Carmakers of the future may yet look back nostalgically to 2017 as their industry's peak
sold 95m cars and commercial vehicles in 2017 the 100m mark seemed just around the corner. After a disappointing 2018 and 2019, this year was forecast to be a turning point. And it will be—in the wrong direction. As governments around the world have ordered factories to close and locked-down buyers put off purchases, car sales are expected to plummet by a fifth , to a level last seen in the depths of the global financial crisis of 2007-09.
The immediate concern is survival. Firms are tapping old and new credit lines despite high borrowing costs. Ford, an American firm, is paying a punishing 9% interest on its newly issued bonds. The price of insuring its debt against default has soared since December. Other companies, too, have seen their creditworthiness increasingly questioned.and Ford to burn through $10bn and $14bn of cash, respectively, in the first half of 2020.
At least factories are opening after having been shut for weeks. Those in China are already up and running. Chinese dealerships are, too. Early signs offer some encouragement. Chinese sales collapsed by 80% in February, year on year, according to the China Passenger Car Association, an industry body. In March they were down by two-fifths—still dismal but less so. April promises to be better. In the first 19 days of the month sales were down by just 7% from the same period last year.
Labour shortages caused by illness, the need for more deep-cleaning and other safety measures will be a drag on firms’ productivity for a while., one of several European firms that will slowly restart from April 27th, will use experience from reopening 32 of its 33 plants in China. Its 100-point plan will safeguard workers’ health—but make their jobs harder.
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