U.S. auto sales cratered in March, thereby dragging down first-quarter sales reports of various auto bigwigs as coronavirus wreaked havoc on the economy. With production and sales grinding to a halt in mid-March, sales during the month were adversely impacted.
The COVID-19 pandemic has crippled the auto industry, with automakers across the nation suspending operations. Amid the virus-led uncertainty, the companies are resorting to severe cost-cutting measures and have withdrawn their 2020 outlook.
Sagging showroom traffic in March resulted in a drastic decline in U.S. vehicle sales in the first quarter of 2020. This underscores how rapidly the coronavirus rampage has dealt a major blow to one of the largest industries of the nation.
Below is a gist of sales reports by major automakers during first-quarter 2020.
Virus Outbreak Stalls U.S. Vehicle Sales Momentum
The top U.S automaker, General Motors GM delivered 618,335 vehicles in first-quarter 2020. This marked a 7.1% year-over-year decrease on a volume basis, mainly due to the coronavirus pandemic that took a heavy toll on sales in March. Each of General Motors’ brands — namely Buick, Chevrolet, Cadillac and GMC — reported sales decline, with Buick witnessing the maximum drop of 34.7% year over year. General Motors currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ford F reported vehicle sales of 516,330 units, down 12.5% year over year. Ford brand sales fell 13.2% year over year, somewhat offset by higher sales of the Lincoln brand. Ford brand SUVs and F-series pickups — which form a major chunk of total deliveries — saw double-digit declines.
American-Italian carmaker Fiat Chrysler FCAU sold 446,768 vehicles, which contracted 10.4% year over year. Robust sales during the first two months of 2020 more than offset the weak numbers recorded in March. Nonetheless, the firm’s hot-selling RAM pickup managed to remain in the black, with its sales totaling 128,805 units, up 7% from the corresponding quarter of 2019.
Japan-based auto biggie Toyota Motor’s TM sales slid year over year 8.8% to 495,747 units. Sales for the namesake and Lexus division tumbled 7.9% and 15.6% year over year, respectively. Notably, Toyota’s sales in the month of March totaled 135,730 vehicles, tanking 36.9% year over year.
Honda’s HMC sales totaled 2,98,785 units, shrinking around 19% from the first quarter of 2019. While the firm’s namesake and Acura brands started the year on a positive note, with solid sales in January and February, coronavirus dealt a severe blow to March sales, which plummeted 48% year over year.
Nissan NSANY posted one of the biggest quarterly declines, with sales tanking 29.6% from the year-ago period.The firm sold 257,606 vehicles in the quarter, with car and truck sales crashing 37.5% and 24.1%, respectively.
Volkswagen’s VWAGY sales were heavily slammed by the pandemic in March. The German auto giant reported higher year-over-year sales in the first two months of 2020, before hitting the brakes in March, with vehicle sales crashing 42%. Resultantly, first-quarter sales of the firm dwindled around 13% year over year to 75,075 vehicles.
Hyundai Motors’ first-quarter vehicle sales in the United States dropped 11% year over year to 130,875 units, including a 42.6% decline recorded in March. During January to March, Mazda, Porsche, Mitsubishi and Subaru’s sales declined 4.5%, 20.2%, 15.5% and 16.7% year over year, respectively.
Surprisingly, Kia Motors was an outlier for the industry, which reported year-over-year sales increase of roughly 1% during the first three months of 2020. Tesla — which does not provide U.S. sales figures — managed to keep up its global deliveries despite the COVID-19 fallout, which is certainly commendable.
Choppy Waters Ahead
Amid halted production, closed dealerships or/and historically low footfall in showrooms, sales headwinds will certainly continue. With various states enforcing ‘stay at home’ or ‘essential business’ mandates, production and sales will further decline in April. Even if some states lift/relax restrictions, consumers are likely to stay away from showrooms for quite some time.
Notably, March's unemployment rate represents a big jump from the historical lows. Owing to weak consumer confidence and substantial increase in unemployment, car sales will further decline. Per Moody’s, U.S. light vehicle sales are likely to sink at least 15% in 2020.
Well, coronavirus-induced damage has been done much and the situation is unlikely to improve anytime soon. Challenges related to the virus outbreak will certainly impact the upcoming earnings cycle. However, second-quarter earnings will be a litmus test for automakers, as it will determine the actual gravity of the COVID-19 pandemic on the economy and the auto sector.
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Ford Motor Company (F) : Free Stock Analysis Report
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