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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

Biden's Day 1 challenges: The immigration reset

Illustration: Aïda Amer/Axios

President-elect Biden has an aggressive Day One immigration agenda that relies heavily on executive actions to undo President Trump's crackdown.

Why it matters: It's not that easy. Trump issued more than 400 executive actions on immigration. Advocates are fired up. The Supreme Court could threaten the Deferred Action for Childhood Arrivals (DACA) program, and experts warn there could be another surge at the border.

Broncos and 49ers the latest NFL teams impacted by coronavirus crisis

From left, Denver Broncos quarterbacks Drew Lock, Brett Rypien and Jeff Driskel during an August training session at UCHealth Training Center in Englewood, Colorado. Photo: Justin Edmonds/Getty Images

The COVID-19 pandemic has thrown the NFL season into chaos, with all Denver Broncos quarterbacks sidelined, the San Francisco 49ers left without a home or practice ground and much of the Baltimore Ravens team unavailable, per AP.

Driving the news: The Broncos confirmed in a statement Saturday night that quarterbacks Drew Lock, Brett Rypien and Blake Bortles were identified as "high-risk COVID-19 close contacts" and will follow the NFL's mandatory five-day quarantine, making them ineligible for Sunday's game against New Orleans.

Updated 13 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: WHO: AstraZeneca vaccine must be evaluated on "more than a press release."
  2. Politics: McConnell temporarily halts in-person lunches for GOP caucus.
  3. Economy: Safety nets to disappear in DecemberAmazon hires 1,400 workers a day throughout pandemic.
  4. Education: U.S. public school enrollment drops as pandemic persists.
  5. Cities: Surge in cases forces San Francisco to impose curfew — Los Angeles County issues stay-at-home order, limits gatherings.
  6. Sports: NFL bans in-person team activities Monday, Tuesday due to COVID-19 surge — NBA announces new coronavirus protocols.
  7. World: London police arrest more than 150 during anti-lockdown protests — Thailand, Philippines sign deal with AstraZeneca for vaccine.