On Wednesday, General Motors and Fiat Chrysler reported falling sales of its cars in the second quarter (ended in June) by 34% and 39% respectively. However, the company noted “the resilience of the American consumer,” despite the crisis.
The largest American automakers are in crisis due to the effects of stopping the operation of the plants for two months this spring in an effort to stem the spread of the novel coronavirus. In addition, the dealerships were closed and some consumers postponed major purchases because of the provisions of the uncertainty in the economy.
On Wednesday, General Motors (GM) and Fiat Chrysler (FCAU) reported a strong decline of vehicle sales during the quarter from April to June. The performance was predictable and even signaled the rapid recovery of demand, the company said on its efforts to return to “to quarantine” level of production, but the shares of the automakers reacted to the news by reducing.
Shares of General Motors, although increased by 29.6% over the last quarter, since the beginning of the year showed a decrease of 31.8. At the close of trading on Wednesday, shares of General Motors fell by 1.34%.
Shares of Fiat Chrysler have also increased in the last quarter of 45.16%, and the price compared with the beginning of the year, lower by 32.6%, on Wednesday closed with a decline of 3.32%.
The figures and statements of General Motors
The supply of General Motors in the second quarter fell by 34.0% compared to the same period last year to 492 489 cars. Retail quarterly sales fell 24% as the fall in April by 35% accompanied by a decrease of 20% in may and June.
The decline in shipments among the brands GM has made: Chevrolet fell by 33.6% (most fell delivery model Silverado LD – 18.6% to 89 465 cars), GMC has decreased by 32.9% (most fell delivery model Sierra LD – 9.5% to 38 825 car), Buick fell 35.9%, while Cadillac fell by 41.4%.
“GM entered the quarter with very lean inventories (number of cars produced), and our dealers did a great job to meet customer demand, especially for pickups,” said Kurt McNeil, Vice President of U.S. sales. “Now we are reclaiming the manufacturing process to quickly and safely return to “to quarantine” level”.
At the same time, McNeil said the company has “a suitable Suite of in-demand vehicles in combination with the advantages of improved technology online sales “Shop. Click. Drive.”, which gives good chances of success in the second half of 2020.”
Benchmark analyst Michael ward on Wednesday raised its target price for the stock of General Motors to 41% from $29 to $41, assessing their rating of “buy”, indicating great prospects of 2021 for the company.
The figures and statements of Fiat Chrysler
Fiat Chrysler sales in the second quarter amounted to 367 086 of cars, which is 39% lower than a year ago. The decline in shipments among the brands of Fiat Chrysler were as follows: total sales of the Jeep brand fell by 27%, a fall of Ram was 35%, and Chrysler and Dodge 58% and 63%, respectively.
But company executives said that despite the “economic chaos” in April, the pandemic COVID-19, quarter was accompanied by a stronger than expected recovery in retail sales in may and June. The company announced 20% growth in online sales, compared with about 1% a year ago.
“This quarter has demonstrated the resilience of the American consumer,” said Jeff Komar, head of sales, Fiat Chrysler Automobiles NV (FCA) in the United States. “Retail sales rebounded in April, as the recovery of the economy, stable gas prices and access to low-interest loans push people to buy”.
General Motors and Fiat Chrysler are not the only one who has faced the negative impact of the pandemic, many other companies in the sector also reported falling sales. Quarterly deliveries by Toyota Motor Corp. fell by 26.7%, missing analyst estimates, although the decline slowed towards the end of the quarter.
Hyundai Motor Co stated that, although total sales fell by 22%, selling directly to consumers increased by 6% compared to June 2019. Nissan Motor Co Ltd said that sales in the second quarter fell by almost 50%.
The uncertainty of the future of “lock”
“We anticipate continuing recovery of sales, the growth of the business, but recognize that the road ahead may not be linear,” said Elaine Buckberg, chief economist at GM. “The increasing number of infections in many States may lead to backward steps in the process of resuming production.”
April Ancira (April Ancira), Vice President Ancira Auto Group, which has 12 dealerships in the San Antonio, Texas, said that in the short term it is more concerned about the low supply of cars than consumer demand. But in the long run she is worried that government assistance programs will end before the US economy recovers.