From the desk of John Bozzella
President and CEO of the Alliance for Automotive Innovation
APRIL 6, 2020
For more information: Wade Newton: 202.326.5571
Current Situation: It will surprise no one that auto sales and production dropped sharply as the effects of the pandemic, and measures to contain it, have expanded. The latest edition of Reading the Meter (attached) summarizes recent sales and production trends.
A number of automakers have switched to quarterly sales reporting; thus, year-to-year comparisons of first quarter figures understate the coronavirus’s full impact, which began to be felt heavily in March. Manufacturers that still report monthly sales recorded sales declines in the 40 percent range for March.
Beyond the most general point – that this year’s auto sales will be down considerably from 2019 – not much is known. No one can currently foresee the depth and duration of this pandemic’s economic consequences. The Bloomberg Consumer Comfort Index — a polling indicator of the national economic mood — recently recorded its sharpest two-week drop in 34 years of collecting data.
Significance: With employee and customer health and safety top of mind, the auto industry has taken measures throughout the value chain to address the pandemic and its effects: shutting down facilities, employees working remotely, sales shifting to online transactions, providing discounts and favorable consumer financing terms and more.
There are still strains. For example, while dealer service centers remain open to ensure consumers have access to repair and service work, parts shortages appear as suppliers follow state and local closure and social distancing orders. Many suppliers lack the cash reserves or credit access of original equipment manufacturers which is why the recent economic stimulus package is so important to many businesses large and small. Like car manufacturers, the supplier network and their skilled workforce will be absolutely critical to the industry’s restart.
The Future: Again, the auto industry’s highest priority remains public health and safety; once that’s assured, plans to return to production can go into effect. That will require cooperation and coordination among several stakeholders and state and local government across the country. In the realm of public policy, the industry needs:
- Clear and consistent federal guidance. This encompasses everything from best practices in health to financial resources and other benefits that can assist businesses large and small weather this unprecedented public health emergency.
- Support from state and local governments. The auto industry’s complex manufacturing operations rely on just-in-time deliveries traversing states and countries. Inconsistent or unnecessary practices could slow an economic recovery.
Auto Innovators continually surveys its members, identifying problems and solutions. We will continue sharing information with you and elected leaders across the country. We will also continue working on implementation of the economic recovery package at the federal level, and with state and local governments when issues come up within their jurisdictions.