Tesla on Wednesday engineered its latest coup, becoming the world’s richest auto company while two of Detroit’s old guard, General Motors Co (GM) and Fiat Chrysler Automobiles NV (FCA), reported sagging auto sales amid the COVID-19 pandemic.
Led by CEO Elon Musk, Tesla has had its share of ups and downs, but shares have risen steadily since late last year, as it met key production targets for its Model 3, with the automaker topping Japan’s Toyota in market valuation.
The company still sells only a fraction of the vehicles of the “Big Three,” yet it has captivated investors’ imaginations as a bet on the future under charismatic leader Musk, who has challenged conventional wisdom on CEO comportment, while also trying to shift the industry away from combustion vehicles and toward electric.
Photo: AFP
Meanwhile, the lower sales at two of Detroit’s Big Three reflected the hit from the coronavirus, which depressed vehicle demand for part of the quarter and prompted a shutdown of US auto production.
GM and FCA pointed to improving sales trends later in the quarter, although GM also said the recent spike in US COVID-19 cases added to uncertainty.
Cox Automotive has warned of the possibility of a “cruel summer” for auto sales as the US contends with a resurgent coronavirus outbreak and automakers struggle to replenish inventories.
Cox surveys indicated one-third of potential buyers planned to delay vehicle purchases, “driven by general uncertainty in the market, civil unrest and continued unemployment concerns.”
At GM, sales plunged 34 percent in the second quarter from a year earlier to 492,484 vehicles, the automaker said.
The auto giant, along with Ford Motor Co and FCA, halted manufacturing for nearly two months at the height of the virus outbreak, but has returned to normal operating levels at most plants, GM said.
The company’s news release alluded to “very lean” inventories of popular pickup and sport utility vehicles, where demand has been solid and increased notably in May and last month.
“After falling into a deep recession in March, the US economy has begun to recover as it reopens,” GM chief economist Elaine Buckberg said.
“Auto sales are benefiting from historically low interest rates that make now an attractive time to buy a vehicle for many customers. We expect continued sales recovery as businesses ramp back up, but recognize that the path forward may not be linear,” she said.
FCA reported a similar trend, with sales bottoming out in April and bouncing back more strongly than expected in May and last month. The company reported a 39 percent decline during the quarter to 367,086 transactions.
“This quarter demonstrated the resilience of the US consumer,” FCA head of US sales Jeff Kommor said. “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.”
Ford was yesterday to report its sales figures.
Cox has estimated that US auto sales fell about 30 percent during the quarter to 4.4 million vehicles. This includes an expected drop of 61.1 percent in Tesla US sales to 10,000.
Shortly after midday, Tesla shares were up 4.1 percent at US$1,124.13, while those of GM were up 0.1 percent at US$25.32 and FCA fell 3.6 percent to US$9.88.
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