Photo: Chevrolet
At the beginning of January, the U.S. reported more than 17 million sales of new vehicles for the fifth consecutive year. Fast-forward to April, and the sales figures for the first quarter of 2020 paint a bleaker picture than expected.
Analysts were expecting 2020 to end on a high note, namely 16.7 to 17.1 million vehicles in the United States of America. But the COVID-19 pandemic has wreaked havoc during the first three months of the year, plunging sales of new cars, SUVs, and trucks by a considerable margin over the same period of ‘19.
March 2020 was particularly bad for the U.S. as sales dropped by 40 to 50 percent. The exact percentage still isn’t known because not all automakers have published sales results at the time of reporting. On that note, let’s go through a few of them, starting with the Big Three in Detroit: The Big G, FoMoCo, and Fiat Chrysler.
General Motors plunged 7 percent during this period, FCA fell 10 percent, and Ford nosedived 12.5 percent even though Lincoln’s retail sales are up. Brands such as MINI and Nissan declined by 35 percent and 30 percent, respectively.
Given the aggressive sweep of the coronavirus through the U.S., the second quarter of the year is likely to be worse than the first quarter for the auto industry. Declining sales of new automobiles and trucks also mean less business for the dealerships, suppliers, and that’s not all if you look at the big picture. Like, the big one.
Less spending translates to fewer profits in the retail as well as wholesale sector. This is often the case in economically unsure times as well as times of crisis, and the effect of holding onto money instead of letting it circulate shouldn’t be glossed over so easily.
Small businesses are the most vulnerable in this scenario, and before unfolding, these businesses have to either downsize or restructure to survive. Comparing the COVID-19 pandemic to the financial meltdown of 2008, however, isn't exactly correct.
The first was fueled by endogenous interactions of the market's participants, namely those participants who fed on the weaknesses of the financial system. The coronavirus, on the other hand, is an exogenous shock to the worldwide economy.
Therefore, the biggest risk of the COVID-19 rampaging through the world can be summed up as a large-scale slowdown of the real economy, as in that part of the economy that produces goods and services instead of financial actors such as the banks and stock markets.
Automakers are included in the real economy of the U.S., and the outlook is currently uncertain for them because no one knows when these dark clouds will scatter.
March 2020 was particularly bad for the U.S. as sales dropped by 40 to 50 percent. The exact percentage still isn’t known because not all automakers have published sales results at the time of reporting. On that note, let’s go through a few of them, starting with the Big Three in Detroit: The Big G, FoMoCo, and Fiat Chrysler.
General Motors plunged 7 percent during this period, FCA fell 10 percent, and Ford nosedived 12.5 percent even though Lincoln’s retail sales are up. Brands such as MINI and Nissan declined by 35 percent and 30 percent, respectively.
Given the aggressive sweep of the coronavirus through the U.S., the second quarter of the year is likely to be worse than the first quarter for the auto industry. Declining sales of new automobiles and trucks also mean less business for the dealerships, suppliers, and that’s not all if you look at the big picture. Like, the big one.
Less spending translates to fewer profits in the retail as well as wholesale sector. This is often the case in economically unsure times as well as times of crisis, and the effect of holding onto money instead of letting it circulate shouldn’t be glossed over so easily.
Small businesses are the most vulnerable in this scenario, and before unfolding, these businesses have to either downsize or restructure to survive. Comparing the COVID-19 pandemic to the financial meltdown of 2008, however, isn't exactly correct.
The first was fueled by endogenous interactions of the market's participants, namely those participants who fed on the weaknesses of the financial system. The coronavirus, on the other hand, is an exogenous shock to the worldwide economy.
Therefore, the biggest risk of the COVID-19 rampaging through the world can be summed up as a large-scale slowdown of the real economy, as in that part of the economy that produces goods and services instead of financial actors such as the banks and stock markets.
Automakers are included in the real economy of the U.S., and the outlook is currently uncertain for them because no one knows when these dark clouds will scatter.
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