Outbreak Threatens to Torpedo 2020’s Most Important New Car Debuts
Today on Speed Lines: Automakers were pinning their hopes on new models that may not get bought.
Welcome back to Speed Lines, The Drive's morning roundup of what matters in the world of transportation. It's Wednesday, whatever that even means anymore, and everything is bad. Let's dive right in.
2020's Most Important Debuts, Derailed
"But what about the cars?" is probably the last thing anyone thinks when they consider the devastation from the ongoing coronavirus outbreak. But the virus is leaving no sector of the economy untouched.
Even with aggressive incentives and financing deals, people across the world aren't buying new cars amid skyrocketing unemployment, dealership closures and general uncertainty about the future. It's an unprecedented disaster for an entire industry and the millions of people worldwide that it employs.
For automakers who spend three years and as much as $1 billion to launch one new model, as Bloomberg puts it, that's disastrous. It's bad for many automakers that were pinning future hopes on electrified vehicles, or SUVs and crossovers to (hopefully) finance the transition to electricity or just hot new models to keep their business afloat.
Important debuts affected already include the new Land Rover Defender, the Aston Martin DBX, and the long-awaited new Ford Bronco. From the story:
The much-anticipated new Land Rover Defender launches this year with the historic brand’s manufacturing sites shuttered. While the vehicle’s release remains on schedule, the first media test drives planned for April were predictably canceled. The good news for the British automaker though is that the off-road rig, a stalwart of British royalty for four decades, got a fair amount of publicity last year: The Defender’s official debut took place at the 2019 Los Angeles Auto Show, and it has been making the rounds on Instagram ever since.
Along with the Defender, the reborn Ford Bronco is one of the most hyped vehicles in years. In 1996, Ford parked the Bronco name (which dates back to the mid-1960s) after O.J. Simpson provided the worst kind of publicity. In subsequent years, the seminal SUV became a design icon and collector’s item as Jeep took over ownership of the off-road adventure market. We were supposed to see the new Bronco on April 2, but its debut has been delayed.
In North America alone, the pandemic is destroying $12 billion in potential sales each week while scrapping 331,000 vehicles that would otherwise have come off of assembly lines, according to Bloomberg Intelligence. Still, U.S. automakers like Ford hope the second half of 2020 will allow them to make up some lost ground.
This bit about the DBX is especially concerning for Aston Martin, which entered this year in a precarious financial state even before the virus hit:
Aston Martin’s make-or-break DBX, another latecomer to the luxury SUV game, is the first of its kind from the 107-year-old brand. The automaker first showed the 542-horsepower DBX at the L.A. Auto Show in November 2019; media drives were planned for May. Those have been postponed and production at all the company’s manufacturing sites halted.
Meanwhile, Aston Martin doesn’t have enough working capital and still desperately needs the SUV to deliver drivers. The global crisis and its effect on demand may leave the company in a very bad place. Spokesman Nathan Hoyt says the vehicle’s U.S. launch remains on track for the second half of the year.
That story has a pretty comprehensive list of derailed or delayed new models, so it's worth a read in full. Getting back on track won't be as simple as just reopening dealership doors and getting assembly lines running again.
Here Come The Unpaid Furloughs
The situation above represents long-term pain for the automakers. But the people they employ are feeling the hurt right now. Several car companies in the U.S., including Nissan, Honda, BMW, and Tesla, have all had to cease paying workers who were deemed "nonessential"—something they've largely been able to avoid in the past. Here's Automotive News:
A Nissan spokeswoman said about 10,000 workers at plants in Tennessee and Mississippi were furloughed starting Monday. Nissan has suspended U.S. production through April 27.
The unpaid furloughed employees are eligible for unemployment, including newly passed enhanced unemployment benefits. They will continue to receive health insurance, the spokeswoman said. Nissan said it expects furloughed employees to return to their current positions when the shutdown ends. Some employees essential to business operations are scheduled to work and will be paid for time worked.
[...] Honda will begin unpaid furloughs April 13 at its assembly, engine and transmission plants in the U.S. and Canada and a powersports plant in South Carolina. The plants employ about 16,900 workers and are scheduled to be idled until May 1.
"These unprecedented circumstances require that we take some difficult actions in order to cope with the economic impact of the COVID-19 pandemic," a Honda spokesman said. "This will include temporarily implementing No Work Available (NWA) days during the continued production suspension in our plants."
And via Reuters for Tesla:
Employees who cannot work from home and have not been assigned to critical work onsite factories will be furloughed without pay, with workers maintaining their healthcare benefits until production resumes, the email said.
Tesla suspended production at both factories last month after it ended a standoff with authorities concerned about the spread of the coronavirus.
Tesla's sole U.S. auto factory employs more than 10,000 workers, with annualized production of slightly more than 415,000 units by the end of December 2019.
Car production across the board in America has come to a nearly complete halt, and that's expected to be the case until at least May.
A 'Staggering' Toll For Subway Workers
Like I mentioned earlier, what's so shocking about this pandemic is how it's impacting every aspect of our daily lives—no business, no government, no line of work has been able to dodge the crushing effects of the virus and its subsequent economic shutdown. That's true for municipal and state workers everywhere who we count on to maintain our transportation infrastructure.
Even if the outbreak isn't "bad" where you live yet, what's happening in New York City right now could be a chilling preview of what's to come in many places. The state Metropolitan Transportation Authority, which, among other things, maintains the city's subway, has taken a tremendous toll from the virus, reports The New York Times:
At least 41 transit workers have died, and more than 6,000 more have fallen sick or self-quarantined. Crew shortages have caused over 800 subway delays and forced 40 percent of train trips to be canceled in a single day. The average wait for some trains, usually four minutes, has ballooned to 40 minutes.
Since the coronavirus pandemic engulfed New York City, it has taken a staggering toll on the Metropolitan Transportation Authority, the agency that runs the subway, buses and commuter rails and is charged with shuttling workers — like doctors, nurses and emergency responders — who are essential to keeping the city functioning.
But the transit agency may have deepened its workforce crisis by not doing more during the early stages of the outbreak to protect its employees and delaying some steps laid out in a plan the M.T.A. had developed for dealing with a pandemic.
The transit agency was late to distribute disinfectant to clean shared workspaces, struggled to keep track of sick workers and failed to inform their colleagues about possible exposure to the virus, according to interviews with two dozen transit workers.
As that story notes, many public transit agencies across the U.S. have been overwhelmed by the virus, which will have a huge impact on how we all get around once this is "over"—whatever that even means.
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