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March 19, 2020

Will North America closures go beyond March?

Could the 'Detroit Three' coronavirus related plant closures continue beyond March?

By Olly Wehring

Could the 'Detroit Three' coronavirus related plant closures continue beyond March?

Following the news Ford, General Motors and Fiat Chrysler (FCA) are shutting their North American manufacturing plants through 30 March in response to the deepening coronavirus (COVID-19) crisis, the automotive editor at GlobalData, David Leggett, said: "The news from the US is certainly not unexpected and follows temporary plant closures already announced for Europe. As is the case in Europe, the reasons behind the cessation of manufacturing operations are a sudden large drop to demand, supply chain disruption and a duty of care to the workforce in the face of an unprecedented public health crisis.

"In a coordinated move that also involved the United Auto Workers (UAW), 'Detroit Three' US auto producers have set the closure period to 30 March with the situation then reviewed on a regular basis after that.

"Given the forecast trajectory and spread of the coronavirus, it is highly unlikely that production will be able to resume soon after 30 March and that shutdowns will be extended into April at least.

"Of particular importance to a production restart is a stabilisation to market conditions and there is no sign of that yet.

"Demand for new cars is drying up in major markets as consumers face considerable uncertainty over the economic outlook and grapple with new priorities in their daily lives. The March sales numbers are going to make for grim reading in Europe and the US.

"While there is some inertia support for sales such as orders to fleets that were already baked in, private car sales will have fallen off a cliff. Dealerships are not exactly busy with footfall or leads.

"Much depends on how economies react to the crisis over the next few weeks and whether government actions and support in response to the crisis can restore already damaged consumer and business confidence."

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