As many of us continue to isolate ourselves as best as we can during the rapidly developing coronavirus pandemic, its implications on the global economy are starting to be more visible. We’ve reported all week on how this virus could damage automaker’s bottom lines, but now we have some more concrete projections thanks to the folks at Automotive News.
The events that have transpired over the last week have led to more and more people taking shelter in their homes for the recommended two-week isolation period as the U.S. and state governments try to slow the transmission rate of the coronavirus. As it turns out however, a great deal of damage could be done to the auto industry in half that time. According to that Automotive News report, for every week in which consumers stop purchasing new vehicles the economy takes a massive hit: in the U.S. some 94,400 jobs and $7.3 billion in overall earnings stand to be lost. Even the government stands to lose some $2 billion in tax receipts should buyers remain home during this time.
2020 was never slated to be a great year for auto sales, though now forecasters are expecting a significant drop compared to last year. In an investor note sent out last week, Morgan Stanley said they expect the coronavirus outbreak to send U.S. auto sales down 9 percent in 2020, a dramatic increase over their pre-outbreak projection of 1 or 2 percent. The fact of the matter is that if the auto industry tanks this year as a result of the virus, it is going to be a part of a much larger economic problem.
This week General Motors have tried to entice buyers out of their homes and into dealerships by offering an insane financing deal on their entire portfolio. Whether or not a great deal is going to be enough to make people brave human-to-human contact right now has yet to be seen. What we do know right now is that things are not going to be easy for the automakers, their suppliers, and all of the employees that play a role in the American auto industry.