BMW CEO Sees 'Very Slow' U.S. Recovery After Corona Rebound in China
Reuters reports that BMW on Thursday said China sales of luxury passenger cars rebounded in April but the German premium car and motorbike manufacturer cautioned that other markets including the United States will be “very slow” to recover from the corona pandemic. “There is at least a glimmer of hope coming from China,” Chief Executive Oliver Zipse said in a speech held at the company’s annual general meeting, which is being held in a virtual format for the first time. “Economies in Europe have been affected to varying degrees by the pandemic, for instance. Demand for cars in countries like Spain, Italy and the UK will probably be very slow to recover. The same applies to the US,” Zipse said. The Munich-based manufacturer is gradually ramping up production and last week re-opened its factory in Goodwood, England, a plant in Spartanburg, United States and a motorcycle assembly factory in Berlin. Read more here.
Mazda Slumps to Quarterly Loss as Pandemic Torpedoes U.S. Rebound
Mazda Motor Corp. slumped to a net loss in the latest quarter as tumbling sales and factory closures forced by the COVID-19 pandemic hammered the bottom line, reports Automotive News. Operating profit fell 55 percent to 11.3 billion yen ($104.8 million) in the fiscal fourth quarter ended March 31, the automaker said on Thursday in its earnings announcement. At the net level, Mazda plunged to a loss of 20.3 billion yen ($188.3 million) in the January-March period, from a net income of 27.8 billion yen ($257.9 million) a year earlier. Revenue declined 7 percent to 874.0 billion yen ($8.12 billion) in the three months. Global retail sales slid 20 percent to 313,000 vehicles; wholesale volume fell 9 percent to 318,000. Citing uncertainty about the business environment as the world grapples with the COVID-19 pandemic, Mazda withheld a forecast for the current fiscal year ending March 31, 2021. Read more here.
Penske Suspends Dividend to Preserve Cash
Penske Automotive Group is suspending its dividend in a move the nation's second-largest new-vehicle retailer said will save about $34 million in cash during the second quarter, reports Automotive News. "The decision to suspend the quarterly dividend is consistent with the other measures the company has implemented to mitigate the impact of COVID-19, including a hiring freeze, the deferral of approximately $150 million in capital expenditures and the furloughing of 57 percent of its worldwide workforce, among others," CEO Roger Penske said in a statement Wednesday. Under several cost-cutting moves launched in March, Penske and Penske Automotive Group President Robert Kurnick are forgoing salaries for the duration of the coronavirus pandemic, while other executives and managers have taken pay cuts. In an earnings call last week, Penske said the company expects to trim $75 million to $100 million in expenses annually. The dividend suspension is a cash savings and differs from other expense reductions, a Penske spokesman said. Read more here.
7-Year-No-Interest Loans: What It Takes to Sell Cars in a Pandemic
Unemployment is mounting. The economy keeps falling deeper into a recession — or worse. The coronavirus continues to spread. But car sales, surprisingly, are climbing, reports NPR. Auto sales tanked in March — to 80% below their expected levels. And they remain well below normal. But while much of the economy continues its free fall, car sales have been on the rise for six straight weeks, according to data from J.D. Power. The steady improvement is fueled, in part, by big incentives for customers who can afford to buy. Dealers are promoting 0% loans for as long as seven years. And eye-popping incentives on new cars might be sticking around for a while, too, if the economy continues to be stuck in suspended animation. Read more here.
Mexico to Reopen Auto Factories, Helping U.S. Carmakers Struggling to Recover from Coronavirus
As automakers prepare to restart U.S. manufacturing, potential parts shortages south of the border appear to have been diverted, reports CNBC. Some Mexican auto factories are due to open as soon as Monday, in line with large U.S. assembly plants for the Detroit automakers. At $93 billion, vehicles were the top import to the U.S. from Mexico in 2018, according to federal data. The Center for Automotive Research reports $60.8 billion, or 39% of auto parts used in the U.S., were imported from Mexico in 2019. “Mexican content is a significant issue [automakers] must resolve to restart vehicle production,” said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research. “Synchronization of the automotive restart cadence with Mexico is critical.” Important vehicles imported to the U.S. from Mexico include pickup trucks by General Motors, Fiat Chrysler and Toyota Motor as well as luxury vehicles from Mercedes-Benz and Audi. Read more here.
CNA National Lifts Future Contract Guarantee Time Limits for Contract Holders
As the auto industry struggles to recapture sales during this difficult time, CNA National is making a special consideration for its dealerships’ customers whose service contracts have an expiration date of March 1, 2020, through May 31, 2020. Knowing that many of those people couldn’t visit the dealership to make arrangements for a new contract, the company is alleviating the end-date restriction on its Future Contract Guarantee and allowing contract holders to purchase a new VSC for up to 90 days after the expiration date. This is another example of how CNAN is striving to support its dealers now and into the future. To learn how you can work with this industry leader, visit www.cnanational.com or call 800-345-0191.
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