When the world of cars shut down in March everyone from potential customers to investors thought it would last one or two months. Now everyone on the business side is looking at scenarios of six- or nine-month shutdowns. Things took a dramatically downward forecast this last weekend. That’s when Donald Trump extended the social distancing requirements to April 30. With coronavirus cases on an increasingly vertical trajectory, April 30 may be wishful thinking. And right now there are no US sales of vehicles.
The Covid-19 pandemic is resulting in no US vehicle sales
We already know a global recession has begun which will completely tank vehicle markets everywhere. Factory shutdowns started in mid-March and can be expected to continue at least through April. More realistically the beginning of summer looks more promising.
But sitting in your home under the pandemic pall means nobody is thinking about buying a new vehicle right now. “We just don’t know when and how this ends, and that’s the biggest problem right now,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive told Automotive News. “All of this uncertainty creates a lot of angst and that has been spreading really like wildfire through the industry.”
When GM and Chrysler went bankrupt in 2009 US sales were 10.4 million
Back in 2009 when both GM and Chrysler went bankrupt adjusted sales of vehicles hit 10.4 million. LMC Automotive is predicting less than that for 2020. It sees something like nine or maybe 10 million sales. JP Morgan Chase is predicting a darker outcome of six or seven million.
With the end of the first quarter for 2020, the bad numbers are flying in like locusts in a wheat field. Some are not as bad as others but it’s all bad news.
Here’s just a sampling:
Over at FCA Alfa is down 13.6%, Fiat is down a whopping 50%, and Dodge is down almost 20%.
Over at GM Cadillac dropped over 15%. Buick tanked by 35%, but Chevrolet barely dipped being down just 3.8%.
Hyundai has been on a roll and yet it saw sales drop 11.3% while Kia barely felt the pain at only 1% down.
The Japanese companies are feeling the pain-some more than others. Nissan continues to see red dropping 30%, with Mazda only seeing a 4.5% drop. Toyota lost 8% last quarter, with Subaru down 16.7%.
Some companies like Ford and Mercedes have yet to report, but it’s safe to say they’ll all be down 10-40%. Porsche saw a 20.2% drop while VW fared better with only a 12.6% reduction.
In all this was to be expected. The questions remain how long will the dealers have to remain shut down, and how will the economy be once we see daylight? Unemployment figures are through the roof. Will things bounce back quickly or drag on for a year or two?
It’s hard to think companies like Alfa Romeo and Fiat are long for this world. At least not the US. Will the downturn have an effect on the Fiat Chrysler/PSA merger in the works?
The second-quarter is going to be spooky. Let’s hope by the end of it the lock-downs have passed, everyone is on the mend, and everything including car buying gets back to normal.