May 6, 2020 - Economy

Automakers to resume production amid cautious signs of buyer demand

Worker getting temperature read

A worker at the Vauxhall car factory in the U.K. gets his temperature read. Photo: Colin McPherson/Corbis via Getty Images

There's a growing consensus that automakers can safely resume vehicle production this month as they continue to ride strong demand for pickup trucks and SUVs through the coronavirus crisis.

The big picture: The pandemic crippled auto production and sales as it rolled across the globe, but signs of improving business in China are providing hope that the industry will see a similar V-shaped recovery in North America.

Driving the news: "We're certainly seeing green shoots in China," General Motors' CFO Dhivya Suryadevara told reporters during a call to review first-quarter results.

  • In the U.S., she said, "there are bright spots in the industry," particularly surging truck sales in regions not heavily affected by the virus.
  • Other automakers have also been encouraged by China's rebound, but Volkswagen warned that Europe could take longer to bounce back.

By the numbers: GM reported a net profit of $294 million, down 87% from the first quarter a year ago on a 6% drop in revenue to $32.7 billion — beating Wall Street's low expectations.

Between the lines: This is the first big test of GM's resiliency since the global financial crisis in 2009 pushed the company into a government-backed bankruptcy.

What's next: GM and FCA have announced plans to restart production in North America on May 18. Ford has not given a date, but will likely do the same.

  • They'll start slowly, operating just one shift, and then gradually ramp up.
  • Employees are being trained on strict health safety protocols developed jointly with the United Auto Workers union.

What to watch: Vehicle demand is still in question. While China's rebound is encouraging, the economic fallout of the prolonged shutdown of the American economy is too difficult to read, GM officials said.

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