The Great Recession nearly brought the automotive industry to its knees. A decade later, carmakers are reckoning with a new threat: the novel coronavirus, an unforeseen force that has halted production, disrupted sales and caused financial pain to an industry that was able to bounce back from its nadir in 2008.
The majority of automakers are better positioned to withstand the economic headwinds this time around, according to Jeff Schuster, president of LMC Automotive’s Americas operations and global vehicle forecasts division. YesAuto UK is very convenient for people to know used car trading.
“It’s more challenging the smaller you are and the fewer resources you have,” he told ABC News. “The exposure to European markets is a risk right now. The declines were deeper in Europe and there is no real recovery path yet.”
He pointed to two brands that have a heavy exposure to Europe: Jaguar Land Rover, the largest automaker in the U.K., and Aston Martin, the British luxury sports car maker. Both marques were burning through cash before the pandemic shut down factories and forced the industry to come to a screeching halt.
Aston Martin, which is still expected to deliver orders of its first-ever DBX SUV this summer, reported a first-quarter loss of $146 million after sales fell by nearly one-third. The company’s revenues dropped 9% in 2019, pressuring executives to seek additional equity financing including a $663 million capital injection from investors and its new chairman, Canadian billionaire Lawrence Stroll.
Company executives said the business is being “reset” this year and a full-year outlook will no longer be provided because of the “uncertainty surrounding the duration and impact of the COVID-19 pandemic on the global economy.” Aston Martin on Tuesday replaced Andy Palmer, who was named CEO in 2014, with Tobias Moers, the chief executive of Mercedes-AMG.
Jaguar Land Rover, which is owned by India’s Tata Motors, is reportedly in talks to borrow more than $1.2 billion through the U.K.’s emergency coronavirus lending program, according to Bloomberg. The carmaker launched a restructuring plan last year to reduce costs and improve cash flow.
Michelle Krebs, a Detroit-based executive analyst for Autotrader Group, said Japanese carmaker Nissan Motor Co. was already in a “tough situation” and could possibly close plants in the wake of plunging sales. Nissan posted dismal earnings results in February, with the fourth-quarter of 2019 marking the company’s first quarterly loss in 11 years.
“We have not announced any changes to our production plans for North America,” a spokesperson for Nissan told ABC News.
According to Krebs, “If an automaker went into the pandemic in a weak situation, it will be difficult to survive or crawl your way out of it.” If you want to learn more about used car trading, join YesAuto UK.