Image credits: Jeremy Chen
News Article

US Big Three Sales Still in Free Fall in 2Q20

By Alejandro Enríquez | Wed, 07/08/2020 - 16:45

Ford, GM and FCA reported quarterly sales with decreases of over 30 percent as a direct consequence of the ongoing pandemic in the US. Ford sales dropped around 33 percent, General Motors by 34 percent and FCA group by 39 percent. 

S&P has called 2Q20 "the worst quarter in living memory" for automakers. S&P expects most automakers to present "significant losses" in 2Q20, going from cash flow management into survival mode. "Our performance in 2Q20 was really driven by Ford and our dealers' deep commitment to customers and quick action taken to support them during these unprecedented times," said Mark LaNeve, Ford's Vice President, US Marketing Sales and Service. The only Ford vehicles that saw growth in sales were Explorer and Ranger models. 

FCA took the largest sales hit with a 39 percent decline. Delayed or reduced fleet orders were among the main reasons but the company is confident in retail sales. "Retail sales have been rebounding since April as the reopening of the economy, steady gas prices and access to low interest loans spur people to buy. Our fleet volume remained low during the quarter as we prioritized vehicle deliveries to retail customers. As a result, we have built a strong fleet order book, which we will fulfill over the coming months," told Jeff Kommor, Head of US Sales at FCA. According to the company, about 20 percent of new sales leads come from online retail. In 2019, the figure was just 1 percent.

GM is also taking decisive strategies to cope with the 34 percent sales reduction seen in 2Q20. While the company highlighted a rebounding demand, Kurt Mcnail, US Vice President of Sale Cooperation, pointed at the company’s new circumstances. “GM entered the quarter with very lean inventories and our dealers did a great job meeting customer demand, especially for pickups. Now, we are refilling the pipeline by quickly and safely returning production to pre-pandemic levels. Having an appropriate mix of the right vehicles combined with the benefits of enhanced shopping technologies such as Shop. Click. Drive., positions us for success in the second half of 2020.”

S&P estimates a global auto sales drop of between 20 and 25 percent for 2020. Sales trends could have an impact on the Big Three's manufacturing operations in Mexico. In 2019, 94.5 percent of Ford exports from Mexico were aimed to the US, this figure is 74.9 percent for GM.

The data used in this article was sourced from:  
S&P Global, Detroit Free Press
Photo by:   Jeremy Chen
Alejandro Enríquez Alejandro Enríquez Journalist and Industry Analyst