardless of a pandemic or economic cycles, “that won’t change,” he says.
Accelerating new opportunities
In the meantime, Cubic Telecom will continue to help clients in a range of sectors, including energy and agriculture, to secure new opportunities. For example, the coronavirus, and the resulting reduction in European travel, has had a major impact on Europe’s mobile operators, which have seen a drop in data generated from roaming traffic.
Cubic’s local solutions can help. “We can in fact provide the mobile operators with a steady flow of data traffic onto their networks generated by Cubic connected vehicles,” says Gerry McQuaid, Cubic Telecom’s Chief Commercial Officer.
“The Cubic automotive solution is not dependent on drivers crossing into other countries, even though we are known for enabling this feature. Therefore we are assisting the operators with a steady revenue stream during this challenging time.”