Fed Takes Emergency Steps as Virus Pushes Economy Toward Recession
The Federal Reserve cut its benchmark interest rate to near zero and unleashed an aggressive set of additional moves aimed at stabilizing markets as the new coronavirus pushed the U.S. economy toward a recession, reports The Wall Street Journal. The Fed, in a series of statements, said it would cut the federal-funds rate to a range between 0% and 0.25%, down 1 percentage point, and would buy $700 billion in Treasury and mortgage-backed securities, among other actions. “The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” the Fed’s rate-setting committee said in a statement Sunday. “The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses. The central bank will buy at least $500 billion in Treasury securities and $200 billion in mortgage-backed securities over the coming months to help unclog markets that grew dysfunctional last week, the central bank said. It said it would initiate the program, called quantitative easing, on Monday. Read more here.
As Coronavirus Spreads, Dealers Stay Open for Business
With gatherings canceled and people told to work from home, car shoppers are wary, reports Automotive News. And it appears there are plenty of consumers who don't want to spend time at dealerships as the outbreak in the U.S. worsens. Some dealers last week reported declines in customer traffic and sales. Mass cancellations of public gatherings, from conventions to classrooms, and the advice from health officials to stay home are likely to only further compress shopping activity. In the Seattle market, Toyota of Kirkland, east of the city, reopened Monday, March 9, after closing for several days for deep cleaning after a sales-side employee's March 3 diagnosis of coronavirus. At Honda of Kirkland, foot traffic seemed lighter last week after the store had its best new-vehicle sales day of the year the prior Saturday, owner Jason Courter, who is AIADA's 2020 Chairman, said. "There's a lot of ways we can handle things like this," he told Automotive News last week. "We can sell cars online, we can sell cars over the phone." Read more here.
Outbreak Clears Out Offices, Threatens to Decimate Sales
This isn't the kind of disruption the auto industry has been preparing to confront. According to Automotive News, the rapid spread of the novel coronavirus in the U.S. left automakers and suppliers scrambling last week to keep employees safe, dealerships open and factories running. In a matter of days, companies instituted sweeping travel bans and canceled high-profile product introductions. Executives instructed tens of thousands of salaried employees to work from home, and the UAW quickly began negotiations with the Detroit 3 for any quarantined factory workers to get paid leave. Auto shows and other industry events, including the Automotive News World Congress, were postponed or canceled as the number of people in the U.S. known to have contracted COVID-19 jumped into the thousands. While the full scope of the pandemic remains uncertain, the U.S. auto industry faces the potential for plunging new-vehicle sales and plant shutdowns that could cripple production, eat into profits and supercharge the chances of a recession. "The underlying economics of the industry are strong, but this threw a monkey wrench into it," Michelle Krebs, executive analyst at Autotrad Autotrader, told Automotive News. "We're holding our breath to see what happens." Read more here.
Cheaper Gas Prices Help Fuel Sales of These 25 Cars, SUVs, and Trucks
The U.S. auto market has been in decline in recent years, with vehicle sales dropping from 17.4 million in 2015 to just over 17 million in 2019. Not all vehicles have been affected though, reports USA Today. In fact, some types of transportation have boomed in popularity, their sales increasing by well over 50% or even 100% during that time. To determine the fastest growing car brands, 24/7 Wall St. reviewed information from auto sales data company GoodCarBadCar on the vehicles that experienced the largest percentage sales increase from 2015 to 2019. The fastest growing car brands in America represent the shift in consumer preferences towards larger vehicles – 18 of the 25 on this list are SUVs, and several others are pickup trucks. Analysts have asserted that Americans enjoy more cargo area and leg room and, with gas prices remaining relatively low, a lack of fuel efficiency has not deterred drivers from ditching sedans in favor of larger SUVs or crossovers. In fact, many Americans drive large vehicles weighing well over 2 tons. These are the largest vehicles people actually drive. Read more here.
Hyundai and Genesis Launch Job Loss Protection Programs for New Buyers
In 2009, to help new owners through The Great Recession, Hyundai created what it called Hyundai Assurance and Assurance Plus programs. Together, the allowed new buyers to return their cars within 12 months in case of an involuntary layoff, and made up to three car payments for new buyers in the same jobless boat. With the novel coronavirus Covid-19 already creating similar effects to the financial crisis, Autoblog reports that Hyundai has reinstated its Assurance Job Loss Protection program, and brought Genesis in on it with Genesis Cares Job Loss Protection. Hyundai will make up to six months of payments for anyone who buys or leases a new Hyundai from a Hyundai dealer, financed though Hyundai Capital, between March 14 and April 30, 2020 if the owner or lessee loses their job any time this year. The relief is available to any customer, regardless of employment history. On top of that, anyone who buys a new Accent, Venue, Kona, Elantra, Elantra GT, Tucson, or Santa Fe before April 30 and finances through Hyundai Capital can ask to have their payments deferred for 90 days. Read more here.
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