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Coronavirus is spreading worldwide and throughout the automotive industry, devastating carmakers' financial statements. Sales declines, supply chain chaos and factory shutdowns have already caused a lot of damage. Based on everything we saw so far it can be said that the Coronavirus knock-downed the automotive industry in China and Europe. Now, it is coming to US carmakers. It looks like that fight is inevitable and US carmakers are preparing for it.
According to February results, auto sales plunged 79% in China, returning to levels not seen since 2005. It was the biggest decline ever. US carmakers that operate in China have already seen devastating effects in their joint ventures. Chongqing Changan Automobile Company Limited which has joint ventures with Ford Motor Company (NYSE:F), recorded a sales drop of 73.7%. General Motors Company (NYSE:GM) which has a joint venture with SAIC Motor Corporation Limited, sold only 7,612 cars, down 92.2%. Those results are merely a reflection of factory shutdowns and city lockdowns in China.
Now, similar bad news is coming from Europe. The World Health Organization (WHO) has officially declared Europe is now the "epicenter" of the pandemic. Fiat Chrysler Automobiles N.V. (NYSE:FCAU) recently announced the temporary closing of 4 plants in Italy. Italian supercar makers Ferrari N.V. (NYSE:RACE) and Lamborghini stopped the production of their cars. Maserati has decided to halt production at its plant in northern Italy. Volkswagen AG (OTC:VWAGY) subsidiary Seat is stopping production at its factory in Spain. Peugeot SA (OTC:PUGOY) will close its European factories until March 27. And all of those closings are taking place due to the coronavirus outbreak.
To sum up, it looks like things are going from bad to worse. What we are watching is a "horror" show, unfolding just around the corner.
Coronavirus is the biggest public health crisis we have encountered during the last several years. The only solution we have is to reduce and slow down the spread of this virus. It will not stop on its own so all we can do is spread the curve as much as possible for those in need to receive proper care. It requires joint effort as it's a big challenge that requires a strong answer. And US carmakers have provided it.
The United Auto Workers (UAW), General Motors, Ford and Fiat Chrysler announced that they are forming a Joint Coronavirus Task Force to implement increased healthcare and safety protections for production and warehouse workers at all three companies.
The broader set of actions are planned to be taken to stop and reduce the further spread of the virus. Detailed visitor checking, additional social distancing, increased cleaning and hygiene, health and safety education, health screening, food service, safety protocols for people with flu-like symptoms are only some of the measures taken. Workers will be updated with all identified improvements. The final aim is to prevent the negative scenarios that took place in China and Europe. Well done to The Big 3 Detroit automakers!
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