The car manufacturing industry has been one of the worst-hit industries since the COVID-19 pandemic broke out. Across the world, demand for cars has reached all-time lows. Many have been forced to stay home and the need for traveling is no longer there. Additionally, the uncertainty of the economy means few are ready to spend thousands of dollars purchasing a new car. Consequently, it has come as no surprise that Ford has posted $2B losses in the first quarter of the year.
This has hit the manufacturer harder and the same is expected to ring to investors as its stock fell by 7.4 cents following the announcement. What was further significant is that the volume is falling which is a sign of little investor confidence. And rightfully so.
Ford has announced that it expects it to get significantly worse before it gets better. In the second quarter, Ford forecasts a loss of $5B. This will be an unprecedented drop and one that might take the manufacturer years to recover from.
Although the CEO has been upbeat about the situation, the numbers are not collaborating with his words. He noted this recently:
“We must not only weather this crisis; we need to emerge from it ready to build a brighter future,”
Ford Vs Volkswagen
Ford’s numbers come just hours after one of its biggest rivals VW posted losses of $3B. However, unlike Ford, executives from VW are still expecting to turn a profit this year.
Already VW has gone into full swing production as lockdown in Germany has been eased up. All there is the uncertainty of the market, VW wants to start producing and shipping cars as soon as possible.
It will definitely be years before demand for cars goes back to post COVID-19 but with government support, it is likely to be better than witnessed in the 2008 financial crisis.