The race by car on the part of households to decamp to
suburbia from congested cities amidst the COVID-19 pandemic appears to be a
tailwind for at least one U.S. auto giant.
“Actually, you know it varies across the globe,” General
Motors Chairman and CEO Mary Barra told Yahoo Finance’s The First Trade on
current demand trends. “We're seeing the China market come back as well as the
United States and North America in general, a little faster than we thought. I
would say we're cautiously optimistic. There's a lot that we need to see start
going in the right direction. But right now we're seeing especially retail
demand come back more quickly than we expected.”
Barra’s comments come on the heels of it shelling out $2
billion for an 11% stake in electric truck maker Nikola this week. The deal
will make it as the lead manufacturer of Nikola’s 906-horsepower Badger pickup
truck and supplier of batteries for the upstart’s semi-trucks.
To be sure, the latest data on the broader U.S. auto market
is a little bit more mixed than the trends GM is seeing at the moment.
Toyota reported earlier this month that sales in August
plunged 23%, marking its fifth straight monthly decline. Sales at Hyundai
tanked 8.4%. Even Subaru — which has been riding high on the back of interest
in its Outback and Forrester — saw sales fall 17.4%.
The savings grace for automakers, as Yahoo Finance sister
publication AutoBlog points out, is that transaction prices for new vehicles
are up as they pull back on incentives. That should help offset weaker volumes
in the near-term.
Nonetheless, the auto industry is likely to have a
challenging fall as dealers battle with low inventories (caused by plant
shutdowns at the height of the pandemic) and cautious consumers dealing with
financial loss and an uncertain presidential election.
“Our initial take on August: The market recovery remains on
track. There are headwinds holding back sales — limited inventories, fewer cash
incentives – and those likely suppressed some activity as potential buyers
could not find what they wanted. The industry is also wrestling with a shortage
of MY2021 vehicles, which normally the OEMs would be rolling out at this time
of year. The lack of fresh product likely kept some buyers on the sidelines.
The inventory situation is going to take some time to improve, and when coupled
with an ongoing pandemic and weak economy, vehicle sales could face a difficult
period this fall,” said Cox Automotive senior economist Charlie Chesbrough.
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