Auto industry's Q2 performance plummets despite signs of recovery

No great news for automakers right now, but signs of short-term improvement

Multiple automakers reported financial slides in the second quarter of 2020 as coronavirus-related impacts rippled throughout the global car industry despite signs of rebounding sales in multiple markets. 

Honda forecast a 68% decrease in annual operating profit to a 10-year low with global demand for cars expected to slide because of the pandemic. Japan’s No. 3 automaker expects profit to sink to 200 billion yen ($1.89 billion) in the year to end-March 2021, its weakest since the 2010-11 year and undershooting analyst estimates.

Honda is bracing for a 6% decrease in annual vehicle sales after a 40% plunge in the June quarter, which resulted in a 113.7 billion yen ($1.1 billion) operating loss. The maker of the CR-V SUV crossover and the Fit compact hatchback expects to sell 4.5 million vehicles this year, versus 4.79 million last year. It predicts a 16% sales slide in North America, a key market where the United States is struggling to control a surge in virus infections.

BMW expects to make a profit this year if demand continues to recover, despite posting a record loss for its car division in the second quarter after sales slumped 25% because of coronavirus lockdowns, it said on Wednesday. As a result of the sales slide, and higher costs for developing low-emission cars, BMW posted a pretax loss of 498 million euros, its first in over 11 years, and an operating loss of 666 million euros ($790 million) for the quarter.

British new car registrations rose by an annual 11.3% in July, the only increase so far this year as showrooms across the whole of the United Kingdom were open for their first full month since lockdown measures eased. The rise followed other signs of a gradual recovery in Britain’s economy after its historic 25% contraction in March and April. House prices and manufacturing have risen although jobs cuts are mounting in the retail sector.

Nissan, Honda and Toyota all reported July sales gains in China vs. the same period in 2019, showing signs of not only recovery, but growth. 

(This article contains reporting by Reuters.)

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