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Virus Puts Stores in 'Survival Mode'
Dealerships across the country are already absorbing the financial hit from the coronavirus pandemic as they close the books on March, reports Automotive News. Stores are recording significantly lower sales, revenue and profits for the month — the result of state mandates to close showrooms and, even where sales have continued, a significant dropoff in customer traffic as people heed guidelines to stay home to limit the spread of the COVID-19 illness. Yet March is just the start. April likely will be more painful, according to dealers, accountants, and economists who spoke to Automotive News last week, since the impact may be felt for an entire month rather than a few weeks. Additional states now are restricting nonessential activities, which could further repress auto sales. "April is going to be far worse than March," said Jonathan Smoke, chief economist for Cox Automotive. "How bad it gets, I think, will vary still pretty dramatically in the month of April because there's very different responses that the state and local authorities are taking to vehicle sales." Read more here.
Dealers Seek Guidance on Business Loans as Showrooms Shutter
As showrooms are ordered to close and new-vehicle sales come to a crawl, Automotive News reports that a number of dealers need help navigating the massive $2.2 trillion coronavirus stimulus package signed into law March 27 by President Donald Trump. With demand for forgivable loans expected to be high, the key question is how long will it take for their cash-flow dependent businesses to secure aid? The CARES Act — or Coronavirus Aid, Relief and Economic Security Act — expands existing loan programs and creates programs intended to help companies maintain employment and, ultimately, save their businesses. The nearly 900-page bill offers several potential benefits, including new payroll and tax provisions to provide a short-term lifeline to companies such as dealerships as they navigate the best way forward financially. A lack of clarity on the scope, requirements and timeline of the lending process — particularly within a new program from the Small Business Administration — has caused some dealers to scratch their heads as they consult with bankers and tax advisers while struggling to keep their employees paid and businesses afloat during an economic and public health crisis. Read more here.
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Nissan-Renault's Coronavirus Conundrum: How to Plan When 'We're Not Selling Anything'
Spring was supposed to herald a fresh start for the troubled car-making alliance of Renault SA and Nissan Motor Co. Executives were hoping to grab investors’ attention with a vision for the next three years, backed up with detailed projections of profits and sales. So much for projecting anything. The Wall Street Journal reports that with sales evaporating and most factories closed, the companies’ leaders say they are flying blind with no way of knowing when business will return to normal. “I’m not sure that in 2020 any car company can make an accurate budget today,” Nissan Chief Executive Makoto Uchida said in an interview. “Simply put, we need to watch our cash management,” Mr. Uchida said. The pandemic has hit the allied auto makers at a time when they were already struggling. Read more here.
The Year's Hottest New Cars Just Got Cold as Ice
At least three years and about $1 billion. That’s roughly what it takes to make a new vehicle, from drafting table to dealerships. Bloomberg reports that the coronavirus pandemic and its attendant recession may be the worst time to launch a car since, well, since we’ve had cars. The global auto industry of 2020 is witnessing an unprecedented, near-instantaneous drop in demand as potential customers steer clear of car lots, and dealers close up shop to comply with public health mandates. Volkswagen, Honda, Hyundai, and Mazda each reported a more than 40% decline in U.S. sales last month. For the year, S&P expects global auto sales to plummet almost 15%. For sales of the most anticipated cars of 2020, the timing couldn’t be worse. In a normal economy, the first few months for any shiny new machine are relative magic. Overeager customers clamor for the fanciest, most profitable versions, and dealers seldom have to offer discounts or incentives. Now, every sale (done online or over the phone) will be considered a coup. Read more here.
GM Offers Manufacturing Blueprints for Facemasks to 600 Auto Parts Suppliers
General Motors is encouraging and empowering its suppliers to assist in production of medical face masks for frontline workers amid the coronavirus pandemic, reports CNBC. In a note to the suppliers on Saturday, Shilpan Amin, GM’s vice president of global purchasing and supply chain, said it is making the automaker’s step-by-step manufacturing plans for the personal protective equipment available to any company willing to join in the cause. “Our ultimate goal is to get more masks to the people who desperately need them,” he said in part of the message obtained by CNBC. “We also recognized it would be counterproductive if GM – or any other manufacturer – competed for supplies with existing medical-mask companies. By making available GM’s production processes to our global supply base, we hope to facilitate other companies’ efforts to bring more materials, more equipment and ultimately more facemasks to the community.” GM, according to a spokesman, will provided suppliers detailed specs on materials, equipment, and processes – essentially, what suppliers would need to know to ramp up their own production lines. He said the message was sent to 600 suppliers. Read more here.
Around the Web
This is Why the Windshield-Less McLaren Elva Doesn't Require Goggles [Autoblog]
Buying Cars Online: The Trend Accelerates, Even at the High End [Barrons]
25 Best-Selling Cars, Trucks, and SUVs of 2020 (So Far) [Car and Driver]
