An executive order signed by Gov. Gretchen Whitmer this week allows manufacturing in Michigan to resume on May 11th. The announcement clears a path for Fiat Chrysler, Ford and General Motors to restart vehicle production on May 18th.
“Here in Detroit we have a different view because we’ve been so hard hit, but there are areas of the country where it’s barely had an impact.” — Michelle Krebs, AutoTrader
Michelle Krebs is executive automotive analyst for AutoTrader. She tells WDET’s Alex McLenon, Detroit’s Big Three automakers will be looking to make up for money lost in the first quarter.
Click on the player above to hear AutoTrader analyst Michelle Krebs on how the Big Three automakers are faring during the COVID-19 pandemic, and read a transcript, edited for length and clarity, below.
Alex McLenon, 101.9 WDET: How are Detroit’s auto manufacturers holding up during the COVID-19 pandemic?
Michelle Krebs, AutoTrader executive automotive analyst: First quarter earnings were pretty much what we expected. Ford lost about $2 billion dollars, Fiat Chrysler lost almost that, and [General Motors] managed to eke out a profit. We don’t know where we’ll go in the second quarter. Ford has indicated it could lose $5 billion. I don’t believe GM and Fiat Chrysler have given that indication.
We do think the worst is behind us. April, we believe, was the lowest sales month and we’re starting to see signs that sales are going back up.
With the lockdown in the U.S. having begun in the final weeks of March, is it safe to assume that the second quarter is going to look worse than the first quarter?
Well, it varies. For GM, China had a big impact in the first quarter but will be less so in the second quarter. Likewise with Ford – they’re back up and running in China.
We know that the Detroit Three are talking about getting plants rolling again around May 18th. So yes, they’ve lost the month of April and a good chunk of May. The second quarter, at least in terms of the U.S., will be seriously impacted.
And talking about reopening the plants – sales are down right now but money is down for everyone. Is reopening the plants going to have that big of an impact? Is anybody buying the cars to validate having the plants open?
Absolutely. Every day we monitor credit applications that give an indication of sales. Here in Detroit we have a different view because we’ve been so hard hit, but there are areas of the country where it’s barely had an impact.
So sales continue to be pretty strong. The Detroit Three are actually in a good position because they are selling trucks, and trucks are what’s selling. In fact last month, for the first time ever, trucks outsold cars.
The lockdown started in the late March in the U.S., but with about half of General Motors’ business being in China, they’ve been dealing with the pandemic through pretty much the whole first quarter. Having still made a profit, and with China coming out of lockdown as the U.S. was going into it, is that an indicator that General Motors might be in a pretty good positions to come out the other side of this?
I think all of them are in a far better than where we were in the Great Recession, but of the three General Motors is probably in the best position. Also GM saw this coming early on because of its experience in China and started tapping into some of its credit so that it would have cash on hand to weather this.
The one disadvantage GM has right now is they need to be building trucks. They had a blockbuster first quarter selling trucks. In fact the Chevy Silverado outsold the Dodge Ram, and last year of course we talked a lot about the Ram outselling the Silverado. That was great, except it left them with not much inventory of trucks to sell. So the sooner GM and the others get their truck plants rolling, the better off they’ll be. That’s where the big profits are and that’s where the sales are right now.