2020 is shaping up to be nothing short of a complete and total meltdown for the U.S. auto industry.
The industry was already barely holding on by a thread before the coronavirus pandemic started, with China leading the rest of the globe's auto industries into recession over the last 18 months. Now, in a post-coronavirus world, automakers in the U.S. are expecting nothing less than full collapse.
And the things that were barely holding the industry up to start 2020, namely low rates and modest consumer confidence, don't matter. Businesses are closed, would-be buyers are strapped for cash and the country's economy has simply been turned off. The industry's annualized selling rate could slow to 11.9 million in March, according to Edmunds.
Jessica Caldwell, executive director of insights for market researcher Edmunds, told Bloomberg: “The whole world is turned upside down right now.”
The coronavirus lockdowns across the nation will also put a damper on April, which is traditionally a good month for auto sales. Ford is all but shutting down and names like Fiat and GM are expected to release extremely weak numbers later this week.
Morgan Stanley analyst Adam Jonas put it simply: “There are basically no U.S. auto sales right now. Investors have fully embraced the reality that the U.S. auto industry may be shut down for one or two full months. We’re now being asked to run scenarios of six-month or nine-month shutdowns.”
Jeff Schuster, senior vice president of forecasting for research LMC Automotive commented: “We just don’t know when and how this ends, and that’s the biggest problem right now. All of this uncertainty creates a lot of angst and that has been spreading really like a wildfire through the industry.”
He predicts that the industry's annualized selling rate will continue to plummet to between 9 million and 10 million vehicles. Those numbers are well below the 10.4 million autos sold in 2009, the year GM and Chrysler both filed for bankruptcy. J.P. Morgan has an even more pessimistic view, with estimates of a pace of 6 million to 7 million vehicles over the next month.
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