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Automotive Outlook – A Road To Hell?

·3 min read

The automotive industry has been hit hard by COVID-19, with automakers forced to shut down approximately 95% of plants across Europe and the U.S.

In most cases, those measures were supposed to last only a few weeks. Now it looks like factories will remain silent for much longer. Reopening dates are being postponed, while some auto producers like General Motors (NYSE: GM) decided not to give any reopening targets at all. Uncertainty is present everywhere these days.

Beating The Invisible Enemy

The COVID-19 is a new virus, an invisible enemy that you cannot catch or hit back. The number of infected people is constantly increasing, with the average growth rate moving between 10-15% per day.

Approximately 5,000 Americans have died so far, but public health officials recently said that between 100,000- 240,000 deaths can be expected before the end of this year. In extending stay-at-home restrictions past Easter, President Trump warned that the U.S. is facing "a very, very painful two weeks" ahead.

Thus, it can be expected that lockdowns will continue for the foreseeable future. It is the only available option in the fight against the virus. China showed to the rest of the world that this strategy works.

The Crisis Could Be Just Getting Started

The impending economic crisis is only in its early stages. Investors are worried, as they are starting to realize that unemployment rates could skyrocket and that factories and businesses may remain closed for the next two months or even longer. Even after the crisis is over, it will be hard to avoid an economic downturn. People will probably try to postpone some bigger purchases until they are convinced that the situation is back to normal.

The question on everyone's minds is "How long will this last?" We don't know, unfortunately.

What Do Analysts Expect?

Average expectations are that Detroit's Big 3 automakers will all show sales declines in the first quarter of 2020. It is expected that General Motors, Ford (NYSE: F) and Fiat Chrysler (NYSE: FCAU)'s auto sales will drop somewhere near 6%, 16%, and 10% respectively compared to last year's results.

Full-year forecasts are even worse. JP Morgan analysts predict that approximately 10.3 million automobiles could be sold in 2020, a 40% drop compared to last year. If this ends up being the case, sales would be even lower than in 2009, when only 10.4 million vehicles were sold.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be sent to ivana@iamnewswire.com

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