US car sales plummet in Q1 as buyers stay away

New vehicles at a General Motors' plant that had been shut down in Flint, Michigan, last month. Carmakers and dealers expect a bigger decline in sales this month because stay-at-home orders will be in effect for most or all of the month in many parts
New vehicles at a General Motors' plant that had been shut down in Flint, Michigan, last month. Carmakers and dealers expect a bigger decline in sales this month because stay-at-home orders will be in effect for most or all of the month in many parts of the US.PHOTO: BLOOMBERG

NEW YORK • Carmakers in the US on Wednesday reported a plunge in new vehicle sales as fear of the coronavirus and stay-at-home orders kept consumers away from dealerships, adding to the troubles of the country's largest manufacturing sector.

General Motors (GM) said sales fell 7 per cent in the first quarter and Fiat Chrysler said they fell 10 per cent in the quarter. Both companies said a significant decline last month offset strong sales in January and February.

Toyota, Honda, Hyundai and Mercedes-Benz reported declines last month ranging from 37 per cent to 50 per cent.

Tesla is expected to report a first-quarter global total, and analysts expect a substantial decline, in part because Tesla had been growing in China, which was affected by the virus for much of the first quarter. Tesla began producing cars at a new factory in Shanghai late last year. It temporarily suspended production at its plant in Fremont, California, on March 23.

Mr Toni Sacconaghi of AllianceBernstein is forecasting first-quarter sales of 78,000 cars, which would be a 20 per cent fall from the same period in 2019. "First-quarter deliveries have clearly been tracking well below the fourth quarter over the last several weeks," he wrote in a report to clients.

ALG, a company that tracks trends in car sales, estimated that industry-wide March sales fell 37 per cent from a year ago. Analysts will tabulate a total for March sales after all automakers have reported their numbers.

Dealers had hoped to continue selling cars at the beginning of last month, but customer traffic quickly dwindled as it became clear that the virus was spreading rapidly. Many dealerships around the country remain open for repair and maintenance services, often with reduced hours.

"The market right now is really shell-shocked," said general manager Brian Benstock of Paragon Honda in Queens. He said his service department was in "limp mode" and his sales area was dark.

The drop in sales is the second big blow to carmakers. Most companies have shut down factories across North America.

Carmakers and dealers expect a bigger decline this month because stay-at-home orders will be in effect for most or all of the month in many parts of the country. Even as some states lift or relax those orders, consumers will likely stay away from showrooms for some time. To draw buyers, GM, Ford Motor and Fiat Chrysler are offering zero per cent loans that last up to seven years for new car purchases.

GM, Ford Motor and Fiat Chrysler have also cut or deferred pay for executives.

"April is likely to see further historic declines, driven largely by a lack of consumer confidence and... unemployment," said Cox Automotive senior economist Charles Chesbrough.

NYTIMES

A version of this article appeared in the print edition of The Straits Times on April 03, 2020, with the headline 'US car sales plummet in Q1 as buyers stay away'. Print Edition | Subscribe