Drumbeat of bad coronavirus news starts to hit U.S. auto
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[March 14, 2020] By
DETROIT (Reuters) - A relentless barrage of
bad news surrounding the coronavirus epidemic has begun to affect
customer visits at some U.S. auto dealers and even those businesses that
have thrived so far believe a big sales decline is imminent if China's
experience is any guide.
Since the coronavirus outbreak began in China last year it has killed
more than 5,000 people globally, including 41 so far in the United
States, where President Donald Trump on Friday declared a national
The outbreak has caused automakers to shutter plants in Asia and Europe,
and the mounting responses in the United States - school closures, pro
sports leagues suspending play and other big events canceled - are now
being felt by some U.S. dealers. For a sign of what may be in store,
analysts said look no further than China, where auto sales plunged 79%
"Sales are definitely falling," said John Luciano, managing partner with
Street Volkswagen in Amarillo, Texas, and chairman of Volkswagen's <VOWG_p.DE>
national dealer council. "We're waking up in a different world a little
bit more every day."
At Russ Shelton's Buick GMC dealership in Rochester Hills, Michigan, so
far this month customer visits are down 30% while the service department
has seen a 40% drop in business due to the outbreak.
"When schools close, mothers get worried - and this stops economic
activity," industry consultant and former GM executive Warren Browne
Cox Automotive now sees negative U.S. economic growth in the second
quarter and has withdrawn its forecast for 16.6 million new-vehicle
sales in the United States this year.
Even businesses whose sales have remained strong acknowledge this week
could mark the beginning of a big decline.
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Jim Farley, Ford's President, Global Markets, speaks next to the
2020 Ford Mustang Shelby GT500 at the North American International
Auto Show in Detroit, Michigan, U.S., January 14, 2019.
REUTERS/Jonathan Ernst/File Photo
"It's going to happen," Beau Boeckmann, president of Galpin Ford in the Los
Angeles area and one of the largest U.S. Ford dealers, said of a potential drop
in sales. "We're kind of still in this odd wait-and-see moment."
Ford Motor Co <F.N> Chief Operating Officer Jim Farley and other executives
outlined on a Friday call with dealers how the outbreak has not interrupted U.S.
vehicle production and sales through last weekend finished ahead of company
projections, according to dealers on the call.
However, Ford spokesman Mark Truby acknowledged some dealers have seen customer
General Motors <GM.N> spokesman Jim Cain said the U.S. automaker's sales have
been strong in most markets, but the company understands that could change.
"We'll have to see how long this crisis lasts," he said. "It stands to reason
that sales would fall in some markets as people are putting basic needs first."
J.P. Miller, owner of a Ford dealer in Lexington, Kentucky, where the University
of Kentucky at this time of year would normally be competing for the NCAA men's
basketball championship, shifted advertising he had planned around that event to
alerting consumers to online car-buying options.
Morgan Stanley analyst Adam Jonas said one possible fiscal stimulus for the
industry the Trump administration could consider would be a form of "Cash for
Clunkers," a $3 billion federal program in 2009 that incentivized consumers to
swap aging gas-guzzlers for new, more fuel-efficient vehicle.
(Reporting by Ben Klayman in Detroit; Editing by Matthew Lewis)
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