Return to Work Signals Auto Industry Recovery to Begin

After shutting down automotive production more than two months ago, many automotive assembly plants are beginning to bring their workforce back. Around 133,000 workers are expected to return to work this week, getting the post-pandemic recovery effort underway in America. It’s one of the first truly positive signs that the economy is starting to resume.

The news of car factories reopening is just the start. Carmakers will require a steady stream of parts to supply the assembly lines, essentially pulling the parts manufacturers along with them in the restart process. 

Dealers Already Opening

Factories going back online is not the first sign of recovery for the industry, though. Thousands of dealerships nationwide have started to resume sales after weeks of being in flux regarding the status of essential or non-essential businesses.

In New York State, perhaps the hardest hit by the coronavirus, new car dealers are now permitted to have in-person appointments with sales customers, according to a statement released to CBT News from the Greater New York Automobile Dealers’ Association. Franchised car dealerships are the 5th-largest retail employer in the metro New York area. Appointments for one-on-one visits must be scheduled in advance and walk-in traffic is still not permitted.

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“Dealers have been diligent serving customers during this unprecedented crisis, and this is one way to begin reopening an important sector of the state economy,” said GNYADA President Mark Schienberg. “Since the Governor’s office identified vehicles repairs and service work to be an ‘essential business,’ our dealers have followed the State and CDC’s protocols to keep their employees and their customer safe. Now with this new State guidance that allows face-to-face sales with prior appointment, dealers will be able to sell and lease cars more easily to those who need them.”

Manufacturers Supplying the Demand

Sales throughout the beginning of May 2020 are much stronger than forecast when the coronavirus forced economic shutdowns nationwide. Rather thana 70 to 80 percent year-over-year decline, losses are much less dramatic.

According to the Cox Automotive Auto Market Weekly Summary for May 18th, 2020, new car sales are down 31 percent year over year, and used car sales just 6 percent lower compared with 12 months ago. New car sales have been bolstered by aggressive incentives from carmakers, keeping revenue flowing to dealerships across the nation.

Used car sales will continue to be an anomaly for the next weeks or months. After the weeks-long in-person shutdown at ADESA and Manheim auctions, there remains a backlog of used cars coming through the block. That could tank used car prices and temper new car sales due to lower trade-in values, or it could drive up used car prices due to a lack of supply when lots begin to empty out. 

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Another Slowdown Still Possible

The return to work at assembly plants will help to replenish stock on in-demand vehicle lineups, particularly pickup trucks. However, workers could still be sent home again should demand falter, or if there’s a resurgence of the coronavirus.

Perhaps the most resilient industry in the United States’ economy, it’s no surprise the auto industry is among the first to go back to work. A strong strategy from carmakers and legislators alike will help ensure the major economic sector continues to survive and thrive.

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Car Biz Today, the official resource of the retail automotive industry.