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Tuesday, 12 May 2020 22:27

Carmakers Gear Up to Restart Production: Can They Bounce Back?

Written by Ritujay Ghosh, Zacks
Carmakers Gear Up to Restart Production: Can They Bounce Back? Bigstock

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Most major carmakers reported a sales decline in April due to the pandemic. Toyota and Honda led the declines with sales plummeting about 54% each. Also, Hyundai said that its April sales declined 39%. General Motors’ U.S. sales fell 7% in the first quarter from a year ago. Fiat too reported a 10% decline in sales in the first quarter.

 

That said, things might finally start changing with the restart of the plants. Earlier, J.D. Power said for the week ending April 19, retail sales were down 48% from the pre-virus forecast, marking an improvement of 3 percentage points from the week ending April 12. Around 300,000 new vehicles were sold in the first 19 days of April.

 

Although sales were down 53.9% in April, Toyota said its dealers’ sales of 84,696 vehicles surpassed its forecast of about 50,000 for the month. One major reason behind this is that many carmakers, including Ford General Motors and Fiat, are offering 0% financing rates and deferring payment options for new car purchases, which is aiding this rebound in sales.

 

Moreover, the China car market, where U.S. automakers have a major presence, too has started rebounding following the COVID-19 outbreak. General Motors reported its sales in China jumped over 13% in April, compared to the prior year. 

 

Although Ford has a smaller presence in China compared to its rival General Motors, it sold more than 40,000 vehicles in China during March, which jumped to about 75% of sales during the prior year. With almost 99% of car dealerships reopening in China and U.S. factories gearing up to restart production, carmakers may finally start bouncing back.

 

We thank Zacks for reprint permission. 


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