- New car sales may drop between 9% and 14% in 2020 in the US.
- The original forecast, based on a projected slowdown in deliveries, was of 1-2%.
- The cost is tens of thousands of jobs and billions in lost earnings.
Already, factories and dealerships throughout Europe have temporarily closed their doors due to the continuing spread of COVID-19, its impact is being felt here as assembly plants are shutting down slowly but surely. The effect on the American (and Canadian) economies could be devastating.
Automotive News has reported that, based on their data, the Center for Automotive Research in Ann Arbor, Michigan, has predicted that a significant drop in demand for new cars and trucks could have a crippling effect on the economy. Kristin Dziczek, the center’s vice president of industry, labor and economics, says that “For every seven-day period that consumers stop buying new vehicles, the U.S. economy would lose roughly 94,400 jobs and $7.3 billion in overall earnings.” And added “Government tax receipts would drop about $2 billion.”
Morgan Stanley predicts that the outbreak will slow sales by 9% while ALG projects that the drop will be closer to 14%. If anything, idling assembly plants, as Volkswagen of America has done in Chattanooga, will be costly in many respects. As for FCA, Ford and GM, it seems as though it’s only a matter of time before closures occur.
The only silver lining in this scenario is that the Big 3 are far better prepared in 2020 compared to where they were during the ’08-09 crash which pushed General Motors and Chrysler towards bankruptcy.
