Detroit’s ramping up soon, but are there any buyers?
Detroit automakers are going to restart production on May 4, barring any interventions by state governors. The reason might not be low sales on their part–there is no evidence that inventories are shrinking—but a desire not to be left behind as import automakers, not affected by unions and largely in the less-regulated Southeast, flood the market.
The results might not be pretty, but there is likely fear in Detroit, Dearborn, and Auburn Hills that Hyundai/Kia, Toyota, Volkswagen, and others will flood the market with cars and crossovers at the same time GM, Ford, and FCA face a shortage. Toyota, for one, only closed their plants for “inventory adjustment,” not attributing US plant closures to the coronavirus itself. Tesla only closed down after being visited more than once by local police, defying government orders.
The plants will be running relatively slowly for a while, as they try to physically distance workers and, presumably, do all their work while wearing protective gear. FCA said they would only do single shifts, and by now has already restarted ProMaster van production in Mexico—presumably because most of these are special ordered by fleet buyers; the Saltillo, Mexico and Sterling Heights, Michigan pickup lines are still silent.
The economy is expected to start picking up again in May as governors reduce their lockdown measures. One reason for this is survival: states are not getting as much federal support as the cruise ship, airline, or coal industries, and cannot continue to provide unemployment benefits for their citizens even as tax collections fall to near zero. While there may be unlimited trillions of dollars to save bond markets, the money allocated to states, especially the hardest-hit states, is quite limited; and so the balance between economics and life is dictating and less-conservative slow return to work.hello