Supply issue for some brands, others will have increased sales

New Zealand’s motoring industry has yet to see the affect of new car sales due to coronavirus, but some brands may fair better than others.

The pandemic is changing rapidly, so the global motoring industry is monitoring the situation intensely with the announcement yesterday that Fiat Chrysler is temporarily closing four plants in Italy.

A spokesperson for Fiat Chrysler said the plants affected in Italy will be closed for the rest of the week to “minimise the risk” of contagion among employees. They are expected to reopen on March 16.

To limit contact among workers, the company said it would increase space between employees at their workstations. This will require a change to manufacturing processes and lead to lower daily production rates.

This week, Nissan become the first Japanese carmaker to halt production due to the Coronavirus’s affects just days after Hyundai and Kia did the same in South Korea, while some Chinese carmakers have switched production to making facemasks.

For New Zealand, this could see a decline in stock being shipped here due to lack of production at factories, and supply of parts.

The Motor Industry Association’s chief executive officer, David Crawford, said disruptions to sales would be felt here in coming months.

“The coronavirus has affected both the production vehicles and the supply if parts for the production of vehicles in a number of countries,” he told AutoMuse.

“Manufactures are adopting a range of measures to manage production from shutting down production lines within plants, setting up new sourcing arrangements for parts and reducing their outputs within existing stocks of parts.

“It remains unclear the extent to which supplies of new vehicles which be impacted but some disruptions will be felt in coming months.”

March is one of the strongest months for new vehicle sales in New Zealand, while April generally sees a decline due to Easter and school holidays.

For many distributors here, they already have new products either on ships en route to New Zealand, or confirmation from their head offices of quotas.

But for some brands, the affect of the coronavirus on international travel for Kiwis could have a positive knock-in affect.

One luxury brand told AutoMuse this week that some customers of premium, luxury and exotic vehicles will probably cancel their “$50,000 European holiday this winter” and instead use that money to upgrade their vehicles.

But for other markets, new vehicle sales are expected to decline.

Morgan Stanley expects the coronavirus outbreak will send U.S. auto sales down 9 per cent this year. Before the outbreak, analysts had expected a modest decline of 1-2 per cent, says Automotive News.

LMC Automotive said it expects concerns over coronavirus in the United States and other countries could drive global vehicle sales this year down 4 per cent to 86.4 million, from 90.3 million in 2019, Automotive News reported.

America’s new car sales figures for the first quarter are expected early April, while the MIA will release our results for the beginning of this year around April 2.