Automotive MMI: Sales slump as automakers mull production restart plans

The Automotive Monthly Metals Index (MMI) fell 1.3% this month.
Automotive Chart May 2020 FNL

U.S. auto sales

General Motors reported first-quarter deliveries of 618,335 vehicles, a decline of 7% compared with Q1 2019.
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“In this uncertain and challenging time, GM and our strong network of dealers are here to help, offering concierge service, providing courtesy transportation to customers in need and offering home delivery where permissible,” said Kurt McNeil, U.S. vice president of sales operations.
GM’s inventory at the end of the first quarter was 668,443 units, which marked an 18% decline from a year ago.
Ford, meanwhile, reported a Q1 net loss of $2.0 billion, impacted heavily by the coronavirus pandemic. Last month, Ford reported its Q1 sales fell 12.5% year over year.
Last month, Fiat Chrysler reported its Q1 sales fell 10% year over year. Fiat Chrysler is scheduled to hold its Q1 financial results conference call on Tuesday, May 5 at 8 a.m. EDT.
Honda’s sales plunged 54.1% in April.
“There will be challenging days ahead as this very serious public health crisis continues, but with consumer traffic beginning to increase online and at Honda and Acura dealerships, we are approaching the coming weeks with guarded optimism,” said Steven Center, vice president of automobile sales at American Honda Motor Co., Inc. “We value the actions of our Honda associates and dealers as we work to align our business with changing market conditions, and we are now turning our attention to creating momentum for a broader recovery.”
Nissan, which has also moved to a quarterly reporting schedule, last month announced a Q1 decline of 29.6%.
Hyundai reported April sales of 33,968 vehicles, down 39% year over year.
According to J.D. Power and LMC Automotive, U.S. sales for the month of April (through April 26) totaled 465,000 units, or down 46% compared with the pre-coronavirus forecast.

Start your engines … this month?

Automakers including GM, Ford and Fiat Chrysler idled production at their plants around the world in March amid the coronavirus outbreak.
Among many other sectors that have suffered under the conditions of the pandemic, the lingering question is: when will production start back up?
CNN reported last month that Volkswagen, Toyota, Hyundai and Fiat Chrysler had plans to gradually restart production in early May.
United Auto Workers President Rory Gamble last month questioned plans to restart production in early May.
“Now I don’t claim to have a crystal ball and these are truly unprecedented times, but I do know — and the experts have been very clear on this — that if we restart too early, it will be calamitous for all of us. For me, it comes down to one simple question,” Gamble said. “It’s the same question that I asked when we demanded that the Big 3 and others close production last month. Will our members be safe? If the answer is ‘No’, then our course is clear.
“And so this week, I asked that question again of all of our companies in all of our sectors. I know truckers and others doing essential services are being asked back to work. But these decisions cannot be dictated by economics or stock prices or market conditions. They must be dictated by science and the safety of our working men and women. And based on that, which is the only criteria the International Executive Board and I are using, I feel the scientific data is not conclusive at this point and it is too risky for our members, their families and our communities to support a quick return to work in early May.”
However, there is another potential wrench in restart plans: Mexico.
As the Detroit Free Press reported, 40% of U.S. imported auto parts come from Mexico. As such, any planned restart in the U.S. is in large part contingent on the restart of automotive facilities south of the border, which largely remain idle as part of the country’s effort to mitigate the spread of the COVID-19 virus.

Tesla tallies profit for third straight quarter

Electric vehicle maker Tesla recorded a profit in Q1 for the third straight quarter.
The EV maker reported net income of $16 million in Q1 on the heels of Q3 2019 profit of $143 million and Q4 2019 profit of $105 million.
Tesla reported revenues of $5.1 billion in Q1, down 19% from the previous quarter but up 38% from Q1 2019.
“Q1 2020 was the first time in our history that we achieved a positive GAAP net income in the seasonally weak first quarter,” Tesla said in its Q1 financial report. “Despite global operational challenges, we were able to achieve our best first quarter for both production and deliveries.
“Although impacted by inefficiencies related to the temporary suspension of production and deliveries in many locations, our gross margin remained strong. At Gigafactory Shanghai, further volume growth resulted in a material improvement in margins of locally made Model 3 vehicles. In addition, Model Y contributed profits, which is the firs time in our history that a new product has been profitable in its first quarter.”
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Actual metals prices and trends

The U.S. HDG price fell 12.5% month over month to $711/st as of May 1.
LME primary three-month copper jumped 8.4% to $5,215/mt. U.S. shredded scrap steel increased 8.1% to $281/st.
The Korean 5052 aluminum coil premium fell 0.7% to $2.97/kilogram.

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