Automakers could see new rollouts delayed because of pandemic

Kalea Hall Breana Noble
The Detroit News

Detroit — As the coronavirus pandemic halts auto production and puts the economy into a spin, on edge with millions filing for unemployment, automakers are considering how it might delay new vehicles.

General Motors Co. on Thursday told employees it was extending its production shutdown in North America indefinitely, while Ford Motor Co. and Fiat Chrysler Automobiles NV want to restart U.S. plants April 14.

The uncertainty of when production will restart, what the economy will look like after the pandemic scare and how that affects demand for new vehicles is likely to lead to changes in how, when and to what extent automakers stay on schedule with new-vehicle programs, especially those further out. 

Analysts don't expect a delay on Ford's electric Mustang Mach-E, but Jessica Caldwell, analyst at Inc., believes tight finances could cause less to be spent marketing the vehicle that represents a new direction for the automaker.

"We are going to see some of the electrification programs delayed just as they try to push off some spending," said Sam Abuelsamid, automotive analyst at Navigant Research. "Stuff that is already in progress they will try to continue and keep as close to on schedule as they can."

GM's near-term programs including its coming full-size SUVs and its electric portfolio of the Chevrolet Bolt EUV, GMC Hummer EV and driverless Cruise Origin shuttle will see "little-to-no" impact at this time, GM said. 

In a communication sent to its Arlington Assembly employees Thursday, GM said it would ask employees at the Texas SUV plant to volunteer for paid shifts next week. GM told The Detroit News that the work is expected to last a week or less, and will allow it to build-out current models. After those are completed, Arlington will start building the new 2021 Chevrolet, Chevrolet Suburban, GMC Yukon and Cadillac Escalade.

GM plants are closed indefinitely, just as the automaker is ready to transition to profitable new vehicles like the 2021 Chevrolet Tahoe.

"Our customers are counting on our trucks and it is important for the company to changeover to our new trucks as quickly as possible," GM's communication to employees said.

GM has aggressive long-term electric-vehicle plans that include putting 20 new models on the ground by 2023. Earlier this month, CEO and Chairman Mary Barra said the company planned to spend more than $20 billion on electric and autonomous vehicle programs through 2025.

Industry-wide, Abuelsamid believes cuts will have to be made to some of the automakers' electric and autonomous plans because of their high cost, low gas prices, an impending recession and slumping auto sales. He estimates sales will come in this year between 13 or 14 million "at their best." Sales were above 17 million in 2019, and Navigant doesn't expect to see numbers like that again until 2023.

It costs billions to develop new products likes these, and to modify factories to build them. And with the significant loss of revenue this year, they are going to be delaying a lot of these plans, Abuelsamid said. "They cannot afford to continue on the spending pace that they had up until the beginning of this year." 

Ford's forthcoming products include the Mustang Mach-E SUV this fall as well as the redesigned F-150 pickup and a small off-road SUV later this year. Early in 2021, it will start building the off-road Bronco SUV.

"We know there’s tremendous interest in the reveals of the all-new Bronco and F-150, plus the launch of Mach-E," the automaker said in a statement to The Detroit News. "We can’t wait to share more news as we make progress on new plans. All will be worth the wait."

Analysts don't expect a delay on the Mach-E, but Ford could pull back on marketing dollars during lean times, said Jessica Caldwell, analyst at Inc. 

"For something, like the Ford Mach-E, it’s such an important vehicle to the Ford lineup that you really don’t want to botch the launch and make it less of a splash," she said.

Automaker might reason that sales will spring back after the lockdown. "You could have a post-wave of euphoria you could ride, but that is risky because people's financial situations probably have to repair," Caldwell said.

Ford is under pressure to have a trouble-free rollout of its new vehicles after the Explorer SUV and its sister, the Lincoln Aviator, came off the line at Chicago Assembly Plant with faulty seats, buggy software and loose wire harnesses. The problems that had to be fixed in Flat Rock caused months-long delays and lost sales, and hurt Ford's 2019 bottom line.

Jeff Schuster, president of global vehicle forecasting for LMC Automotive, isn't aware of official delays from carmakers, but said the pandemic could be disruptive because of stay-at-home orders that may limit what engineers can do.

“Even vehicle launches that are planned and expected, you’re going to see fallout there,” Schuster said. “Testing and prototyping, even the ramp-ups at plants planned, they are likely at risk.”

He believes Ford will make its new F-150 job one. "The F-150 presents massive profitability, or at least, margins," Schuster said. "They’re going to want to prioritize that as much as possible.”

Abuelsamid agreed that Ford wouldn't delay its F-150 series debut, especially the expected electric F-150, because it's a mainstream vehicle that will be attractive to commercial customers unlike its competition — the Tesla Cybertruck and Hummer EV.

In addition to pausing manufacturing until April 14, Fiat Chrysler has halted construction projects until then. That delays work on its new assembly plant on Detroit's east side, whose 16-month schedule already was deemed aggressive. Production of a three-row Jeep SUV is supposed to begin in the fourth quarter. It is too early to tell if the construction hiatus will affect those plans, Fiat Chrysler spokesman Rick Deneau said.

Fiat Chrysler's Warren Truck plant is getting a new paint shop and is being retooled for the new Jeep Wagoneer and Grand Wagoneer SUVs. The plant was expected to shut down at the end of the month, and the production suspension was expected to last for 14 weeks, the company has said.

The Italian American automaker this week said it was holding off on some development projects because of the outbreak, putting about 2,000 contract workers out of jobs across North America. The company had planned to showcase new vehicles at the New York Auto Show in April, but that was delayed until August. The automaker is looking for alternatives to promote the vehicles.

Automakers will do everything they can do to avoid product delays because of the complex chain from getting parts contracted out to prepping assembly plants, said Karl Brauer, executive publisher at Autotrader and Kelley Blue Book,

"A couple of weeks isn't a big deal, but even a couple of months is a big deal," he said. "This is not an easy thing for them to shift even when drastic circumstances like this market circumstance might call for it."

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