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Carmakers Gear Up to Restart Plants as States Ease Restrictions
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Ford Motor Company (F - Free Report) , General Motors Company (GM - Free Report) and Fiat Chrysler Automobiles N.V. are reportedly planning to restart some production at their United States factories from May 18. The news comes a day after many European carmakers resumed production at their European plants, with Volkswagen AG (VWAGY - Free Report) reopening its biggest facility.
Vehicle production across the United States had come to a halt after carmakers suspended manufacturing in late March, following the coronavirus outbreak. A temporary halt in production coupled with declining global auto sales has been hitting carmakers. However, with a number of U.S. states now steadily reopening, especially those in the Bay Area, carmakers are contemplating resuming production at their North American facilities.
Carmakers Freeze Restart Date
According to a Wall Street Journal report, all three big Detroit carmakers — General Motors, Ford and Fiat Chrysler — have been initiating talks on a timeline for a possible restart with United Auto Workers (UAW) and Michigan governor Gretchen Whitmer’s office over the past few days. However, Ford said that it is yet to determine an exact date, while Fiat said that it will officially communicate new restart dates in a few days.
The other big U.S. carmaker Tesla, Inc. (TSLA - Free Report) , which had called some workers back to its vehicle-assembly plant in Freemont this week, canceled requests to bring back its employees to production lines on Monday. The UAW last week had warned that it was too “soon and risky” to reopen plants, citing risks to workers. However, carmakers have been planning to resume some production in May after plans of an April restart had to be done away with as coronavirus continued to spread.
Is It an Early Restart?
Although the coronavirus spread curve has somewhat flattened in a few states and many have started easing restrictions, experts say that it is too early to resume business. However, most U.S. carmakers have downed the shutters of their factories since Mar 24, when coronavirus started spreading it tentacles in the United States.
Many automakers had initially thought of restarting some production in April but growing cases of Covid-19 prevented them from doing so. Coronavirus has already left automakers battered with both sales and production taking a massive hit. Earlier this month, Ford said that it expects to report an adjusted pretax loss of about $600 million for the first quarter. The company also said that total revenues for the first quarter are expected to be about $34 billion, down 15.7% from $40.3 billion a year ago. Ford carries a Zacks Rank #3 (Hold). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
General Motors’ U.S. sales fell 7% in the first quarter from a year ago. Fiat too reported a 10% decline in sales in the first quarter. Global car sales have been witnessing a sharp decline over the past few quarters. To make things worse, coronavirus has further started biting into the profits of the companies.
The situation is no different for foreign carmakers. On Monday, a number of carmakers including Volkswagen resumed production at its largest European plant. Also, Bayerische Motoren Werke AG (BAMXF - Free Report) said that it plans to reopen its British and German plants from May 4 and May 11, respectively. European car plants have already changed work patterns to incorporate more rigorous hygiene and cleaning intervals as well as more generous spacing between workers.
Meanwhile, carmakers in the United States are working with UAW on drawing up safety protocols for reducing exposure risk to workers. However, the companies are reportedly yet to finalize these terms.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Carmakers Gear Up to Restart Plants as States Ease Restrictions
Ford Motor Company (F - Free Report) , General Motors Company (GM - Free Report) and Fiat Chrysler Automobiles N.V. are reportedly planning to restart some production at their United States factories from May 18. The news comes a day after many European carmakers resumed production at their European plants, with Volkswagen AG (VWAGY - Free Report) reopening its biggest facility.
Vehicle production across the United States had come to a halt after carmakers suspended manufacturing in late March, following the coronavirus outbreak. A temporary halt in production coupled with declining global auto sales has been hitting carmakers. However, with a number of U.S. states now steadily reopening, especially those in the Bay Area, carmakers are contemplating resuming production at their North American facilities.
Carmakers Freeze Restart Date
According to a Wall Street Journal report, all three big Detroit carmakers — General Motors, Ford and Fiat Chrysler — have been initiating talks on a timeline for a possible restart with United Auto Workers (UAW) and Michigan governor Gretchen Whitmer’s office over the past few days. However, Ford said that it is yet to determine an exact date, while Fiat said that it will officially communicate new restart dates in a few days.
The other big U.S. carmaker Tesla, Inc. (TSLA - Free Report) , which had called some workers back to its vehicle-assembly plant in Freemont this week, canceled requests to bring back its employees to production lines on Monday. The UAW last week had warned that it was too “soon and risky” to reopen plants, citing risks to workers. However, carmakers have been planning to resume some production in May after plans of an April restart had to be done away with as coronavirus continued to spread.
Is It an Early Restart?
Although the coronavirus spread curve has somewhat flattened in a few states and many have started easing restrictions, experts say that it is too early to resume business. However, most U.S. carmakers have downed the shutters of their factories since Mar 24, when coronavirus started spreading it tentacles in the United States.
Many automakers had initially thought of restarting some production in April but growing cases of Covid-19 prevented them from doing so. Coronavirus has already left automakers battered with both sales and production taking a massive hit. Earlier this month, Ford said that it expects to report an adjusted pretax loss of about $600 million for the first quarter. The company also said that total revenues for the first quarter are expected to be about $34 billion, down 15.7% from $40.3 billion a year ago. Ford carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
General Motors’ U.S. sales fell 7% in the first quarter from a year ago. Fiat too reported a 10% decline in sales in the first quarter. Global car sales have been witnessing a sharp decline over the past few quarters. To make things worse, coronavirus has further started biting into the profits of the companies.
The situation is no different for foreign carmakers. On Monday, a number of carmakers including Volkswagen resumed production at its largest European plant. Also, Bayerische Motoren Werke AG (BAMXF - Free Report) said that it plans to reopen its British and German plants from May 4 and May 11, respectively. European car plants have already changed work patterns to incorporate more rigorous hygiene and cleaning intervals as well as more generous spacing between workers.
Meanwhile, carmakers in the United States are working with UAW on drawing up safety protocols for reducing exposure risk to workers. However, the companies are reportedly yet to finalize these terms.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>