In Retail, Jobs May Be Gone for Good
Franchised dealers terminated or furloughed about 300,000 employees, or more than a quarter of the industry's work force, during the first crushing months of the U.S. coronavirus outbreak, and about half of dealership jobs were reduced or altered in some way, reports Automotive News. Dealership employment started to rebound as states began easing stay-at-home restrictions and retailers leveraged federal Paycheck Protection Program loans meant to support payrolls. But even as retail sales came roaring back in May and June, there is reason to believe the rush might be temporary. When will pent-up demand from consumers who stayed home in March and April subside? How badly will falling inventory levels for both new and used vehicles crimp sales? Improved productivity brought about by the acceleration of digital retailing and fears about spiking coronavirus cases also make many retailers hesitant to restore staffing to pre-virus levels, dealers and experts say. Read more here.
June Sales Expected to Be Down, But Improvement Over May
Despite the improved ease of online shopping and buying a new vehicle, the economic issues from the pandemic are still negatively impacting auto sales, reports The Detroit Bureau. Anyone wondering if U.S. auto sales would experience a June swoon after two months of improving results can put those thoughts out of their heads, according to three prominent automotive consultancies. J.D. Power and LMC Automotive revealed they expect sales will be down about 25% in June to 1.09 million vehicles, supporting a similar forecast by analysts at Edmunds, who expect a drop of 28.7% this month. “The industry continues to show signs of recovery in June,” Power and LMC said in a statement on Friday. “The combination of pent-up demand, states relaxing coronavirus-related restriction and elevated incentives are all providing a tailwind for the industry.” Read more here.
Toyota Ramps Up Japan Plants to Fuel the U.S. Market Comeback
Toyota Motor Corp. will open the taps on production in Japan to expedite shipments to the U.S., where local factories are still slowly ramping up and inventories are evaporating, reports Automotive News. Toyota's return to production in Japan occurred quickly, after dialing back plans in the face of diminished sales as a result of the COVID-19 pandemic. Toyota now plans to ramp up Japan production to 90 percent of pre-pandemic levels, and it is prioritizing models that it exports to the U.S. Toyota's Japan production was down 40 percent in June, as the company responded to plunging demand. But for July, volumes will be down only 10 percent. Giving new priority to U.S. retailers mostly will affect production that had been earmarked for Japan, mainland Asia, and Middle East markets, Toyota said. Read more here.
Ford Will Allow Some New Customers to Return Vehicles if They Lose Their Job
Some new Ford Motor Co. customers can lease or purchase a vehicle with peace of mind, knowing they can return it if they lose their job, reports The Detroit News. The Blue Oval on Monday rolled out a new program in which customers who lease or purchase a vehicle with Ford Credit financing can return it if they experience job loss within a year of the transaction. Enrollment in the program extends through Sept. 30. As it launches a recovery from the coronavirus crisis, Ford is looking to spur sales amid double-digit unemployment and as the country grapples with a surge of new COVID-19 cases. "We feel like right now, the economy is at the stage of recovery where people want things to be back to normal, they want to buy, but they're still a little nervous about what the future holds," Mark LaNeve, Ford's vice president of U.S. marketing, sales and service, said in a statement. "We want them to know we understand that, and we're here to support them in their buying decisions." Read more here.
Nissan CEO Vows to Restore Finances, Roll Out New Models
Nissan Motor Co. will need to return to positive cash flow and bolster its cash position to start paying out dividends again, Chief Executive Officer Makoto Uchida told shareholders at the Japanese automaker’s annual meeting on Monday. According to Bloomberg, Uchida, who took the helm of Nissan in December, said his goal is to reach positive cash flow during the latter half of the next fiscal year, or October 2021 through March 2022. Nissan is implementing a pay freeze for senior managers for at least six months as it seeks to turn the business around, he said. Nissan is seeking to cut 300 billion yen ($2.8 billion) in annual fixed costs and introduce new models to jump-start sales after reporting a 671 billion yen loss for the latest fiscal year, the first deficit in a decade and the biggest in 20 years. The coronavirus pandemic has added to Nissan’s pain, following a turbulent year caused by the 2018 arrest of former chairman Carlos Ghosn. 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:
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Economic forecast and impact going into the third quarter
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Consumer sentiment and buying behaviors
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Stock market, interest rates, and employment
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An outlook for vehicle sales
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Current view of new and used retail sales and price
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