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        home > news > Automakers > Plummeting Auto Sales Causing Inventories, Layoffs to Rise

        Plummeting Auto Sales Causing Inventories, Layoffs to Rise

        Honda, Nissan lay off nearly 30K workers.

        Michael Strong
        Michael Strong , Managing Editor
        April 07, 2020
        Inventory levels are on the rise as the coronavirus pandemic wreaks have on new vehicle sales.

        The tough sales results in March are being followed by even more dire predictions for April. Now the anecdotal evidence showing the industry is taking a down turn is adding up.

        U.S. automakers are selling fewer and fewer vehicles and the cars, trucks and sport-utility vehicles already built are beginning to stack up in storage lots and at dealerships. At the beginning of April, the average days’ supply number for the industry was 95 days, which is a 26-day gain from March and is the highest it has been since February 2009, according to Edmunds.com.

        It’s not as dire at dealer lots where the days-to-turn – how long it takes to sell a vehicle after it arrives at a dealer – stayed relatively flat at 77 days compared to 76 days for the month prior. Details for each brand are attached.

        (Pandemic will have “a permanent effect on auto industry.)

        “Auto plant reopening dates are a bit of a moving target right now because no one is certain when the worst of the pandemic will be over,” Jessica Caldwell, executive director of insights, Edmunds.

        “Although sales will likely remain lackluster until shelter-in-place orders are lifted, this is at least ensuring that dealerships are in a strong position inventory-wise to continue serving those who need a vehicle during this crisis while the majority of Americans sit out of the market.

        “With production and inventory at a standstill, automakers who have already begun providing favorable finance terms and lease extensions will face a great amount of pressure to sell quickly once the nation gets back to work.”

        (Pressure on automakers rises as shutdown gets extended.)

        As those inventory levels rise, automakers in the U.S. continue to take actions to manage their resources: human and capital. Honda Motor Co. and Nissan Motor Co. on Tuesday said they had furloughed thousands of workers at their U.S. plants and facilities due to the pandemic, Reuters reported.

        A Honda spokesman for Honda told Reuters that about 18,400 workers at plants in Alabama, Indiana and Ohio, will be impacted. The Japanese automaker will guarantee salaries through April 12, after suspending operations March 23. The plants will be closed through May 1.

        Nissan noted it was laying off about 10,000 U.S. hourly workers starting April 6 after suspending operations at its U.S. manufacturing facilities through late April due to the impact of the outbreak. The two automakers aren’t alone in making changes.

        AutoNation, the largest automotive retail chain in the U.S., shuttering showrooms across the U.S. and laying off at least 7,000 employees.

        (Fever pitch: coronavirus taking increasing toll on auto industry.)

        LMC is currently predicting U.S. sales will plunge from 17.1 million last year to 14.2 million for all of 2020. And that number could drop by as much as 3 million under a worst-case scenario.

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