Thu, 13 Aug 2020

Sales of major U.S. automakers plunge in Q2

Xinhua
02 Jul 2020, 16:30 GMT+10

CHICAGO, July 2 (Xinhua) -- COVID-19 took its toll on U.S. auto industry, as Fiat Chrysler Automobiles NV (FCA) on Wednesday reported a 39 percent year-over-year drop in U.S. new-vehicle sales in the second quarter, and General Motors Co. (GM), a 34 percent drop.

The FCA delivered 367,086 vehicles in the second quarter, down from 597,685 a year ago while the GM delivered 492,489, down from 746,659. For the first half of the year, FCA's sales dropped 26 percent year on year and GM's sales went down 21 percent.

"(No one) thought this was going to be a really great quarter. We expected double-digit declines," the Detroit News quoted Jessica Caldwell, executive director of insights for auto-information website Edmunds.com, Inc., as saying. "Thinking back to where we were in mid-March, this result wasn't as bad as we thought it would be, fearing the worst."

What is worth notice is that though the retail sales of the automakers plummeted in April, they started to rebound in May and June.

"This quarter demonstrated the resilience of the U.S. consumer," said Jeff Kommor, FCA's head of U.S. sales, in a statement. "Retail sales have been rebounding since April as the reopening of the economy, steady gas prices, and access to low-interest loans spur people to buy."

GM's retail sales dropped 35 percent year on year in April, then recovered significantly in May and June with a year-on-year decline being about 20 percent or less. The U.S. automaker's retail sales went down by about 24 percent in the second quarter.

Nevertheless, sales to fleet operators were low in the second quarter. Vehicle rental companies are experiencing deep financial problems as business and leisure travel dries up amid the pandemic.

As car-rental companies make up the majority of fleet sales, market analysts predicted it may take longer for fleet sales to rebound, the local newspaper reported.

Due to comparatively brisk retail sales, low inventory has become a problem.

The latest Cox Automotive data shows Chevrolet's supply is below 70 days and the GMC is slightly above 50 days; Jeep is above 70 days and Ram is above 80 days. The national average is 70 days. Ford has the highest with levels closer to 90 days.

"We do think that low inventories will hamper sales and again we will have to see what happens," the Detroit News quoted Michelle Krebs, senior director of automotive relations for Cox Automotive, as saying. "It's all about the virus. What's the virus going to do? How do we react to it, and how does the consumer react to it?"

The biggest concern of the U.S. automakers and retailers at present is the spike of COVID-19 cases, and how increases in cases could affect auto production and sales and all-important consumer confidence.

The FCA and Ford are now back to full pre-shutdown production levels at their North American plants.

After restarting plants on May 18, nearly all of GM's car and crossover plants have returned to the same number of shifts as pre-pandemic levels. The majority of GM's U.S. plants, including all truck and SUV plants, will continue to operate during the traditional two-week summer shutdown.

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