“Never make predictions, especially about the future.” — Casey Stengel
Going into 2020, all economic indicators pointed to another solid year for the automotive industry – low unemployment, low interest rates, predictable labor contracts, and more stable international trade rules. In the January/February issue of Today’s Motor Vehicles and in a follow-up webinar, I predicted another year of at least 17 million new vehicle sales.
When I wrote the outlook story, the COVID-19 outbreak was a small story in China, something that wasn’t even causing much of a stir there. By the time I recorded the webinar in February, the novel coronavirus had spread widely in China but hadn’t yet reached Italy or the United States. So, I predicted it might threaten U.S. supplies of components from China but didn’t appear to be a major threat.
Clearly, I was wrong. As I write this, Italy is on lockdown, and Fiat Chrysler Automobiles (FCA) and luxury automakers there have shuttered production for at least several weeks. Closures quickly followed in France, Spain, and Germany. In the United States, as of mid-March, Ford, General Motors, and FCA have shuttered their plants, and other automakers are pausing production as well.
Several cities and counties are under complete lockdown with people being told to stay at home, leaving only for work or grocery shopping. Trips to car dealerships will almost certainly fall in March and April. It’s far too early to predict the full-year impact of the virus on demand or the ability of companies to produce new vehicles. The entire global economy is watching to see how quickly this disease spreads and how deadly it will be, and until we know those answers, a massive cloud of uncertainty will overhang all industries.
It’s possible that the threat will pass quickly, that the strong measures being taken by federal and state governments to encourage social distancing will slow COVID-19’s spread and that medical professionals will develop better treatments for those infected (Update: March 29, 2020: White House recommends nationwide shelter-in-place procedures through April 30). If that’s the case, auto sales lost in March and April will take place in May, June, and July, and 2020 will end the year in the same strong stance it began.
Businesses are evaluating their production plans, updating hygiene policies in plants, developing contingencies for unavailable supplies, and working with creditors to ensure liquidity through the crisis. At Today’s Motor Vehicles, we plan to continue focusing coverage on the news, processes, and technologies that can improve operations in good times and bad.
While few people alive today have seen school shutdowns and mass health screenings at the scale the world is currently experiencing, we have seen many crises, and we’ve learned from them.
“I understand how uncertain these times feel. For many of us, it’s our first experience of this type,” General Motors Chairman and CEO Mary Barra says. “But disruption and trying circumstances are not new to us. Especially in times like these, we demonstrate our flexibility, agility, and resilience. This team always rises to the occasion, and just as we have in the past, we will chart our course.”