Covid-19 and transformational megatrends in the European automotive industry: Evidence from business decisions with a Central and Eastern European focus

Abstract

Objective: The objective of the article is to reveal the effects of the Covid-19 pandemic on the businesses in the European automotive sector, with a special focus on Central and Eastern Europe. The further objective is to identify how these effects relate to the ongoing transformational megatrends in the sector (digitalisation, electrification).

Research Design & Methods: We have collected a large (>700 items) sample of relevant business decisions in the European automotive sector over four years (2017-2021), including those taken especially due to the Covid-19 pandemic. In our research, we transformed our qualitative inputs into a quantitatively analysable database through coding. Then, we applied descriptive statistical analysis on the retrieved data combined with qualitative analysis of the contents behind these data.

Findings: Based on our sample, our primary finding is that the Covid-19 pandemic does trigger the already existing trends of digitalisation and electrification in the European automotive sector. Very similar effects characterise the relatively less developed but deeply integrated Central and Eastern European periphery, although to a lesser extent. Obviously, the Covid-19 pandemic has induced numerous temporary business decisions, mainly plant closures. Layoffs occurred as well but these were not prevalent. Then, the second wave of the pandemic in early 2021 brought about the global shortage of semiconductor chips, which substantially affected the sector in Europe.

Implications & Recommendations: The longer lasting impact of the short-term pandemic-related European automotive business decisions is yet to be explored. Nevertheless, the global shortage of semiconductor chips is already showing signs of influencing the industry over a longer time scale, in Europe as well. Forward-looking, future-oriented, and brave responses to the pandemic can well be the keys for businesses to successfully overcome the negative effects of the Covid-19 pandemic.

Contribution & Value Added: Our sample of more than 700 items and a four-year-long timespan is in itself a unique collection of business decisions in the European automotive sector. In addition, by processing the inputs through coding, our sample becomes a treasury of potential information. In this article, we conduct an exploration along the events to which the decisions can be related, and along the decision types. We also look at the involvement of Central and Eastern Europe. Obviously, our ongoing primary research was ready to be extended to the firm level analysis of the effects of the Covid-19 pandemic, immediately upon its outburst.

Keywords

COVID-19, automotive industry, Central and Eastern Europe, digitalisation, electrification

Author Biography

Anita Pelle

Associate Professor at the University of Szeged. She holds a PhD in Economics (2010). She received a postdoctoral scholarship from the National Centre of Excellence of Hungary in 2013-2014 and has held a Jean Monnet Chair since 2014. She teaches on and studies the economy of the EU, the European economic integration process, the history of European economic thought, the EU internal market and its regulation, and lately, the internal EU divide. She has also been visiting professor at Université d’Angers (France), Université Jean Moulin Lyon III (France), Universitá di Pavia (Italy), Vysoká Škola Ekonomická v Praze (Czech Republic), Universitá di Macerata (Italy), and Uniwersytet Warszawski (Poland).

Gabriella Tabajdi

PhD Student and junior researcher at the Faculty of Economics and Business Administration of the University of Szeged. She holds an MSc in International Economy and Business (University of Szeged) and an MSc in International Business and Entrepreneurship (Universitá di Pavia). Her research focuses on the process of European integration, the internal market of the European Union, and international business and location decisions.

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