May 19, 2020 (IAM Newswire via COMTEX) -- The first full month of COVID-19 restrictions, April, was the month when the auto industry reached its bottom with car registrations in Europe falling as much as 76 percent, with the worst hit Italy and Spain seeing a drop of 97.6% and 96.5% respectively. This was the strongest drop in demand since records began. But, as lockdowns were eased earlier this month, European carmakers were able to take advantages of loosened measures to restart production. More specifically, BMW , Volkswagen /zigman2/quotes/204431732/composite VWAGY -1.46% and Daimler AG /zigman2/quotes/203566154/composite DDAIF -0.75% were able to bank in Germany's capability to contain the spread of COVID-19 as the country's economy is heavily reliant on their output.
As of Monday, US automakers are now finally able to do the same!
Besides learning the hard way from the last Big Recession, not only was GM /zigman2/quotes/205226835/composite GM -2.15% the only out of the three that pulled out a profit, but it also made a COVID-19 playbook for others to follow.
It seems that the company's executives did more than fortify their balance sheet in the past decade. And besides carefully thought-of protocols, the guidebook has two more perks. One is that health and safety lessons have already been learned and tested from the restarting of their Asian plants a few weeks ago. Another edge is enjoyed by only GM and Ford as they reopened their U.S. plants during the pandemic as they shifted production to produce essential medical equipment. GM did good this time as it took every step that a leader can think of to ensure that protocols are followed for employees and the UAW to feel safe, so all industry players are able to restore production, sales, profits and renew prosperity as quickly as possible. Moreover, GM predicts it will be back to full production levels in about 4 weeks.
Ford Motor Company
Also on Monday, Ford /zigman2/quotes/208911460/composite F -3.92% resumed its operations at nine facilities across the US with robust health and safety protocols. Its European plants restarted recently with China leading the reboot over two weeks ago. Along with its own 'safety playbook', UAW and epidemiologist and infectious disease experts, it is carefully resuming operations across the globe. But the pandemic led to a loss of lost $2 billion during its first fiscal quarter, with the second quarter loss estimated to be far greater as the company already drew more than $15 billion in its credit line.
Fiat Chrysler Automobiles NV
Although all auto makers suffered with the lockdown, the American-Italian automaker Fiat /zigman2/quotes/204248628/composite FCAU +0.77% was among the worst hit as it heavily depends on Fiat's home market-Italy with the lockdown plunging the company into a loss for the company of $1.8 billion.
And let's not forget that by June 17 [th] , EU antitrust regulators will decide upon the fate of its $50 billion merger with PSA Group /zigman2/quotes/202472300/composite PEUGF +2.04% , which would result in the creation of the world’s fourth biggest carmaker, surpassing Volkswagen as the market leader in Europe. Although even combined, they would be weak in the luxury segment, their synergy would make them particularly strong in SUVs. But the biggest problem perhaps is that they are both weak in China.
The problem remains
Monday was a huge day as 51 plants gradually resumed production. The main issue, however, lies in the fact that the auto industry was struggling even before COVID-19 as it is a maturing market that will be redefined by electrification revolution which is led by Tesla /zigman2/quotes/203558040/composite TSLA +3.35% But no recession has ever put the world on pause as COVID-19 took 300,000 lives worldwide, with over 90,000 fatalities in the U.S. so far. And that battle is still far from being won.
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