Auto Industry Could See 'Cruel Summer' Amid Economic Uncertainties, Analysts Say

First Up 06/26/20

Chairman's Blog: Count on AIADA

We fill out the census, because failure to do so could result in losing valuable representation in Washington, D.C., and missing out on important government resources for your community. As Americans, we stand up to be counted. It is equally important, as international nameplate dealers, to stand up and be counted, writes AIADA Chairman Jason Courter. Right now, the best way to stand up and be counted as a dealer is to use AIADA to strengthen your relationship with your legislators. Harness the power of our Dealer Visit Program (along with appropriate social distancing measures, of course) to ensure that your lawmakers understand what you do and why your small business is crucial to the health of their congressional district. Our stores count. Our employees count. Our tax and charitable contributions count. It’s time we make sure WE are counted. There is no dealer census. But there is AIADA. Count on them to make sure Washington, D.C., accounts for our industry. Read more here.

Auto Industry Could See 'Cruel Summer' Amid Economic Uncertainties, Analysts Say

The Detroit News reports that there could be a "cruel summer" ahead for the auto industry amid an uncertain economic environment, low inventory levels, and COVID-19 cases increasing in some parts of the country, Cox Automotive analysts said Wednesday. Almost halfway through 2020, automakers are just now returning to production levels equivalent to before the two-month shutdown resulting from the pandemic. They have offered 0% financing and other incentives to keep up sales, but the industry that represents nearly 4% of the national economy could be in for a long recovery more like Nike's swoosh than a "V" or "U," said Jonathan Smoke, Cox's chief economist. "We know we're in for a rocky road on unemployment, consumer credit, consumer sentiment, and oh, yeah, election politics," he said. The contentious circumstances of the election are sure to be a "wet blanket" because of the contributing uncertainty. Read more here. 

Volvo, Waymo Partner to Build Self-Driving Vehicles

Automotive News reports that Waymo and Volvo Cars have agreed to develop a self-driving electric vehicle designed for ride-hailing use, as part of a new global partnership, the companies said Thursday. Waymo, a unit of Silicon Valley's Alphabet Inc., said it will be the exclusive global partner for Volvo Cars for developing self-driving vehicles capable of operating safely without routine driver intervention. Waymo will focus on the artificial intelligence and certain hardware, including cameras, lidar, and radar, for the automated "driver." Volvo will design and manufacture the vehicles. The companies said Waymo will work with Volvo's global brands, including Polestar and Lynk & CO. Volvo, owned by China's Zhejiang Geely Holding Group, has a separate agreement to deliver vehicles to ride-hailing company Uber Technologies Inc. that Uber will equip to operate as self-driving vehicles. Volvo Cars is continuing to deliver vehicles to Uber. Read more here. 

May Consumer Spending Likely Rebounded, but Virus Surge Poses Economic Threat

Consumer spending likely rebounded last month, in what would be a sign that the U.S. economy is slowly recovering from the coronavirus-induced recession, reports The Wall Street Journal. But a recent increase in coronavirus infections threatens any recovery. The Commerce Department is expected to release its monthly report on household income and spending at 8:30 a.m. ET Friday. Consumer spending provides about two-thirds of economic demand in the world’s largest economy. Spending crashed in April as many businesses remained shuttered under state and city orders to prevent spread of the virus. Many state economies reopened in May, and a surge in household income from the federal stimulus bill and unemployment insurance gave households money to spend. Read more here. 

Aston Martin Turns to Stock Offering to Bolster Capital

Aston Martin said it would issue new shares worth up to 20 percent of its existing equity capital as the automaker seeks additional funds to ride out the coronavirus crisis. According to Automotive News, the automaker has seen its share price plummet since floating in October 2018, from 19 pounds ($23.57) to about 70 pence. New owner Yew Tree, led by Canadian billionaire Lawrence Stroll, will pick up 25 percent of the offering, with Investindustrial, which has steadily reduced its holding in the company having previously been the main shareholder, planning to buy about 8 percent, the company said. Aston Martin, which in May posted a deep first-quarter loss after sales dropped by nearly a third, also said its sales are expected to fall further in the second quarter compared with the first. The company has been cutting jobs and streamlining its operations as it seeks to bring its cost base in line with its move to reduce sports car production levels. Read more here.

Webinar: An Update on COVID-19's Impact on U.S. Auto Sales

Cox Automotive Senior Economist Charlie Chesbrough returns to AutoTalk for an update on July 9 at 2:00 p.m. EDT. Topics to be reviewed include: 

  • Economic forecast and impact going into the third quarter

  • Consumer sentiment and buying behaviors 

  • Stock market, interest rates, and employment 

  • An outlook for vehicle sales

  • Current view of new and used retail sales and price

Click here to register.

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