Automakers, Dealers Continue To Adjust

To say the auto industry is continuing to reel due to the effects of COVID-19 would be an understatement. 

JPMorgan warns of multibillion-dollar losses for Ford Motor Credit and GM Financial due to an abrupt plunge in used auto prices and the resulting impact on residual values of leased vehicles, according to Seeking Alpha. Analyst Ryan Brinkman envisions losses of $3B at GM Financial and $2.8B for Ford Credit if second-quarter prices finish even lower than anticipated.

New vehicle sales plummeted 34% in March, according to the National Automobile Dealers Association. Hundreds of showrooms are dark, with 22 states enforcing restrictions on in-person sales. Under these circumstances, dealers are rightly turning to online sales.

A dealership’s ability to sell a vehicle during this time depends on respective state and county stay-at-home orders, according to Debbie Ann Sunga, the NADA chief speechwriter.

“Marketing must remain compliant as well,” Sunga says. “Dealers should exercise extreme caution with text messages—even COVID-19-related messages do not have any special exceptions under federal law. It’s vital to steer clear of any coronavirus claims or messaging that could be viewed as false or misleading.”

The shift in how cars are being sold could change the marketplace forever, according to Scotty Reiss, founder of A Girls Guide to Cars, who writes about the ins and outs of buying a vehicle in the middle of a pandemic.

Some automakers are offering meeting platforms like Zoom or Fuze to virtually walk customers around the vehicle, complete the paperwork and explain all the details. 

“There’s nothing that dealers are doing now that won’t help them in the future, that customers won’t want to take advantage of,” Joe Webb, president of training and technology company DealerKnows, tells Reiss. “I fear dealers will say when this is over, ‘We don’t need to do at-home delivery’ and that will set them back.” 

For the moment, no vehicles are being manufactured in the U.S. and dealers are working on selling their current inventories, which are still quite high. 

Some plants are being used to make ventilators and face shields -- and now, hospital gowns and COVID-19 specimen collection kits.

Ford Motor Co. has joined with with airbag supplier Joyson Safety Systems to manufacture reusable gowns from material used to make airbags in Ford vehicles. Production of gowns is scaling up to 100,000 gowns for the week of April 19 and beyond. By July 4, workers will have cut and sewn 1.3 million gowns, which are self-tested to federal standards and are washable up to 50 times.

The automaker also is lending its manufacturing support to help Thermo Fisher Scientific quickly expand production of COVID-19 collection kits for patient testing.

Thermo Fisher’s engineering team at the company’s site in Lenexa, Kansas, realized their expertise, combined with the manufacturing expertise of Ford’s nearby Kansas City Assembly Plant engineering team, could help set up additional collection kit production machinery. The Ford team also helped Thermo Fisher adapt machinery that currently runs glass vials for other products to run plastic vials required in drive-through coronavirus test collection.

“Ford's engineers brought a fresh perspective to production expansion, and together, we'll more than triple the number of collection kits we can deliver each week starting April 20,” said John Reuss, senior director, microbiology business for Thermo Fisher. “It’s great to see different industries coming together to solve a common problem.”

Indeed, there are some upsides to the pandemic which help counter what has been mostly depressing and disturbing news. 

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