Industry Expert Carla Bailo Predicts Two-Year Auto Recovery, Impact Not as Severe as Expected

According to Carla Bailo, the President and CEO of the Center for Automotive Research, it can be expected to take two years for auto sales and production levels to return to pre-COVID levels. Bailo’s comments were made during a legislative hearing in Lansing, Michigan on September 2nd.

Bailo said, “Everyone is predicting this year about 13 million (vehicles sold), pre-COVID we were about 17 million. We expect it’s going to take another two years, but that’s predicated on a good recovery and continued recovery throughout this year. Should we have another hit in the fall, we’ll have to adjust those figures. So about two years to come back to where we were.”

However, returning to sales figures equal to pre-pandemic times depends on stability in the auto industry. With the novel coronavirus continuing to be a worldwide problem, the potential for lockdowns to be re-imposed is not off the table. Should that occur, the effect on the auto industry would be dramatic.

Regional director of state government relations at General Motors, Brian O-Connell says that even a short halt in production could cripple the industry again. “The shutdown had a huge impact on our industry and our company. And we cannot afford a shutdown. We cannot afford a week shutdown.” 

Effect on Sales Not as Severe as Expected

To this point of 2020, Carla Bailo says that overall sales are down by 25 percent. Pickup trucks continue to be performing well and are down just 10 percent. Used vehicle sales are also below pre-COVID levels.

But the effect isn’t as dire as it one seemed it would be. Cox Automotive is forecasting that August sales will exceed the SAAR predicted by Carla Bailo. Sales appear to be nearing normal for 70 percent of dealers and SAAR is expected to be around 15 million units.

Holding back sales to a certain degree currently is a shortage of inventory, not buyers. Due to the eight-week shutdown for automakers in the United States and abroad, popular models like the aforementioned pickups are in short supply. Cash incentives are also drying up due to the shortage, keeping some purchasers from pulling the trigger. 

Staffing Concerns at Plants Ongoing

Safety remains a hot topic for auto manufacturing facilities. Since a plant shutdown due to COVID-19 could destabilize recovery efforts, PPE and safe work practices are being strictly enforced.

GM’s O’Connell mentioned that masks are required to be work at all times when on site at facilities, preventing the potential spread of the virus. The focus is on keeping workers healthy and eliminating the possible transmission in any way they can so operations can continue uninterrupted.

He said, “We cannot have an outbreak at our plants. It shuts us down. It shuts our suppliers down. The impact is tremendous on us.”

Although there have been plant workers who have been ill with COVID-19, it has not originated or transmitted at their facility.

“We have not had a transmission at our plant where people are following safety protocols. Now, have we had employees who had it? Yes, but it was when they were home over the weekend and not working.”

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