F Ford Motor Company

By Nora Naughton 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (April 2, 2020).

A collapse of showroom traffic in March led to a big drop in U.S. sales for major car companies in the first quarter, illustrating how quickly the coronavirus outbreak has dented business for one of the nation's largest industries.

Fiat Chrysler Automobiles NV reported a 10% drop in first-quarter U.S. sales, saying strong results in January and February were more than offset by the impact of the virus in March.

General Motors Co. said its U.S. sales were down 7% in the January-to-March period, citing similar reasons, while Nissan Motor Co. reported a 30% drop in the first quarter.

Hyundai Motor Co.'s U.S. sales were off 11% for the first quarter and Toyota Motor Corp. reported a nearly 9% decline.

Ford Motor Co. will release its first-quarter sales results Thursday.

The weaker first-quarter results provide a window into what is ahead for the U.S. car business as the outbreak continues to shut down large parts of society. Analysts in recent weeks have rushed to cut their U.S. sales forecasts, and executives and dealers expected the sales declines to only deepen in April with a rebound not likely until the summer, at the earliest.

"Consumers obviously and understandably shifted their priorities," said David Kershaw, Nissan's U.S. sales chief. "The situation is very fluid right now and everybody's trying to get their arms around where and how this is going to play out."

Car companies already had been grappling with collapsing sales in Europe and China as the virus spread around the globe earlier this year. But new-car demand in the U.S. has held strong, all the way through the first half of March, analysts and dealers said.

The turning point came midmonth, when buyers began steering clear of showrooms to avoid interactions with others and possible exposure to the virus. U.S. car factories went dark soon after and many dealers have since temporarily closed their locations to comply with stay-at-home orders.

For March alone, analysts are expecting sales to have decreased by about a third compared to the same month last year. Toyota's sales last month fell nearly 37%, while Hyundai's dropped 43%.

"This is a sign of things to come," said Jessica Caldwell, an analyst with car shopping website Edmunds.com. "April is going to be another tough month. It's going to be hard for any company to move the needle."

Some retailers are trying to stimulate business by promoting online sales and at-home delivery services, allowing buyers to purchase a car without having to leave their homes. That has helped some, analysts say, but the bigger challenge is customers are delaying purchases altogether.

Auto makers, rushing to salvage business, have also responded by reviving sales promotions used during the 2007-09 recession, such as no-interest loans, delayed first payments and protection plans that give buyers relief if they lose a job.

Fiat Chrysler on Wednesday said starting in April it will offer customers 0% financing for seven years and deferred payments for three months.

Those kinds of no-interest finance deals helped lift pickup truck sales for the Detroit car companies in March, said Tyson Jominy, a J.D. Power auto analyst. But it is unclear if such promotions helped business more broadly because many were rolled out late in the month.

One point of relief for the industry, dealers and analysts say, is that while demand craters, nearly all U.S. factories have also closed due to parts shortages orders and to curb the spread of the coronavirus. That will help auto makers avoid unwieldy stockpiles of unsold cars.

The U.S. auto industry entered the year with expectations that vehicle sales, while slowing from a peak of 17.6 million in 2016, would remain healthy. Now, some forecasters are predicting sales could dip as low as 13.5 million in 2020 -- a level not seen since 2010 when the industry was only starting to emerge from the financial crisis.

Dealers who remained open last month saw business nosedive as buyers canceled appointments and avoided showrooms.

George Waikem II, treasurer of Waikem Auto Family, a dealership chain in Ohio, said store traffic was off 60% last month compared with February and he doesn't expect it to improve anytime soon.

"I'll be happy with 50% of what we did last year," he said, of April. "Well, I won't be happy but that's what we're hoping for."

--Ben Foldy contributed to this article.

(END) Dow Jones Newswires

April 02, 2020 02:47 ET (06:47 GMT)

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