Mix of Relief, Concern as Dealerships Open Doors

First Up 05/18/20

Mix of Relief, Concern as Dealerships Open Doors

What lies ahead for U.S. dealerships as they slowly come back up to speed will be anything but business as usual, reports Automotive News. Conversations across the country last week found dealers grateful for the sight of shoppers as well as relieved by sales declines that would have once been viewed as disastrous. "I don't think anybody really knows what's going to happen, but we have communicated to our members that this isn't a permanent condition," said Brian Maas, president of the California New Car Dealers Association, whose members got a welcome green light to open showrooms on May 8. "Things could hopefully get better, but it's possible we could retreat, and there may be further restrictions down the road." For now at least, more areas of the U.S. are relaxing coronavirus-related restrictions, a pattern reaching states that initially imposed more stringent requirements on physical auto sales. Kentucky, New York, and Pennsylvania, in addition to California, are lifting bans on in-person sales, albeit with restrictions, stoking dealer hopes that the bleakest days of the COVID-19 era may be in the past. Read more here.

How the Coronavirus Will Change the Way We Buy Cars

Car sales are inching forward, reports Bloomberg. Though new-vehicle sales are down 47% year-over-year, and rental, commercial, and government fleet purchases have fallen 70% over the same period, too, the auto industry has enjoyed small amount of good news. Average incentive spending reached $4,296 per vehicle in April, according to Cox Automotive, up 7% from March and up 26% year-over-year. Sales of classic cars are booming. Factories across Europe and the U.S. have begun to reopen. So have dealerships, though they are reeling from the loss of 265,000 jobs, according to Cox Automotive. The outbreak has significantly changed how we think about—and shop for—the cars in our lives. While some changes are temporary, others are most likely permanent, according to Bloomberg. Read more here.

It's Trying Times for U.S. Auto Suppliers as Plants Reopen – the Industry Needs at Least $20B

The U.S. auto supplier industry was facing challenges heading into this year of slowing sales and investing in emerging technologies such as all-electric and autonomous vehicles. Then the coronavirus pandemic hit, turning a difficult situation into a dire one for some companies, reports CNBC. Unlike major automakers, which have billions of dollars in cash available, many suppliers weren’t prepared for such a drastic downturn in the economy. The coming weeks, as automakers attempt to reopen and ramp-up U.S. factories, will be trying times for suppliers, particularly small-to-medium-sized companies. Julie Fream, CEO and president of Original Equipment Supplier Association, a trade group representing hundreds of auto suppliers, said the industry needs an influx of around $20 billion to $25 billion as soon as possible to avoid widespread issues, including bankruptcies. Read more here. 

Coronavirus Bolsters Car Ownership as Consumers Rethink Shared Rides

With widespread concern about coronavirus contagion, some say they’re seeing a revival of consumers’ interest in owning their own car, reports The Wall Street Journal. The Covid-19 pandemic has caused people from Beijing to Boston to shun public trains, trams, and buses, as they fear contracting the disease from contact with strangers in public places. Many car owners who previously had left them home in favor of shared or public transportation are now taking their own vehicles out of safety concerns, analysts and executives say. That instinct has produced a bright spot in an otherwise bleak sales outlook as the coronavirus batters the economy. Some car makers say new car sales in China, where recovery in the auto industry is beginning, are driven in part by new car shoppers looking to avoid the risk of public or shared rides. Stephan Wöllenstein, chief executive of Volkswagen Group China, said that many are first-time car buyers, noting that they made up about 60% of the company’s China sales last month. Read more here. 

Dealers Donate Time, Services, and Goods

When an older woman in Charlottesville, Va., had her groceries delivered by Carter Myers Automotive CEO Liza Borches, she said it was the first time she had seen a smiling face in more than 10 days, reports Automotive News. Borches was more than happy to deliver the food and a smile. The Virginia-based dealership group, which has 15 stores serving five markets, has a temporary help line that offers grocery, pharmacy, and essential-errand deliveries to community members. It has been used by individuals and nonprofit organizations that need volunteers. Dealership groups throughout the U.S. are running errands and delivering essential goods to hospitals and community members during the coronavirus pandemic. Other dealers across the U.S. also are offering errand runs and delivering goods to those in need. Read more here. 

Around the Web

Future Cars Worth Waiting For [Car and Driver]

Nissan COO: New Products Will 'Bring Momentum' to U.S. [Automotive News]

President Trump to Visit Ford Plant on Thursday [Detroit Free Press]

Workers' Return Monday is Major Test for Automakers [The Detroit News]

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