Auto Giants Swing to Loss During Coronavirus-Driven Downturn

First Up 07/31/20

#DealersDoGood Friday

In the midst of a challenging time for our industry, AIADA remains focused on how dealers are helping the communities in which they operate. Each Friday, we highlight a few in FirstUp. Check out this week’s examples of dealerships who are going above and beyond to give back. 

  • Kolosso Toyota in Appleton, Wisconsin, is providing goodie bags to essential hospital workers. These bags include Mary Kay products and other self-care products. Click here for a picture. 

  • Findlay Subaru St. George in St. George, Utah, recently made a large donation to the Southwest Wildlife Foundation of Utah. Dealership General Manager Dave Gourley presented a check for $12,444 to the foundation. Read more here. 

  • Schaller Auto Group in Hartford, Connecticut, is providing mobile hotspot solutions for area students who are conducting virtual learning during the COVID-19 pandemic. Read more here. 

  • The Detroit Auto Dealers Association Charitable Foundation recently announced $300,000 in grants for eight nonprofits serving children and youth in southeast Michigan. Read more here. 

If you or a dealership is doing something great, let us know by clicking here, or join us on Twitter by tagging @AIADA_News and using the #DealersDoGood hashtag.

Auto Giants Swing to Loss During Coronavirus-Driven Downturn

Ford Motor Co. posted a $1.9 billion operating loss in the second quarter, the latest global automaker to report steep losses from factory closures as the pandemic’s financial fallout on the car business comes into focus, reports The Wall Street Journal. Still, global automakers this week said they expect profits to return in coming months—barring further factory disruptions related to Covid-19—as the restart of production has mostly gone smoothly and buyer demand has been stronger than analysts expected when the crisis hit. Ford’s second-quarter result was far better than the $5 billion operating loss the company signaled in April, when its U.S. factories were idled amid Covid-19 lockdowns. Volkswagen slashed its proposed dividend Thursday after swinging to a net loss in the second quarter, but the world’s biggest car maker by sales also said there were signs a recovery was under way in markets from Western Europe to the U.S. Volkswagen posted a net loss of €1.61 billion ($1.9 billion) in the second quarter ended June 30, compared with a net profit of €3.96 billion in the same period a year earlier. Read more here. 

Carmakers Borrow Industry-Leading $132 Billion to Weather COVID-19

The automotive industry has borrowed $132 billion since March as the spread of the coronavirus curbed demand for cars and closed factories, reports Bloomberg. The sector is the largest user of funds put in place to ease the impact of the pandemic. The amount consists of $79 billion in new loans and $53 billion in drawdowns from existing credit lines. Facilities linked to the pandemic account for almost 80% of overall loan borrowings by the sector in the year to date. Loans for virus relief, which peaked during the March-to-June period, eased this month to less than $100 million as some companies began paying down their loans. Ford Motor Co. is the latest company to repay part of revolving facility drawn previously, according to an Bloomberg News report earlier this week. The automaker said Thursday its second-quarter operating loss was less than half the $5 billion deficit it had predicted, due mainly to undiminshed demand for its sport utility vehicles and trucks. Read more here. 

Mazda Braces for Full-Year Operating Loss as Sales Slump

Mazda Motor Corp. forecast a record full-year operating loss Friday as the Japanese automaker continues to be pummeled by falling vehicle sales due to the COVID-19 pandemic, reports Automotive News. Japan's No. 5 automaker anticipates a 40 billion yen ($383.5 million) loss for the fiscal year to March, joining a growing number of automakers which expect annual losses after the virus shuttered vehicle plants and kept customers away from car dealerships. Mazda posted an operating loss of 45.3 billion yen ($433 million) for the April-June quarter, its weakest in 11 years, due to a 31 percent drop in vehicle sales in the period. For its fiscal year ending in March, Mazda anticipates an 8 percent fall in global vehicle sales to 1.3 million units, its lowest in seven years. The automaker said it would forgo paying a dividend this year. Read more here. 

Honda Orders Office Workers to Ohio Assembly Line

Honda Motor Co. is requiring office employees to work the production line at its Marysville, Ohio, plant because of COVID-19-related worker shortages, reports Automotive News. Departments with affected employees include purchasing, accounting, and quality. A Honda spokesperson told Automotive News in an emailed statement that COVID-19-related “precautions, combined with strong demand for our products, has created the need to ask some support associates to work temporarily in the production area.” The spokesperson added that Honda has taken similar measures in the past. In a July 23 email obtained by local radio station WOSU, Honda told employees that the decision is due to "difficulty in attracting and hiring the needed amount of associates," citing COVID-19 cases in plants and the CARES Act's $600 unemployment benefit deterring temporary hires. "The indirect functions will need to continue to support the product line," the email said. "We are still trying to recover from lost build time between March and May. It is critical that we regain normal inventory levels to assure we have sufficient products for our customers." Read more here. 

Beltway Talk Podcast: Mid-Year Dealer Review with Cody Lusk

Listen to the latest episode of Beltway Talk to hear AIADA President and CEO Cody Lusk discuss AIADA’s recent work on behalf of dealers this summer, why he’s encouraged at how dealers are forging ahead and serving their communities in the midst of a pandemic, and what he sees through the rest of 2020. You’ll also find out why it is more important than ever for dealers to be involved in what lawmakers are doing in Washington, D.C. Listen in and subscribe here. 

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