By on March 20, 2020

Bankrupt. Shutterstock user Peace Tree Studios

With the novel coronavirus forcing the economy to grind to a halt, just about every industry on Earth is affected, almost all negatively. The auto industry is no exception.

Production is halting around the world, and it seems likely that car dealers will be closing, either voluntarily or via government order, at some point soon – at least on the sales side (vehicle service is arguably essential).

People are being ordered to stay home, people are losing their jobs, and with a few exceptions – say a first-responder who absolutely needs a car right now – there will be almost no vehicle sales, new or used, for the next two months or longer.

Even as bad as things got in 2007-2009, sales never ground to a halt.

So will the automakers join the airlines in asking Washington for money? Just over a decade after two of the Detroit Three went to Capitol Hill, hats in hand?

Note: I am not arguing if they should. That’s an argument for another day. I was pro-bailout in 2008 for a variety for reasons, although I am not someone who believes in bailouts as a matter of philosophy. I believe bailouts should only be provided under certain circumstances. Circumstances outside an industry or company’s control? Okay, sure. Would collapse and liquidation cause great harm to the general economy, especially during a time of recession? Go for it. Is reorganization via bankruptcy not an option? Fine. Is the company or industry providing a public good? Alright, I get it.

That said, I do believe bailouts should be loans, not handouts.

All the above reasons are why I was pro-bailout in 2008. The automakers suffered a double-whammy on the credit crunch (couldn’t get credit from the banks, consumers didn’t have credit to buy cars), liquidation was more likely than reorganization via bankruptcy if the government didn’t step in (obviously, the government managed the bankruptcies when all was said and done), and liquidation of one of the Detroit Three would’ve been catastrophic at a time when the overall economy was tanking.

I also argued for the bailouts because automakers needed loans to get new product to market to address the rising fuel prices – and thanks to factors unique to the auto industry (read: Long product development times that can’t be shortened, in part because of regulations) and banks that weren’t lending, the automakers just needed money to stay afloat until new product could reach the market.

You can even argue that vehicles are a public good, and while other companies would’ve remained to produce them, costs would’ve gone up as the remaining OEMs dealt with fewer suppliers and fewer shared platforms, making it hard for some people to afford vehicles they’d need to get to work.

Sure, there are strong counter-arguments against bailouts. Some say that government should never get involved, and if an industry or company fails because of factors it can’t control, too bad, them’s the breaks. Some argue that bailouts actually hurt the economy in the long run, even if they keep companies afloat. And specific to the auto industry, some argue that if automakers couldn’t foresee or prepare for a downturn, and/or because the Detroit Three was too slow to produce fuel-efficient cars that were competitive, they should’ve faced the consequences.

To that, I say, poppycock: Few saw the economic collapse coming, and the Detroit automakers were already working on offering better small cars – they just needed to get them to market. Remember, it takes three to five years to develop a new vehicle, or to give an existing model a full redesign.

I did experience discomfort with how involved the government got with GM, and Cash for Clunkers had some problems, but overall, I think the bailouts were a net positive. Jobs were saved (if not enough), the loans were mostly paid back, and the automakers bounced back stronger. The dealer network was also trimmed (full disclosure – I am related to a dealer principal who lost his franchise as Ford cut down on stores).

To be fair, government investments in GM and FCA that were separate from the loans didn’t do so well, and ProPublica lists the taxpayer investment in the automakers as a “loss”, though I think it’s a bit unfair to combine loans that were repaid with equity investments that resulted in a loss. The two things are separate, and the government could’ve loaned the money without taking stakes in the companies. And even if you chalk it up as lost taxpayer money overall, it’s still, in my view, worth it, thanks to the jobs that were saved.

But, again, I’m not here to relitigate 2008 – I just wanted to provide context. The question, again, is will the automakers need to ask Washington for help as a result of the coronavirus shutdown?

Right now, I don’t think so. For one, it appears the Detroit Three have much more cash on hand as a reserve than they did during the Great Recession. Just look at Ford as an example.

If China is any indicator, the automakers might not have too much to worry about – although that country saw huge sales drops during the peak of the coronavirus crisis, production appears to be rebounding.

It also obviously depends on how long automobile production is shut down, and just how long consumers are stuck at home. If the world is back to normal in a month or two, the automakers and most dealers will likely be just fine. A six-month timetable looks much dicier, however.

The bigger picture is also vastly different. In 2008, it was mostly banks and automakers asking for money. Now, the airlines are ailing, and just about every industry is borked. The entire economy is basically shut down. Hell, the Trump administration is talking about simply sending money directly to consumers.

So automakers, conscious of how divisive the last bailout was, might be a bit more careful about approaching the government for cash, unless it’s absolutely necessary.

There are other factors at play, too. For one, the coronavirus may scare people away from public transit for a while. That could result in a sales boost once the world restarts. Automakers are also likely to cut deals to incentivize buyers – we’ve already seen that. Of course, cash on the hood gets people in the door, but it can come at a cost.

Finally, fuel prices have dropped, and gas was already relatively affordable in most places even before the world went to hell. Additionally, highly profitable crossovers and SUVs are even more popular than they were in 2008, and they are more fuel-efficient. So with low fuel prices, consumers have no real reason to switch back to sedans, and even if fuel prices do spike, crossovers pass more gas pumps than they used to.

This means automakers might not have to scramble for cash in order to switch product plans on short notice, or need to worry about getting loans to usher already-planned product through the development process.

I don’t foresee us running death watches just yet, but like everything else with this virus, nothing is certain. The future is cloudier than ever.

[Image: Peace Tree Studios/Shutterstock]

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86 Comments on “Auto Industry Death Watch 2020: Are We Heading for Another Bailout?...”


  • avatar
    Lorenzo

    I think the shutdown will be short enough that no bailout will be necessary. When the all-clear is sounded, there will be pent up demand that will clear any backlogs, providing the dealers and automakers with cash enough.

    UAW workers have pay protection measures that will be used. It’s the workers who don’t have union coverage like servers, cooks, busboys, maids, and bartenders, among many others, who will have lost income that can’t be recouped.

    • 0 avatar
      Tim Healey

      That is where I am at…for now.

    • 0 avatar
      SCE to AUX

      It won’t be short, and there won’t be an all-clear sounded.

      Instead, it will be a long, drawn-out waiting game, followed by a partial all-clear, followed by reports of more infection, followed by more isolation.

      I don’t know how this ends cleanly.

      • 0 avatar
        Lou_BC

        @SCE to AUX – agreed. Unless SARS-CoV-2 virus hops back into an animal reservoir and stays there, this isn’t going to end quickly. Any return to “normalcy” will give the virus the change to replicate again. One will have to wait for a vaccine which will be roughly a year from now at best. The reports of success with chloroquine are limited in scope. if the dose is wrong, it kills people. I have yet to read anything from a reputable source on antivirals being effective across the board.
        Staying the course with social distancing is the best approach since that strategy will prevent healthcare from being overwhelmed. The high death rates in Wuhan province and Italy are mostly due to that fact.

        • 0 avatar
          Vulpine

          @Lou_BC: The quinine treatment you mention is not intended as a cure but as a treatment to ease the symptoms. It is certainly interesting that a treatment for Malaria is even partially effective against Covid-19. Yes, the treatment can sometimes be worse than the disease but if it helps at all, then that can be beneficial while we wait for a proper vaccine.

        • 0 avatar
          JimZ

          if you haven’t already, read Derek Lowe’s blog over at Science Magazine (titled “In the Pipeline.”)

          he’s a drug discovery-pharmaceutical chemist who has a ton of insight on how this stuff works.

          https://blogs.sciencemag.org/pipeline/

          plus, his “Things I Won’t Work With” category is funny as all get out.

        • 0 avatar
          Dan

          “Staying the course with social distancing is the best approach since that strategy will prevent healthcare from being overwhelmed.”

          Healthcare is going to be overwhelmed in many places by the end of the month and everywhere else by the middle of next. It will stay overwhelmed for the duration. Lockdown and distancing to the greatest practicable extent will, hopefully, hold it down to only overwhelmed by a factor of 2 or 3 for long enough that something – discovery of better non ICU treatments, fortuitous strain mutation, benevolent aliens, I’d take anything at this point – can come out of left field before that 2 or 3 turns into 20 or 30.

          The math on this one is absolutely terrifying.

          • 0 avatar
            geozinger

            I tend to agree with your statement. I think that we’re not being told all that is known. In addition, we have no way of knowing how this will play out; some common sense things only have so much effectiveness…

          • 0 avatar
            mcs

            One thing that is starting to emerge is that smoking might be a factor. The countries that have been hardest hit have high rates of smoking and inhaled tobacco smoke could be enhancing the infection mechanism. If you smoke, now is a really good time to quit.

          • 0 avatar
            Lou_BC

            @Dan – “The math on this one is absolutely terrifying.”

            Agreed.

            The reason why “flattening the curve” is important is to lessen the burden on health care. There aren’t enough ICU beds and ventilators to care for the worst cases. One can build more ventilators but you can’t quickly train more nurses, respiratory therapists or Doctors to care for all of those extra patients.

            I read that the average time to recovery once intubated (breathing tube inserted and put on a vent) is 14 days. If one does not recover then the average time on a ventilator to death is 25 days. There might be some that will recover after that 14 day span but if the system has no capacity that means health care staff will be forced to assess for stabilization within 4-5 days and if no improvement by 7 – 10 days then they will be forced to “pull the plug” after that 14-16 day mark.

          • 0 avatar
            RHD

            The math is terrifying… but for anyone under 65 who is reasonably healthy, it’s going to be like getting a cold or a mild flu. Some people will never even know that they had it.

            It will be fatal to 10-20% the elderly who catch it, and simply awful for smokers, the diabetic, those with cancer, high blood pressure and heart problems.

        • 0 avatar
          thornmark

          >>if the dose is wrong, it kills people.<<

          that's true of virtually anything but you seem to be unusually uninformed and willing to share it

          • 0 avatar
            Lou_BC

            @thornmark – my point is the fact that since chloroquine/hydrocloroquine hasn’t been studied for COVID 19 disease then one does not know for sure what constitutes safe therapeutic limits.

            “unusually uninformed”
            Unless you have a PhD in medicine, microbiology or in virtually any allied health profession, I’m betting that I’m considerably better informed than you are!

          • 0 avatar
            JimZ

            This is why we don’t tell people to use drugs off-label for conditions they’re not tested for.

            https://www.cnn.com/2020/03/23/africa/chloroquine-trump-nigeria-intl/index.html

            but go ahead with your flippant ignorance.

          • 0 avatar
            JimZ

            Here’s another couple of casualties of chloroquine:

            https://www.npr.org/sections/coronavirus-live-updates/2020/03/24/820512107/man-dies-woman-hospitalized-after-taking-form-of-chloroquine-to-prevent-covid-19

            This is why the ramblings of ignorant politicians are not sound medical advice.

          • 0 avatar
            EGSE

            @JimZ: “Here’s another couple of casualties of chloroquine:”

            Why in the world would they need to do this? According to some of the geniuses on this forum it’s merely a “weak-ass flu”.

    • 0 avatar
      Luke42

      @Lorenzo:

      A short shutdown is optimistic. My job involves some business dealings with China, and our partners there were mostly shut down for three months.

      My Chinese colleagues also say that they’ve tried all of the things we’re doing now, and that they didn’t work very well. They recommend going straight to quarantine centers and field hospitals. Of course, we’re engineers, not epidemiologists, but we’ve all had a front-row seat to this for *months* already — so we’re not exactly casual observers.

      In talking with my American friends about this, I’ve discovered that I have to explain the obvious: my Chinese colleagues are just as smart and hardworking as we are, even though they are in different parts of our supply chain. They have their $#!t together for the most part, just like we do. We can’t just assume we’re going to deal with COVID-19 better than China. We threw away our head start while our national leadership was busy pretended this was “just the flu” and refused foreign-made test kits put of arrogance, and so we’re off to a lousy start. We’re in for a wild ride, and it will likely take at least three months to sort this out.

  • avatar
    Hummer

    “we’re so doomed”

    That’s an interesting tag.

  • avatar
    Vulpine

    “Auto Industry Death Watch 2020: Are We Heading for Another Bailout?”

    — I would say that for Ford, the answer is a definite ‘Yes.” For the others, maybe not. GM has made some significant changes, not always to the pleasure of its workforce, that could help them survive this coming period. If they are smart, they will use this time to prepare for the EV evolution and come out of it running, instead of trying to just pick up where they left off. This is an opportunity–but only if they take the challenge.

    Other brands have their opportunities, too. Traditional methods of manufacture and sales are seeing a paradigm shift–triggered by Tesla if by nothing else–and as such traditional markets are collapsing, even more so now with the Covid-19 virus pandemic. FCA appears to have been correct with its attempted divestment of Chrysler’s legacy dealerships but obviously it did so far too soon and engendered too much legal push-back from those dealerships. Now, 12 years later, those dealerships and everyone else’s are seeing sales dwindle as they drive customers away to more amenable sales venues using more modern sales methods.

  • avatar
    ajla

    Everything Death Watch 2020

    • 0 avatar
      JMII

      Agreed: cruise lines, airlines, hotels, restaurants, malls – you name it, no industry is safe… well unless you sell medical supplies I guess. If everyone stays home only companies with stuff you can stick in a box and ship tomorrow will remain profitable. Anything that was an “experience” will be done.

      Get ready for the virtual racing. NASCAR, Indycar and F1 will be hosting online racing events. All of a sudden those Twitch streams your kids were into just became your new ESPN. I can only assume the NBA, NHL and NFL will follow suit.

      • 0 avatar
        ajla

        I’m still being paid and technically have contracts through October although if my client’s companies go insolvent or just stop paying who knows what happens. I’m fortunate in that I have about 11 months in savings (that I could probably stretch to 13) and don’t have children to worry about taking care of.

        But as of today everyone I know is either laid off or can’t work due to government order. They probably have 0-6 months in savings and these were decent-ish $35K+ paying jobs so $1000/month isn’t going to cover the loss. What’s going to happen to people when the money runs out and they aren’t allowed to work?

        • 0 avatar
          Dan

          “What’s going to happen to people when the money runs out and they aren’t allowed to work?”

          Food stamps, eviction freezes, mortgage holds, and federal dollars dumped on everything by helicopter until this has burned through enough of us for herd immunity.

          I think that we’ll have plenty of dollars but I’m worried they’ll be well on the way to the Zimbabwe kind.

      • 0 avatar
        Vulpine

        @JMII : I’m almost surprised that nobody has considered using some of these cruise ships as mobile hospitals for the disease. After all, each stateroom could be turned into a semi-isolation bed for keeping patients separated from other patients and they have thousands of rooms available, as well as on-board cooking and cleaning facilities for handling those thousands of patients. It really wouldn’t be that difficult to press them into service as such.

        • 0 avatar
          Michael S6

          They are considering this if situation gets worse

        • 0 avatar
          geozinger

          IINM Princess Cruise Lines has offered their ships as hospital ships. Maybe it was some other cruise line, but as I’ve never cruised, the actual name didn’t stick with me. It was something I’d heard on the radio while on my way to work this week.

          • 0 avatar
            Vulpine

            Not Princesss, as I remember, but I saw that as well and wondered if they had seen my statement to you or had a similar thought at a similar time because the report came out through Cruise Critic roughly an hour after I’d mentioned it. Coincidence, to say the least.

  • avatar
    thegamper

    Well, there will be millions of people with a few extra grand in their pocket soon with the Trump bucks stimulus plan. Small business owners will be getting their “forgivable” bridge loans soon and the ones that have no intention of paying them back can get a free taxpayer sponsored car.

    I think there is a lot of people hurting, but also a lot of people who will be fine if things start getting back to normal in the next 30 days.

    So qualified answer, if this drags out past the end of April with shutdowns, shelter in place orders, etc….its going to be bad. Everyone will need a bailout. On the bright side though, we will have saved thousands of octogenarians with pre-existing medical conditions. So there’s that.

    • 0 avatar
      Vulpine

      @thegamper: Might I suggest you read this: https://www.medscape.com/viewarticle/927196?fbclid=IwAR3fNUKm-X8f6kSqH8rkco0LvYipwgm485G8wnL4HrAUaLi7IChlZSzrr5s

      It’s not just the octogenarians who are at risk.

      • 0 avatar
        Lou_BC

        This goes beyond dealing with COVID 19. If the majority of hospital beds are tied up with COVID 19 pneumonia’s and ICU’s are tied up with COVID 19 ARDS, what will happen to those who suffer heart attacks, asthma attacks, strokes, diabetic complications, liver and kidney disease? Add to that mix various forms of trauma. Allegedly, the USA healthcare system is at 95% of capacity with the “normal’ stuff that puts us in the hospital.

    • 0 avatar
      Dan

      “I think there is a lot of people hurting, but also a lot of people who will be fine if things start getting back to normal in the next 30 days.”

      That’s certainly true at 30 days and still would be at 60 or even 90 if this would just end.

      My back of the envelope of 60 days from now is 15 million cases, 100,000 dead, and we’re only just beginning.

      • 0 avatar
        Maymar

        Apparently Canada’s Public Health team is planning for six months worth of deaths in a six week period, which would be roughly ~130k people, so if the US situation scales up, it’d be approx 1.3 million.

        • 0 avatar
          Dan

          As unhealthy as America already is, and as little medical help as there’s going to be, I’d call that awfully optimistic.

          That six week peak will encompass 3/4 of the entire epidemic, if we could keep it to 50% total infection rate and 2% CFR – conservative on both counts – that’d be 2.5 million in the hell stretch.

          The figures below are for Koreans in fully supplied hospitals. You can figure out what it’s going to look like for diabetics at home.

          https://www.statista.com/statistics/1105088/south-korea-coronavirus-mortality-rate-by-age/

          • 0 avatar
            RHD

            Having been watching the numbers, I get the feeling that this is just getting started. Countries such as Mexico, Brazil, and Guatemala are in the low hundreds – where we were a month or so ago. Their population densities are higher, and health care infrastructure is not up to even US levels.
            Our curve is farther along than theirs, and will drop sooner or later. Theirs will go higher and last longer – when our situation is resolving, they will still be in catastrophic territory.
            The Middle East is just getting started, and the African continent is at the very beginning.
            Our best hope is an effective and safe vaccine that can be produced in massive quantities and given to everyone, worldwide. The alternative is the majority of all people getting it sooner or later and tragically high mortality figures, particularly among the elderly and those with high-risk medical conditions.
            One final thought – if we do not get a vaccine, then the virus will keep spreading around the world from its last isolated pockets back into countries in which it had practically disappeared.

  • avatar
    JimZ

    Betteridge’s Law of Headlines.

    That said, consider:

    2009: GM and Ford had been losing billions every quarter since 2005, and were well beyond broke by the time the finance sector collapsed.

    2020: GM and Ford both have ~$15-20bn cash and cash equivalents on hand, and ~$30bn total liquidity.

    so get back to me once they’ve been losing money for successive years and are unable to borrow any. ‘cos we’re nowhere NEAR that point right now.

    cripes, I think some in the media *want* to see these companies go bust or something.

    • 0 avatar
      Hummer

      That was my thinking as well, these companies are going to hurt but they should be able to weather this. I expect this to cause R&D Budgets to suffer for a while but bankruptcy shouldn’t be in the cards assuming we’re not in the same situation come 1 month from now.

    • 0 avatar
      Vulpine

      @JimZ: Ford’s stock price is headed for the basement. Their $22B is all added debt as it comes from lines of credit, not cash on hand. Simple point is that Ford is effectively betting the brand, again, to stave off bankruptcy and this time at the beginning of the recession rather than later.

      GM may be at less risk but I can see this taking a bad turn if they don’t at least try to prepare ahead of the recovery. They’ve already announced their product intentions and this stoppage would be a near-perfect opportunity to come through on those products.

      FCA, while obviously hurting on its own, has already committed to a partnership/merger with PUGOY, which hasn’t been impacted as strongly as France proved more proactive in its response to Covid-19.

      We’ll just have to wait and see.

      • 0 avatar
        JimZ

        “@JimZ: Ford’s stock price is headed for the basement. ”

        That has little to nothing to do with the company’s ability to operate and make profits.

        can we stop acting like the stock market (and share price) is the be-all, end-all of everything?

        • 0 avatar
          Lou_BC

          @JimZ – stock prices will continue to hold sway in some circles as long as the cheeto-in-chief continues to fixate on the stock market.

        • 0 avatar
          Vulpine

          @JimZ; So you reacted to my first statement and totally ignored the rest. Ok, let’s ignore the first statement and explain to me why Ford going $22 billion dollars into debt ON TOP OF their existing debt is a good thing, hmm?

          • 0 avatar
            JimZ

            because the vast majority of that debt is “revolving” debt owned by Ford Motor Credit Co., and people have been b*tching about it for over a decade while the actual financial types view it differently than debt taken out to finance ongoing operations.

            Hmm?

          • 0 avatar
            Vulpine

            @JimZ: Of course, you have a link to verifiable proof of your statement, right? Ford is in debt up to their eyeballs and their sales, outside of so-called trucks, have been falling. I find the tale of Ford being in debt to itself rather… specious, at best.

          • 0 avatar
            JimZ

            try this for a start. people have been grumbling about it for years. You’re not bringing anything original.

            https://www.fool.com/investing/general/2014/06/24/should-you-be-concerned-by-fords-117-billion-debt.aspx

          • 0 avatar
            Vulpine

            @JimZ: Interesting information. Worth watching to see how that comes out. I would, however, remind you that even banks are hurting right now, so just because Ford Credit owns most of Ford Automotive’s debt, that doesn’t mean they are automatically immune from the current Covid-caused recession.

          • 0 avatar
            JimZ

            it’s worth remembering that even during the Great Recession FMCC only posted losses for one or two quarters in 2008 (near as I can find, I’m not digging through everything.) IIRC reading that they deliberately don’t play much in the sub-prime sector.

  • avatar
    MrIcky

    I think this is far different than 2008. When the government asks you to stay home, I don’t have as many concerns about assisting businesses. It’s concerning to watch all the small businesses like restaurants that are failing, it may be longer coming back than we think- even in 2008 people occasionally went out to eat, groceries stores remained open all hours, etc. I don’t think it compares well, it’s just the only event in our frame of reference.

    • 0 avatar
      Hummer

      I have no doubt restaurants are going to suffer considerably, but I’ve went out to eat two days in a row now and the small places are doing curbside service with decent business and the drive throughs are wrapped around buildings.

  • avatar
    Michael S6

    In 2008 the big three were deep in debt and owed billions to pension funds, future health care costs, and were losing money on operations. Currently the companies are in much better financial situation as they are leaner and profitable from pickup truck and big Suv sales. The pandemic will not cause their downfall but their very narrow vehicle offering is a big risk as they are totally dependent on the USA truck and Suv market.
    If Americans ever stop buying pick up trucks or start buying foreign pick up trucks then game is over.

  • avatar
    65corvair

    It just too soon to know. There will be pent up demand. I hope it will be a lot.

    • 0 avatar
      87 Morgan

      Not going to be much pent up demand, we have been selling 16M+ for the last several years. New cars dropped to 9M or maybe 10M then up a bit in 09′ and more in 10′. A 30 or 60 day closure is not going to create a lot pent up demand considering so many are staying home and not putting miles on their existing cars.

  • avatar
    redgolf

    Oh, the old cyclical auto industry, what would we have done without you? Even the Chinese quit riding around on bicycles!

  • avatar
    Jeff S

    There are some bright spots for the auto industry in that with Trump’s new emergency powers (war powers) the Government can use auto plants to produce respirators and other essential medical supplies. True this is no replacement for lost auto production but it will at least keep some revenue flowing into the auto industry. In today’s press conference
    Trump when asked stated GM was one of the industries that was contacted to produce medical equipment. The auto dealers will be hit much harder than the auto manufacturers. Maybe we will have another Cash for Clunkers in the future if auto sales don’t pick up.

  • avatar
    Steve203

    Until there is a vaccine, or a silver bullet treatment, I don’t see life getting back to normal as any relaxation of controls on people’s movement would probably result in re-acceleration of the spread of infection.

    That means the virus will cause a deep recession.

    I hear a lot of people saying there will be “pent up demand” that will make sales and profits soar, once we are on the other side. People laid off will draw down savings, and they will be watching their 401k crater. I don’t see people having the discretionary income. On the last go around, auto sales didn’t get back to 2007’s 16M level until 2014.

  • avatar
    Jeff S

    @Vulpine–Many of the auto dealerships by me have closed the dealership except for the parts and repair. Dealers are now offering online purchases arranging financing or allowing you to arrange your own financing and even delivering the new vehicle to your door. Ford dealerships have a lot of new 2019 Ford Focuses left and one is offering them starting at $14,900. GM dealers are offering cash back and 0% financing for 84 months. Even a Toyota dealership near me has plenty of 2019 Rav4s.

  • avatar
    87 Morgan

    In 2008 the retailers for the Big 3 were doing just fine selling the wares of GM, Ford and CerberusC/J/D even though 2 of the 3 were headed to the BK court very soon.

    The difference now…
    The retailers (dealer body) are the ones who will go under due to this pandemic. The factories are sitting on enough cash to weather the storm and in fact may find their factories used to produce medical supplies. The dealers are sitting on a ton of inventory and in 5 states for sure and more to come most likely, they are closed selling zero. In 2008, 2009, & 2010 they were selling, albeit less, but selling and used cars were plenty profitable if you knew what you were doing. Add in the C4C deal, the dealer body was in good shape or reasonable if you will.

    This mess we have now could and most likely will cause the closure of several new and a lot of used car dealers. I get that for some on this site this is a welcomed event, but just like not every attorney is a dirtbag, not every small used car dealer is a dirtbag. Most are just trying to make an honest living.

    • 0 avatar
      sgeffe

      The big conglomerates will be OK — mine is a larger, family-owned group, but they haven’t forgotten their roots. The family has most of the Bowling Green, OH stores, plus a VW dealership in Monroe, MI. Good people, got a good deal on my 2019 Accord, and they will continue to get my business.

      You’re right that the honest Mom-‘n-Pop stores are gonna be hard-hit if this goes more than May or so.

  • avatar
    myllis

    As I writing this in Europe (Finland) I can inform what will be expected. At first you have seen just a marks of coronavirus, it extends really fast and you will notice it high temperature and breathing comes harder every day before your breathing stops. How to survive, stay home, use mask and one time cloves when you go shopping. Do not meet even your friends.
    European countries has closed they borders and no one gets in or out without 2 weeks isolation. Many countries army is controlling your steps if you go out your home.
    No one knows how long coronavirus will afflected our society, but as I call today my friend in Southern China and he says that southern china is still in isolation and what Chinise qovernment official speaks are just bluff.
    Cause Finland is small country and only 5,5 milj. habitants our government hopes the worst scene will be over in June. But comparing the scale it means hell of a longer time in USA.

  • avatar
    B&B? PFFFFTHAHAHA

    Amazing allowing this much power to politicians over a weakling virus. The Wife and I had it months ago, when it was still called a “bug”. Weakest ahem, “flu” either of us have ever had. Mild symptoms and completely gone in 10 days. What a joke.

    • 0 avatar
      Michael S6

      It is far from being a joke for the 1-2 percent that die or the thousands that are hospitalized some on ventilators.

    • 0 avatar
      JimZ

      “ The Wife and I had it months ago, when it was still called a “bug”. ”

      You did not.

      • 0 avatar
        Vulpine

        @JimZ: While I agree that it is unlikely, I don’t believe it is impossible. Way back in early December I had what I considered at the time as a “one day” cold, which is highly unusual and turns out to be one of the symptoms of a Covid-19 infection. This doesn’t necessarily mean that I was an early case, only that it is possible. I was also at a major theme park at the time and on the fourth day of my visit, meaning I very likely contracted it at the park. And since the park is internationally known, it is very possible that any one–or group–of visitors might have brought it with them.

        My wife also caught something, though likely from me but also possible from the park. Her symptoms were much more drawn out and rather uncharacteristic of a cold or flu, though she did hold a fever during the later stages. While she was never diagnosed with a flu through testing, in her case a specific medication for the treatment of a flu WAS effective and reduced her symptoms within a week–though didn’t totally eliminate them. Again, we don’t know exactly what it was we caught but the odds are pretty much even that we had at least some variant of Covid that simply affected us differently.

        Keep in mind that even now, not all that much is known about this disease and only the more extreme cases seem to be making the news. Those more extreme cases are also the ones that are more life threatening. This ‘bug’ is no joke and honestly the only reason I tend to agree with you in that commenter’s case is that the username and statements come across as more an effort to dismiss the disease through a fake account than any legitimate statement. Whereas I don’t know with any certainty that I did contract it, only that I and my wife both had highly unusual symptoms beginning at roughly the same time near the time that this disease was already running rampant in the Wuhan state of China.

        • 0 avatar
          JimZ

          unless you were in Wuhan, claiming you “had it months ago” long before anyone knew what it was or even how to test for it is stupid. Just because you were sick months ago doesn’t mean it was this; it’s not like all of those other viruses out there just decided to sit things out while this one took over public attention.

          chances are far, FAR more likely if you got sick months ago you caught a flu virus or one of the hundreds of viruses which cause colds of varying severity.

          • 0 avatar
            Vulpine

            @JimZ: Do you purposely misread what I wrote? Read what I said above again and this time note that I emphasized the fact that I don’t KNOW if I had it, only that I had highly unusual symptoms that happen to match the kind of symptoms others have had–but not the majority.

            Keep in mind also that the illness started in Wuhan long before 1/1/20;
            Keep in mind also that I clearly stated that I was in an international park, that happens to get frequent visitors from China AND even has public-facing employees from China. So yes, it is possible, even if not probable, that I could have contracted Covid-19 in its early stages.

            Again, as I have now stated twice, the symptoms were highly uncharacteristic of any disease I have previously contracted both in their sudden severity followed by equally sudden clearing up. The common cold usually lasts a full week for me, plus two weeks of chest congestion mostly due to allergy sensitivities and sinus reactions. This, literally, lasted only one day. My wife’s symptoms came on much more slowly and yes, did result in a short-term fever though again, with testing showing that it wasn’t any kind of known flu yet reacted well to a very specific prescription flu medication.

            Neither case can be empirically stated to be Covid-19 but neither can they be empirically stated as to NOT being Covid-19. We didn’t have any tests for Covid at that time and our President wasn’t even acknowledging its presence at that time. What we do know is that my wife annually has her flu shots, so if this were a common flu, she should not have been impacted.

            I, on the other hand, seem to have a natural immunity to most forms of flu to the point that a vaccination that has almost no effect on anyone else GIVES me that flu but yet despite a public-facing private business I never caught any flu that others may have carried. This, again, shows how unusual this incident was for me and my wife. What was it? I don’t know. But neither you nor I can say with any definite evidence that it was or was not Covid-19.

          • 0 avatar
            B&B? PFFFFTHAHAHA

            Chances are, you’re talking out of you B&B(YALL!) ass again. What field are an expert in today, mouthy?

        • 0 avatar
          thelaine

          Yes, Vulpine, this virus has been in this country since at least January, and probably sooner. Many people got it. Millions in the US have it now or have had it. The more they test, the more they will find. Luckily, it is weak, in that it does not typically kill otherwise healthy people, unlike other viruses of the past and present. Most people never know they had it. That is how weak it is. Yes, it is a vicious killer of the old and vulnerable. We need to spend our resources protecting and saving them and their caregivers.

  • avatar

    IMO it is a good time to buy Ford stocks. it would be even better if they did not cut dividends. Or TSLA. Actually anything, like mutual funds, if you have IRA.

  • avatar
    thelaine

    For those who are not too terrified to think, there is good information available. The first is from the notoriously pro-Trump right wing New York Times. Here is an excerpt and the link:

    “I am deeply concerned that the social, economic and public health consequences of this near total meltdown of normal life — schools and businesses closed, gatherings banned — will be long lasting and calamitous, possibly graver than the direct toll of the virus itself. The stock market will bounce back in time, but many businesses never will. The unemployment, impoverishment and despair likely to result will be public health scourges of the first order.”

    https://www.nytimes.com/2020/03/20/opinion/coronavirus-pandemic-social-distancing.html

    The second is an analysis of the virus data so far.

    “The following article is a systematic overview of COVID-19 driven by data from medical professionals and academic articles that will help you understand what is going on (sources include CDC, WHO, NIH, NHS, University of Oxford, John Hopkins, Stanford, Harvard, NEJM, JAMA, and several others).”

    https://medium.com/six-four-six-nine/evidence-over-hysteria-covid-19-1b767def5894

    He whose mind has been slammed shut by fear and panic should just skip it. Anyone who is still open to dissenting or unpopular opinions should check them out.

    • 0 avatar
      Hummer

      “ The first is from the notoriously pro-Trump right wing New York Times.”

      Thanks for the laugh I assume you meant to include /sarcasm.

      • 0 avatar

        “the notoriously pro-Trump right wing New York Times.”

        That’s the one reason why I do not read NYT. Actually I do not read it because it requires subscription and level of journalism is underwhelming to say the least to justify paying hard earned $$ for what you get.

      • 0 avatar
        thelaine

        Indeed, Hummer. Just trying to get people to read a link. They demand evidence and when you provide it, they ignore it. I figured the NYT was a safe space for some.

  • avatar
    Jeff S

    There might be more mergers and joint ventures in the auto industry with those who have cut production and eliminating models being in the best position to weather this virus. I have been critical of GM and Ford eliminating many product lines but under the present environment this was a good decision. My concern for GM, Ford, and FCA is that they are more reliant on sales of high dollar trucks and suvs which will be less popular in a recession. Yes I realize that politicians do not want to utter the “R” word but this could be reality the longer this pandemic and quarantine goes on.

  • avatar
    Tstag

    Vulnerable car makers that will probably need a bailout:
    – Ford
    – Tesla
    – JLR
    – Suzuki
    – PSA/ FCA?

    Mergers?

    VW and Ford?
    BMW or Mercedes buy JLR?

    VW and Ford because they already work together and would be a good fit as VW needs more US sales and could part share across EU.

    BMW or Mercedes buy JLR – BMW because they already have an alliance with JLR and for both Mercedes and BMW, JLR would be a good fit.

    Reason it possible won’t happen? Ford Family and Tata pockets/…

  • avatar
    Jeff S

    Too early to predict who will merge but just when you think you know who will merge and who will not merge then you could be way off. Ford and GM could merge and then maybe not. Suzuki is not going to get a bailout because they no longer sell cars or any vehicles in the US except motorcycles and quads and I doubt that they will get a bailout for that. Ford is more likely to get the bailout because they are a US based corporation.

  • avatar

    GM and Ford were preparing for recession for a long time already. Lessons of Great Recession were learned. What makes you to think they are in trouble?

    • 0 avatar
      ajla

      “What makes you to think they are in trouble?”

      Because there is a good chance this will be considerably worse than whatever they were anticipating. It is like preparing for raccoons and getting grizzly bears instead.

      • 0 avatar

        The is no reason for that. Financial system and banks are healthy, economy was thriving. This crisis is artificial. I can agree that stocks were overpriced but little correction would fix that. All that crisis is caused by stupidity of unelected dictator for life in China. Another reason to stop groveling before communist regime of China who is proved to be enemy rather than friend.

  • avatar
    Erikstrawn

    I am never for bailouts. Like individuals, companies need to have a reserve for emergencies. Government bailouts encourage undue risk. Now that every industry knows they can get a bailout, more companies are leveraged to the hilt, because if you’re not taking wild risks, you’re falling behind. The way it should work is that if your company doesn’t have a reserve, someone else will buy you up cheap. If the market exists for your product, most employees aren’t going to lose their jobs. Management is what gets replaced – and they deserve it.

  • avatar
    Flipper35

    If they are not doing loans then just give each family a voucher for a down payment on a car.

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