PPP Loans: Preparing for What Comes Next
Lately, the automotive industry is breaking records in all the wrong directions, writes Chairman Jason Courter in today’s Courter’s Two Cents blog post. In times like these, small business owners are looking for relief anywhere they can get it. Many dealers, including Courter, received Paycheck Protection Program loans from the government, with the understanding that the loan would be forgiven if the funds were spent on mortgage, rent, utilities, and payroll. As expected whenever a giant government relief program appears practically overnight, there has been pushback. Dealers who have received PPP loans don’t need to be worried about defending their choices, but they should be prepared to concisely lay out their reasoning for applying for the loan. By being organized and proactive, dealers can set themselves up for success. It’s also a good idea to have a response prepared for anyone asking questions about your PPP loan. Courter says his is simple: he is confident that better days are ahead for his stores and his employees, and is am grateful for the PPP loans that will help us get there, together. Read more here.
Toyota Warns Profits Could Plunge Nearly 80% But Car Sales Should Start to Recover
Toyota expects profits this year to plunge nearly 80% as the coronavirus pandemic slams global car sales, reports CNN. The Japanese automaker, one of the world's largest, said Tuesday that it expects operating profit to reach just 500 billion yen ($4.7 billion) this fiscal year. That would be the smallest profit for Toyota in nine years. For the year ended March 31, the company posted profit of 2.4 trillion yen ($22.3 billion), slightly weaker than it estimated in February. Toyota said it expects to sell 7 million cars this year, down from the nearly 9 million it sold last year, not including sales from smaller automakers it owns like Daihatsu and Hino. Read more here.
The Detroit Bureau also reports that Toyota expects to assemble nearly a third fewer vehicles in North America from April through the end of October than originally scheduled. From April through the end of October Toyota plans to build about 800,000 cars, trucks and crossovers in North America, down 29% from what it produced during the same seven-month period a year ago. Prior to the pandemic, Toyota actually had hoped to increase North American output, so the new numbers come in about 32% below that plan. Read more here.
Honda Plunges to Loss After Coronavirus Hit
Honda plunged to a 5.6 billion yen ($51.9 million) operating loss in the latest quarter amid slumping sales as the coronavirus pandemic hammered the global economy, reports Automotive News. Operating profit swung into the red in fiscal fourth quarter ended March 31, from 42.3 billion yen ($392.4 billion) the year before, the automaker said in its earnings report on Tuesday. Honda also booked a 29.5 billion yen ($273.6 million) net loss in the three-month period. Revenue shriveled 15 percent to 3.46 trillion yen ($32.09 billion), as worldwide sales fell 28 percent to 981,000 vehicles in the January-March quarter. Citing uncertainty about the recovery from the coronavirus pandemic, CEO Takahiro Hachigo refrained from issuing an earnings outlook for the current fiscal year ending March 31, 2021. Honda's dismal results come as the global auto industry reels from the impact of COVID-19 and the resulting slump in demand and regulations ordering factory closures. Read more here.
AutoNation's Mike Jackson Says U.S. Auto Plants Should Be Reopened
AutoNation’s Mike Jackson told CNBC on Monday that U.S. auto plants should be reopened to support increasing demand for vehicles as the U.S. economy tries to restart from its coronavirus-driven halt. “It’s entirely appropriate that the factories reopen. I fully support it. We need the vehicles,” Jackson said “Squawk Box.” “As a matter of fact . . . I would go so far as to say, I support Elon Musk. Tesla should open.” Jackson, executive chairman of AutoNation’s board and CEO, has been a frequent critic of Musk, the CEO of Tesla who is pushing back against health officials in Alameda County, California, over his desire to restart production at the company’s main U.S. car plant in Fremont, which is located in the county. Jackson, who is back in the CEO job for Cheryl Miller as she takes a leave of absence for health reasons, said there is growing demand for vehicles in the U.S., following a significant downturn driven by pandemic lockdown orders. Read more, and watch Jackson’s interview with CNBC, here.
Detroit's Automakers Have Enough Cash to Last the Year Without a Bailout
Not even during the Great Recession and bankruptcies of General Motors and Chrysler did the automotive industry come to a standstill as it has during the coronavirus pandemic, reports CNBC. U.S. automakers are losing billions of dollars every month with the majority of American factories shuttered since March and dealer showrooms closed or running on a limited basis. No one could have prepared for Covid-19, but the Detroit automakers, including Ford Motor and Fiat Chrysler, are weathering the storm without talk of bankruptcies or the need for the same level of assistance the airline industry just received. It’s a stark contrast from 2008 and 2009. “The automakers themselves are in quite a bit different shape. They learned the lesson the hard way of we need to improve of balance sheet,” said Mark Wakefield, a managing director and global co-leader of the automotive and industrial practice at AlixPartners, which led GM’s bankruptcy restructuring. Read more here.
Paycheck Protection Program: How to Maximize Your Forgiveness
Join AIADA's AutoTalk Webinar today, May 12, at 2:00 p.m. EDT to hear from experts from Moss Adams Automotive and Dealer Services Group provide an update on the Paycheck Protection Program.
Topics covered include:
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Overview of loan forgiveness rules and guidance received to date
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Areas where additional clarity is needed
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Tax and other considerations
Around the Web
Bentley, Ferrari, Aston Martin Plants Restarting [WardsAuto]
Lucid Shows Off 40 Prototype Air EVs Awaiting Testing [Autoblog]
Toyota Marks 20th Anniversary of the Prius [The Detroit Bureau]
