U.S. Car Sales Verging on Great-Recession-Level Collapse

First Up 03/19/20

Car Dealers Make House Calls to Sell Wheels to Wary Shoppers

Lured by an ad for 0% financing, a customer phoned Chuck Olson Kia in Seattle saying he wanted to buy a Sedona minivan. But with more than 400 confirmed coronavirus cases in Washington state, he said there was no way he’d go to the dealership. So, reports Bloomberg, the salesperson instead sent a staffer to his home with paperwork and closed the sale of the loaded $40,000 vehicle. Of course, given the circumstances the dealer was fortunate the buyer even agreed to meet in person at his house. Few doubt that the virus will have a huge impact on the industry. LMC Automotive, a research firm, has lowered its 2020 forecast by about 750,000 vehicles to as low as 16 million this year, down from about 17 million in 2019, said Jeff Schuster, LMC’s senior vice president of forecasting. Morgan Stanley’s Adam Jonas sees the market falling even further, down to the recessionary level of 15.5 million. That will spill over to dealers and parts suppliers. Joe Spak, an analyst at RBC Capital Markets, slashed price targets for all 22 of the auto-related companies he covers and downgraded four of them in reports Monday. Read more here.

U.S. Car Sales Verging on Great-Recession-Level Collapse 

According to The Detroit Bureau, as the nation comes to grips with the worsening coronavirus pandemic, new car sales appear to be tumbling off a cliff, with a new report by J.D. Power warning that March retail demand could slip by as much as 41%, approaching levels that haven’t been seen since the depths of the Great Recession a decade ago. “Both the virus and its effect on new vehicle sales are expected to grow in severity throughout March,” wrote Tyson Jominy, a Power vice president in a report released Wednesday afternoon. After an unexpectedly strong 2019, with U.S. car sales reaching 17.1 million, the current year was expected to see a modest decline. For its part, J.D. Power originally forecast a 0.5% dip in demand during March, and during the first week, the numbers weren’t much worse, slipping about 1%. But then things took a sharp turn for the worse. By early last week, the drop in U.S. car sales had grown to 8%, by Friday 20%. And on Sunday, dealers reported a 36% decline overall, according to Jominy. Read more here. 

Asian Automakers to Suspend North America Output

Automotive News reports that Toyota Motor North America and Honda Motor Co. will temporarily suspend production starting next week in North America as the continent struggles against the spreading coronavirus. Nissan Motor Co. is planning a two-week shutdown beginning on Friday, according to an internal company memo. Toyota said it is stopping production at all plants Monday and Tuesday next week for a deep cleaning to help contain the virus. It previously halted overtime production and Saturday shifts at some plants in anticipation of lower U.S. light-vehicle sales. Honda said it would halt production for six days because of an anticipated decline in auto sales as a result of the coronavirus outbreak, and will reduce output by about 40,000 units. Honda will suspend production beginning Monday, March 23, and plans to restart plant output on March 31. Nissan North America is idling production at all three U.S. factories starting Friday in response to the coronavirus crisis.

The shutdown will last two weeks, according to an internal memo obtained by Automotive News. Read more here.

Toyoda Urges Japan's Automakers to Stay Calm Amid Crisis

According to Automotive News, Akio Toyoda, in his role as head of Japan's automotive lobby, said the global pandemic is taking a big bite out of worldwide sales and production, but he pledged that assembly plants in Japan would do all they can to remain producing cars and trucks. "Production shall be continued on the shop floor," Toyoda, chairman of the Japan Automobile Manufacturers Association, said at a press conference on Thursday. "Otherwise, we will cause troubles and inconvenience to our customers. So, we shall never stop production activities." Toyoda conceded some output adjustments will be necessitated by supply crimps and declining demand. But he urged Japan's auto industry to stay calm and work together through the crisis.  Speaking through an interpreter at JAMA's regularly scheduled monthly briefing, Toyoda said it was too early to make predictions about how bad the impact will be or how long the industry interruptions will last. JAMA usually releases its Japan domestic market sales forecast for the fiscal year starting April 1 around this time. But it held off doing so on Thursday amid the uncertainty. Read more here.

Auto Associations Urge Officials to Keep Vehicle Supply and Repair Businesses Open

As the potential coronavirus impact continually grows, a wide swath of industry associations representing dealerships and repair shops are urging federal, state, and local officials to consider the importance of motor vehicle supply and repair facilities in implementing orders to close nonessential businesses as a result of COVID-19, reports Auto Remarketing. Cody Lusk, president and chief executive officer of the American International Automobile Dealers Association (AIADA) emphasized that dealerships and their service shops are essential to the communities they serve. “These are uncharted waters for all of us. As Americans determine the best way to move forward and protect each other, AIADA asks that lawmakers keep in mind the tremendous value dealerships offer their cities and towns, and the many important services they perform — from brake repairs to addressing critical recalls to providing vehicles to essential workers who can no longer rely on public transportation,” Lusk said. “Dealers are working around the clock to ensure compliance with CDC guidelines and establish safe conditions for both their employees and customers. Local governments should allow them to continue to make available the essential services their communities require,” he added. Read more here. 

Federated Insurance: Coronavirus Pandemic Directives and Go-To Resources

Federated Insurance is proactively taking steps to prevent the spread of COVID‐19, or coronavirus. We are a company committed to risk management and enhancing client success, and our highest priority is supporting the health and safety of you, our employees, and our communities. Federated has had a pandemic response plan in place forseveral years and our established Business Continuity Team is working diligently to help ensure you receive the same high quality customer experience you have come to expect as the coronavirus pandemic unfolds. Read more here.


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