The US car industry is restarting after Covid. Now what?
: Coronavirus pandemic automakers have had to close all auto plants in North America. When companies close their factories across the board and close in March, they will reopen their various facilities in stages and gradually reintroduce the product. It will take months – perhaps years – for companies to restore production before the crisis.
There is a litany of challenges facing the industry while standing back and running. Stay-home orders vary by state. Some suppliers, especially small ones, have limited financial resources to roll back assembly lines and may lack the ability to procure the personal-protection equipment needed to keep their workers safe. The most expensive opportunity the entire sector is trying to avoid is the need to re-start production and re-start production.
German automakers were one of the first people to get out of the gate, Daimler’s Mercedes-Benz and BMW began operating partially-operated factories in the southern US. Tesla plans to reopen its California plant on May 8, Michigan manufacturers move forward to reopen May 11, General Motors, Ford, and Fiat Chrysler begin production May 18.
This is why it is important
Motorists book revenues when cars leave their factories, so stopping production is expensive. For example, Volkswagen AG estimates that stopping production on both sides of the Atlantic costs the world’s largest automaker 2 billion euros ($ 2.2 billion).
To meet demand better than expected, the output needs to be restored, especially for pickups. Although carmakers may be cautious about the shortage of goods by moderating incentives, including 0% financing offers, they are eager to fill their big-money trucks and sport utility vehicle supplies first.