HARDY TRUCK SALES BOLSTER CAR COMPANIES DURING HEALTH CRISIS
The coronavirus outbreak has cut deeply into U.S. auto sales, but for Detroit in particular one corner of the market has held up relatively well: pickup trucks. With auto makers offering aggressive finance deals and trucks often needed for work, sales of pickups haven’t dropped as precipitously as other types of vehicles and are expected to bounce back faster as the market recovers, industry executives and analysts say. Another factor, they say, is that big truck-buying states, like Texas and Florida, have had less-restrictive lockdowns during the Covid-19 crisis.
Source: The Wall Street Journal
GASOLINE DEMAND REBOUNDS
Gasoline demand is rebounding, suggesting that the car – at least for now – is making a comeback. As lockdowns ease and parts of the world reopen for business, driving has emerged as the socially distant transportation mode of choice and is offering some near-term relief to an oil market fresh off its worst crash in history and reeling from an unprecedented collapse in energy demand. “People are using more their cars because they are afraid to use public transportation,” Patrick Pouyanne, the chief executive of French oil giant Total SA, said.
BIGGEST U.S. CAR DEALER DECLARES THE RECOVERY IS UNDERWAY
AutoNation Inc., the biggest car-dealership chain in the U.S., said consumers’ desire to travel again and do so in their own personal space is driving the industry’s rebound from the coronavirus pandemic. Demand started to pick up at the end of April as shutdown orders eased, Chief Executive Officer Mike Jackson said Monday after the retailer reported first-quarter profit that beat analyst estimates. The comments comport with market researcher J.D. Power’s findings that retail sales declines have moderated for five consecutive weeks.
PICKUPS, PROFITS ARE JOB ONE AS U.S. AUTO PLANTS MAY RESTART NEXT WEEK
Assuming they reopen next week as planned, to make up for lost time and lost profits as quickly as possible Fiat Chrysler US, Ford Motor Co., and General Motors will likely restart production with their most profitable and popular products first, and that means building trucks, trucks and more trucks — specifically, pickups and SUVs, experts said.
GM RESTART IN CANADA WILL BE SLOW, COSTLY, UNIFOR SAYS
'If I didn’t think it was safe, I wouldn’t be in there,' plant chair says
Unifor has painted a very vivid picture of GM Canada’s safety measures and production plan for its CAMI plant in Ingersoll, Ont. It includes costly ventilation and a slow return to capacity.
In a video update posted to Unifor Local 88’s website Thursday, Plant Chairman Mike Van Boekel outlines the automaker’s blueprint for his members.
General Motors is scheduled to resume North American vehicle assembly May 18 — a day later in Canada because of the Victoria Day holiday. CAMI, which builds the popular Chevrolet Equinox, will begin with a skeleton crew on the day shift, consisting of workers in the factory’s paint, stamping and welding departments, according to the union. Week 2 will feature full production, but only during one shift. Two shifts will work during the third week of ramp-up. It’s not clear when the factory will return to three shifts. One-hour gaps will be scheduled between shifts in an effort to limit employee interaction. “This is absolutely necessary to keep our people safe when they come in and out of the plant,” Van Boekel says in the video.
Unifor said GM will modify all general ventilation air houses at CAMI to run with 100-per-cent fresh-air intake “effectively quadrupling our fresh-air intake running with zero recirculation.”
"Normally at this time of year, we are running at about 25-per-cent fresh-air intake and 75 per cent is recirculated air. The cost is obviously going to go up."
When reached by phone, GM Canada spokeswoman Jennifer Wright wouldn’t immediately say how much that would cost the automaker. GM will also turn on "as many exhaust fans as possible,” the union said.
Clean work stations
CAMI is also unique in that its hourly employees rotate jobs every shift — some every hour, others quarterly during a shift — and that means an increased sharing of tools, work stations and tables. No other Detroit Three factory operates that way. It presents health and safety concerns for Unifor, said Van Boekel. “We are in talks with the company about the amount of time you’re going to get paid to clean your work area,” Van Boekel said.
In a telephone interview with Automotive News Canada, Van Boekel said his members “love the rotation and they love the variety” and “would kill me if we eliminated it.” So rotation is likely to continue, but maybe not with as much frequency for the time being, he said. “We’re trying to make it so you rotate every four hours,” he said.
Other changes inside the plant include larger break areas, with added tables. Break areas will be cleaned twice per shift Lockers have been spaced apart and eliminated in some cases to make more room. Masks and safety glasses are now mandatory throughout the plant.
Wright said “the work place is going to look different for everyone.”
Van Boekel told Automotive News Canada he’s been in the plant every day for three consecutive weeks working on the changes. He said half his members are calling him, “ready to get back to work” while “the other half has anxiety about going back, saying ‘we’ll never be completely safe.’” “We listen to both camps,” he said. “But I’ve got a wife and three kids, and I go home to them every night. If I didn’t think it was safe, I wouldn’t be in there.”
Source: Automotive News Canada
20 GROUP IDEAS FOR THE CORONAVIRUS
One of the best resources a business owner can have is access to new information. While this is true in any circumstance, having new ideas brought to your attention is even more important amidst a global pandemic. While you may be in crisis mode internally, it’s imperative that you exemplify a calm exterior for the sake of your employees and your business. In our 20 Group meetings, many dealers have discussed ways they can be better leaders during this time. The ideas sometimes start small, like regularly checking on individual team members’ health and safety, and how to establish lines of communication via email and video conferencing. While other ideas, like establishing new processes to implement contactless delivery services in both your fixed and variable operations, can be huge undertakings. No matter how big or small the new information may be, it’s critical that you seek out as much advice as possible from your trusted advisors and reliable sources.
In this piece, I wanted to share with you some of the best ideas shared by my dealer clients, in our recent 20 Group video conference calls, on how to tackle the challenges associated with the COVID-19 pandemic. The following list is not an all-inclusive guide of the greatest ideas across our industry, it is merely a shortlist of a few items I consider to be the most unique and innovative.
Ideas to Consider:
Insurance Premiums: If your employee count has decreased, send the new census to your insurance company. While you are at it, give your insurance agent a call and see what other information they have on file that can be updated. Many times, updating your policy can result in savings on premiums without having to sacrifice any coverage.
Workers Comp: Like your insurance policy, now is also a great time to look at your workers compensation policy. Break out vacation pay, holiday pay, and paid time-off to lower your premium.
Update Google My Business: If you haven’t done so already, get on your Google My Business listing and update it to reflect current business hours. While there, make sure the links are working properly for phone and messaging. In fact, now is a great time to do this same process for all of your online business listings.
Highlight New Services: Let people know if you’ve expanded your services with initiatives like vehicle delivery, remote test drives, or new digital retailing options. Additionally, be sure to share the precautions your dealership is implementing at this time. Not only will this showcase your dealership in a positive light, but many of these services might be exactly what your customers have been wanting.
Maintain Your Community Presence: Social networking is critical right now, and I would advise dealers to be careful of reducing or eliminating your online presence. It’s possible that your actions could erase a positive digital reputation and established history. Along with the loss of a digital selling tool, you may be forced to start from scratch when you decide to reengage.
Fixed Operations Revenue: Try to maintain as much revenue as possible in fixed operations. Even if your costs increase and your net profit decreases in the short term, you need to keep the technicians busy. We know how difficult it is to find qualified technicians, and it will only get harder if you lose techs during this crisis. It will cost more to recruit, hire, and train new techs at a later date than it will to keep them on board now. The current situation has brought to light how important it is to keep your best employees close.
Armed with these ideas, I hope that you and your dealership can optimize a few areas during the pandemic, and ultimately be prepared to emerge stronger on the other side. Like many of the economic challenges the retail automotive industry has faced before, there is an opportunity for dealers to evolve and become a more robust business than before. As proven over time, peer collaboration is one of the best ways to build a stronger organization. My 20 Groups have found the interaction with other dealers beneficial enough that we are scheduling recurring weekly meetings well into the foreseeable future. The COVID-19 pandemic will pass, and there will be leaders in our industry who will push our industry forward. Use this crisis to strengthen your team and processes so your dealership will be poised for market leadership.
Source: Lee Michaelson, NCM Associates
LOCKDOWN LEADS TOYOTA CHIEF TO QUESTION CORE TENET
Toyota Motor Corp. CEO Akio Toyoda says he is starting to question long-ingrained practices at the Japanese carmaker after cutting travel by 80 percent and spending less time in meetings as part of measures to guard against the spread of COVID-19. The grandson of Toyota’s founder, who has spent recent weeks at a Toyota training facility, said on Tuesday he is now questioning “Genchi-Genbutsu,” a Japanese phrase that translates roughly into “go and see for yourself.” The principle was built on the idea that problems can be solved more quickly and efficiently by going to where they exist and analyzing root causes. “We’re taking a fresh look at the assumptions of ‘Genchi-Genbutsu’,” Toyoda, 64, said after announcing Toyota’s financial results and forecast for an 80 percent decline in operating profit for the fiscal year through March. The outbreak has forced automakers to shut factories and showrooms, leading to a plunge in vehicle sales.
Toyoda said it’s still important to see things for yourself, but for the right reasons and at the right times. But it’s also becoming clearer that people shouldn’t be traveling all the time just to attend meetings, he said. Underscoring the point, the CEO said he spends 30 percent less time in meetings, and cut related paperwork by a half. “Until now, when employees met me, they would prepare briefing materials, or have someone else prepare them, and then use information that’s one or two weeks old for discussions,” Toyoda said. “Now, I can just get on a video conference without any materials and deal with any issues then and there.”
Japan places great emphasis on face-to-face meetings and paper documents. That may have to change as the government urges businesses to let employees work from home. Even “hanko” seals for official documents are being questioned, with many people working remotely. While the outbreak has accelerated shifts in Japanese work habits, the need was already clear before the health crisis. Such inefficiencies in white-collar work have come under criticism in recent years, with the emergence of new technologies to communicate and transact, and a labor shortage exacerbated by the aging population.
For Toyota, any saved time would be better used thinking about the future of the 87-year-old automaker, the CEO said. Toyoda, however, stopped well short of calling for an end to one of the 13 tenets of the Toyota Production System, the carmaker’s guiding principles. Instead, he called for a return to the main idea behind Genchi-Genbutsu, by being smarter about seeing things in person and when to see them remotely. Obtaining information outside what is presented, and making apologies in person are still critically important, the CEO said.
“We need to be bold about what we should stop doing, and what we should change.”
Source: Bloomberg and Automotive News
ASTON MARTIN STRUGGLES
Aston Martin posted a deep first-quarter loss after sales dropped by nearly a third due to the impact of the coronavirus crisis, though the luxury car maker said production of a crucial sport utility vehicle was on track. Aston Martin, popular for being James Bond’s carmaker of choice, suffered a torrid time since it floated in October 2018, seeing its share price tumble from 19.00 pounds ($23.00) to around 40 pence.
PENSKE SUSPENDS DIVIDEND TO PRESERVE CASH
Penske Automotive Group is suspending its dividend in a move the nation's second-largest new-vehicle retailer said will save about $34 million in cash during the second quarter." The decision to suspend the quarterly dividend is consistent with the other measures the company has implemented to mitigate the impact of COVID-19, including a hiring freeze, the deferral of approximately $150 million in capital expenditures and the furloughing of 57 percent of its worldwide workforce, among others," CEO Roger Penske said in a statement Wednesday.
Source: Automotive News
FCA, PSA GROUP DITCH DIVIDEND DISTRIBUTION OVER COVID-19
The boards of Fiat Chrysler Automobiles and Peugeot maker PSA Group have nixed a planned dividend distribution in light of the coronavirus pandemic, but they say plans for their 50/50 merger remain on track. As part of their merger announcement last year, FCA and PSA Group had said each company would issue a $1.2 billion (1.1 billion euro) ordinary dividend distribution in 2020 related to the 2019 fiscal year. But on Wednesday, they announced that the combined $2.4 billion ordinary dividend was off.
Source: Detroit Free Press