As the resulting complications of coronavirus lockdowns obliterate the economy, reports have emerged that subprime car buyers are beginning to skip payments. Delinquencies were expected to come up a bit this year, even before local governments started issuing lockdown orders, but the swift economic impact of these health initiatives have proven wider-reaching than anyone anticipated.

Normally, the status of the more volatile subprime market is a useful tool in assessing the financial well-being of the country as a whole — sort of an early warning device for economists. However, getting an accurate read on who stopped paying could be hard during the pandemic. Many lenders are offering deferral programs to keep one or two delinquent payments from turning into full-blown defaults. Still, the initial signs are about what you’d expect, and it plants another economic red flag into American soil.  (Read More…)

Updated social distancing guidance released by the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) on Friday indicates the automotive industry is now an essential business.

Version 3.0 (for those keeping count) of what constitutes “essential critical infrastructure workers” added a number of job descriptions as the federal government mulls how to restart the U.S. economy. Among them is pretty much every job related to automotive manufacturing and sales. (Read More…)

Volkswagen Group has announced that its sales declined 23 percent against the previous year, to 2 million deliveries, from January through March of this year. Based upon last week’s assessment of the ailing European market, the region seems to have contributed quite a bit to VW’s downfall. However, the company said it is optimistic that the Chinese market will soon recover as the coronavirus pandemic loses strength in the region.

As the manufacturer’s largest market, Volkswagen has a lot riding on China coming out of this in once piece. There certainly have been a surplus of articles claiming the nation is on the fast track to economic restoration, but we’ve also heard enough conflicting reports on the status of its convalescence that it’s difficult to feel confident of anything. What exactly is in store for VW and other automakers doing business in China? (Read More…)

Volkswagen has decided to waive up to six months of payments for customers who lost their jobs due to the economic complications of the coronavirus pandemic. Of course, there’s a catch. Customers have to qualify for VW’s expansion of its “Community-Driven Promise” and must have recently purchased a new vehicle, though avenues exist to help existing customers who aren’t brazen enough to buy a new car after a viral outbreak.

The manufacturer previously said it would defer payments up to 90 days for existing Volkswagen Credit (VCI) customers affected by the economic crisis. While most automakers are trying to sweeten the pot while demand is down, deals and relief packages have rolled out pretty gradually. By contrast, VW seems to be doing quite a bit all at once — here’s how one goes about getting into those programs.  (Read More…)

Ford is experimenting with social-distancing wristbands as a way to mitigate the spread of the novel coronavirus once factories reopen. In recent weeks, the company has tested various preventative measures at facilities where it swapped from building cars to producing ventilators and respirators to supply hospitals amid the health crisis. While much of that effort revolved around good hygiene practices and the addition of sanitizing stations near assembly areas, Ford also experimented with some outside-the-box ideas.

Workers are now required to complete daily health questionnaires about how they feel and who they’ve been in contact with. But that’s just the start. Most automotive manufacturers are trying to establish a framework allowing employees to return to work without risking secondary outbreaks. For Ford, that means testing dozens of options while factories remain shuttered so the most-useful strategy can be implemented as things return to normal.

What counts as “normal” in this not-distant future sounds like it will be very different than what would have qualified before the pandemic.  (Read More…)

Center-left political/culture magazine The Atlantic dropped an interesting piece onto the Web Tuesday. In it, author Robinson Meyer lays out a case, based in part on the Trump administration’s own writings, that the fuel economy rollback approved in late March will actually cost jobs and reduce the amount Americans drive.

Meyer piggybacks off his previous reporting, suggesting the Department of Transportation froze out the Environmental Protection Agency and the state of California while working on the rollback. He further suggests, by citing passages from the 2,000-page report the administration prepared on the rollback (officially dubbed Safer Affordable Fuel Efficient Vehicles, or SAFE), that 13,500 automotive-related jobs will be lost.

(Read More…)

With the rippling economic effects of the coronavirus outbreak starting to take hold, some industry analysts have begun floating the increasingly popular theory that various markets could stage a retreat from China. While the Chinese Communist Party’s mishandling of the pandemic — including cover-ups (and the possible manipulation of the World Health Organization) that ultimately encouraged the virus’ spread — are often cited as the impetus for the change, the actual decisions will be largely economic. COVID-19 threatens countless nations’ financial welfare as it simultaneously disrupts global supply chains.

The virus has also sent the auto industry into a holding pattern as manufacturers and suppliers hemorrhage money. While the assumption exists that this situation could encourage international automakers to refocus on domestic production, there haven’t been many examples to point to. Renault changed that this week, announcing plans to abandon its joint venture with China’s Dongfeng Motor Corporation. The move, however, may have less to do with the presumed industrial exodus than the company’s general financial situation.  (Read More…)

As the global health crisis pivots toward becoming an economic one, the automotive industry is understandably eager to know when it can begin producing cars again. The situation isn’t going to be as easy as throwing open a few breaker boxes and giving the thumbs up. A mile-long list of problems, many of which lack easy answers, will first have to be tackled before things return to normal.

Supply chains will be slow to move — and potentially severed — as other nations wait longer to walk back social distancing measures. Not all factories will resume operation at the same time, and not all parts suppliers or shipping agencies will have made it through the coronavirus pandemic intact. It’s also uncertain how quickly customers will return to the market. In tougher financial times, customers may remain hesitant in making large purchases; meanwhile, localized quarantines will undoubtedly continue suppressing sales in certain markets. Then we have the elephant in the room — the vast amount of money this colossal reboot is going to require.  (Read More…)

Mercedes-Benz got out in front of BMW while automotive sales languish in the gutter, though neither company finds itself resting comfortably upon a bed of roses. The global pandemic has made sure of that; no segment has gone unaffected by social distancing measures, but it may be the luxury divisions that have it the hardest moving forward.

Up until recently, premium nameplates had done rather well — scooping up an increasing share of the total auto market for years. While the Great Recession momentarily suppressed their ascension in 2008 and 2009, it was a temporary setback.

Luxury brands have had a good decade overall, with any rough years being offset by expansions in their lineup (chiefly crossover vehicles). Now they’re trying to move downmarket to capitalize on younger customers with a bit more pocket money. It might have been a good strategy, were it not for the coronavirus outbreak and subsequent economic downturn.  (Read More…)

With China serving as the flashpoint of the coronavirus outbreak that brought the world down a peg or two, industry and financial analysts have been watching that market like a hawk. The country went into this crisis before any other, which may prove useful for predicting the general path of global recovery efforts.

Unfortunately, specious reports about the number of infected citizens inside that nation have cast a double-quilted blanket of doubt over its official statistics. We don’t actually know if the Chinese government has effectively wrangled the illness or is just hoping to win an international public relations battle. Fortunately, infection rates and death tolls aren’t the only metrics we have to rely on.

According to the China Passenger Car Association, auto sales plummeted by as much as 96 percent since COVID-19 began its relentless spread. This came after months of negative sales growth, leaving the Chinese market in a truly unenviable situation once mandatory quarantines were enacted. Now, circumstances have changed. Showrooms are reopening and many factories have resumed operations, only this time they’re the ones that have to worry about supply chain issues.  (Read More…)

With some analysts now estimating the coronavirus outbreak’s cost to the automotive industry at as much as $100 billion, there’s not much reason to hope for any vehicle segment to trend in any direction but downward. However, domestic pickup sales have surprised us.

Despite the industry taking it on the chin overall, domestic truck sales are actually improving in the United States — at least by the measure with which we gauge domestic sales performance. Seeing the writing on the wall last month, domestic nameplates began incentivizing product like wild. Apparently, bargains ride two-up with the lead horseman of Pestilence. That, in combination with southern states being slower to enact social distancing measures, helped prop up truck sales. While that may result in the region having a longer recovery, it seems to have padded the market’s fall ever so slightly.  (Read More…)

With social distancing measures throwing automotive sales straight into the dumpster, Ford is reportedly getting ready to float some interesting ideas by the U.S. government. It’s vying for a stimulus deal aimed at giving the industry a jump start after the health crisis posed by the novel coronavirus subsides.

One of the models Ford’s pushing is unsettlingly familiar.  (Read More…)

Subaru is joining the long list of automakers closing shop on account of the coronavirus. Japanese production is being suspended at the automaker’s main plaint in the country’s Gunma prefecture from April 11th through the first of May. It’s also idling the Oizumi engine facility as it announces plans to extend the suspension of its U.S. facility in Indiana. The plant will now be idled through April 20th.

While some of the closures are due to social distancing obligations, the rest is down to parts allocation. Subaru is heavily reliant on components manufactured in China, and it’s still not clear how things are actually going there. What is clear is that Subaru (and plenty of other manufacturers) can’t do without its robust industrial sector operating at full strength. Subaru CFO Toshiaki Okada said in February that “it’s impossible to manufacture cars without China.”  (Read More…)

Auto dealers and manufacturers around the globe have spent the past several years examining the usefulness of digital car sales, but the practice hasn’t been embraced as warmly in the United States, where state franchise laws often prohibit direct sales from automakers to anybody but a licensed auto dealer. Critics say this allowed retailers to become middlemen that customers are forced to haggle, while advocates explain that the system promotes U.S. jobs and provides a local resource for those needing repairs.

Neither are incorrect, yet dealerships have continued to buck online sales, even after manufacturers attempted to work with them on various pilot programs.

With COVID-19 keeping a large portion of the American population at home, dealers are revisiting online sales as a way to cut their losses. Digital transactions now look to be a necessity if shops hope to survive a prolonged pandemic. While many see this as a temporary measure, once the genie is out of the bottle, he’s difficult to put back inside… and may be far less benevolent than we’d like — even if we’re desperately in need of one of those wishes.  (Read More…)

While Ford Motor Co. plans to reopen several factories by early April, it’s not doing much of anything at present. That’s a standard problem among domestic brands with the coronavirus afoot, and two of them — Ford and General Motors — are coming off sizable restructuring efforts that included staffing reductions in the thousands. Additional cutbacks aren’t desirable; not with everyone watching how these companies handle the outbreak.

As it secures extra spending power from credit lines, Ford knows the steep financial cost of having the majority of its workforce stuck at home (to say nothing of its customers) will be steep. A plan is now afoot to keep jobs secure. (Read More…)