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Illustration: Aïda Amer/Axios

The economic fallout of the global pandemic will test the resiliency of U.S. automakers, who vowed after going bankrupt a decade ago that they would be prepared for the next downturn.

Why it matters: No one is suggesting the coronavirus means a repeat of 2009's bleak days, when the U.S. auto industry was on the verge of collapse and needed a taxpayer bailout to survive.

  • But what began in late January as an issue for auto supply chains in China now threatens vehicle demand around the globe, writes Bloomberg, citing RBC Capital Markets.
  • Morgan Stanley analyst Adam Jonas is even suggesting the U.S. should bring back the hugely popular "Cash for Clunkers" rebate program that propped up car sales during the Great Recession.

The state of play: It could be a month or two before parts shortages that began in China ripple through supply chains and potentially interrupt U.S. auto production, industry experts say.

  • Many components were already en route to carmakers and suppliers ahead of the Chinese New Year, before the coronavirus threat extended the holiday shutdown.
  • Carmakers are using workarounds, like airfreight or alternative suppliers, whenever possible.
  • “There are bubbles that haven’t shown up yet,” said Dan Hearsch, a managing director at consulting firm AlixPartners.
  • Later this month, for example, there's likely to be a shortage of memory chips from South Korea, says Oliver Wyman consultant Andrew Chien.

The catch: “You need every part to make a car,” says AlixPartners' Mark Wakefield, which means production could be interrupted.

Another problem could be weakening consumer demand: People who are working from home and avoiding airports, conferences and sporting events aren't likely to visit a dealership to buy a new car amid the coronavirus outbreak.

  • Auto sales plummeted 80% last month in China and could fall by as much as half in the U.S. and parts of Europe over the next several months, RBC estimates.
  • Jonas now expects a 9% sales decline for the year. Before the outbreak, he had expected a decline of 1-2%.
  • Analysts are ripping up previous forecasts, with most now predicting sales around 15.5 million vehicles, down from a recent trend of 17 million.

Even if the virus gets much worse, however, sales aren't likely to plunge to the depths of the 2009 crisis, when the industry sold just 10.4 million units.

  • General Motors and Chrysler needed a taxpayer bailout in 2009, and Ford barely squeaked by with a well-timed loan.

The industry is generally healthier today than it was back then.

  • At GM, for example, CEO Mary Barra spent years shedding unprofitable assets and has vowed to maintain a "fortress balance sheet" to withstand a severe downturn.
  • Ford, which is in the midst of an $11 billion restructuring, is in a tougher spot, and some credit rating agencies have downgraded the company's debt. But Ford had $22.3 billion in cash at the end of 2019, and could cut its $2.4 billion shareholder dividend if necessary to power through the worst of the storm.

The bottom line: Detroit's long era of prosperity is about to be upended.

Editor's note: This story has been updated to include further comments from Adam Jonas.

Go deeper

CCP releases two jailed Canadians after Huawei CFO deal with DOJ

Photo: Sheldon Cooper/SOPA Images/LightRocket via Getty Images

Two Canadians imprisoned by the Chinese government for over 1,000 days have been released and are expected to arrive in Canada on Saturday, Prime Minister Justin Trudeau said Friday.

Why it matters: Their release comes hours after Huawei Technologies CFO Meng Wanzhou reached a deal with the U.S. Department of Justice that resolves the criminal charges against her and could pave the way for her to return to China.

Updated 12 hours ago - Politics & Policy

Arizona GOP's private recount of 2020 election confirms Biden's win

Contractors working on behalf of the GOP examine and recount 2020 ballots at Arizona Veterans Memorial Coliseum in Phoenix in May. Photo: Courtney Pedroza/Getty Images

In an odd coda to the 2020 election, private contractors conducting a GOP-commissioned recount in Arizona confirmed President Biden’s win in Maricopa County.

Why it matters: The unofficial, party-driven recount has been heavily covered on cable news as part of former President Trump's continued effort to sow doubt about the election result.

Del Rio bridge camp empty following Haitian migrant surge

A boy bathes himself in a jug of water inside a migrant camp at the U.S.-Mexico border on Sept. 21 in Del Rio, Texas. Photo: John Moore/Getty Images

The last migrants camping under the Del Rio International Bridge, which connects Texas and Mexico, departed on Friday, Homeland Security Secretary Alejandro Mayorkas announced during a White House press briefing.

Driving the news: Thousands of migrants, mostly from Haiti, had arrived to the makeshift camp after crossing the southern border seeking asylum. Roughly 1,800 migrants will now head to U.S. Customs and Border Protection processing centers.