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As Sales Rise, Automakers Ramp Up Production

Just two months ago, the auto industry was bracing for disaster. As the coronavirus spread, automakers shut down plants, and car sales plunged.

But the industry is starting to breathe a little easier. Factories are churning out trucks and sport utility vehicles, with many of the plants nearly back to production levels that prevailed before the pandemic took hold. While some factory workers have tested positive for the coronavirus, automakers have reported no major outbreaks. Perhaps most important, vehicle sales have perked up more than many industry executives had expected.

“At the end of March, it did seem like we were heading for a doomsday scenario,” said Jessica Caldwell, a senior analyst at Edmunds, a research firm. “But people are starting to buy cars now. June sales will still be well off record levels, but they will be OK. It’s pretty encouraging.”

A rebound in the auto industry would probably help the economy. It is the nation’s largest manufacturing sector and employs roughly 1.5 million people in manufacturing, sales and service.

That said, auto sales will be down sharply this year, more than in any year since at least 2009; AlixPartners, a consulting firm, expects sales of new vehicles to fall about 19 percent this year, to 13.7 million. Experts worry that a surge in coronavirus cases in places like Arizona, Florida and Texas could drop sales further as more people stay home to avoid getting sick or making others ill.

In addition, more than 20 million Americans were out of work in May, according to the Labor Department, and unlikely to be in the market for new cars. Rental car companies, which have been hit hard by the drop in travel and typically account for up to 20 percent of the new car market, have all but stopped buying vehicles. Hertz, which operates a fleet of more than 500,000 cars in the United States, filed for bankruptcy protection last month.

“Will we see rental orders come back in the fall?” asked Charles Chesbrough, a senior economist at Cox Automotive. “We don’t know yet, but is seems like most business travel is going to be on hold at least until the end of the year.”

Yet automakers and car dealers say they are feeling optimistic because sales of new cars to individuals and families, the industry’s main customer base, have rebounded strongly.

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Credit…Jeff Roberson/Associated Press
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Credit…Paul Sancya/Associated Press

“There’s pent-up demand,” said Doug Waikem, owner of six new-car franchises in Massillon, Ohio. “There are people who were ready to buy, and then the virus hit. They put it on hold, but some are starting to come back.”

Auto manufacturers have lured buyers back to dealerships with generous financial incentives. For a time, several companies, including General Motors, Ford Motor and Fiat Chrysler, were offering zero-interest loans for 84 months on most or all of their vehicles. Most automakers have phased out those offers, but interest-free loans for up to 72 months are still available on many models.

Many consumers appear to be buying cars with the help of some of the $1,200 federal stimulus payments and money they saved when they cut other spending in March, April and May, said Pete DeLongchamps, senior vice president of manufacturer relations at Group 1 Automotive, a large dealership group based in Houston.

“It’s certainly not as bad as we feared right now,” he said. “The government put a lot of money into the market, and now people are spending money on cars.”

Sales have rebounded so fast that automakers are working to ramp up production to restock dealerships. Inventories dwindled over the last few months because so few cars were produced. The industry made just 4,840 vehicles in North America in April, according to Automotive News. Output jumped in May, but the month’s total, 371,551 cars and light trucks, was still far below the 1.5 million produced in the same month in 2019.

The supply of pickup trucks and S.U.V.s, which American drivers prefer to sedans these days, has been particularly tight. G.M. has an especially short supply of Chevrolet and GMC trucks, dealers said, because its production was halted by a 40-day strike by the United Auto Workers union last fall.

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Credit…Jeff Kowalsky/Agence France-Presse — Getty Images

High-quality used cars are also scarce. “Our used sales have exploded,” Mr. Waikem said. “A $10,000 to $14,000 used car is gold.”

  • Frequently Asked Questions and Advice

    Updated June 24, 2020

    • Is it harder to exercise while wearing a mask?

      A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.

    • I’ve heard about a treatment called dexamethasone. Does it work?

      The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.

    • What is pandemic paid leave?

      The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.

    • Does asymptomatic transmission of Covid-19 happen?

      So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

    • What’s the risk of catching coronavirus from a surface?

      Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

    • How does blood type influence coronavirus?

      A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

    • How many people have lost their jobs due to coronavirus in the U.S.?

      The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.

    • What are the symptoms of coronavirus?

      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

    • How can I protect myself while flying?

      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.


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