U.S. auto industry, San Antonio automakers bounce back from pandemic - San Antonio Express-News

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Battered by the pandemic-related shutdowns and economic crash earlier this year, the U.S. auto industry appears on the road to recovery — though a new surge in COVID-19 cases and political deadlock on federal spending proposals cast a shadow on the industry’s revival.

Toyota’s total sales have mirrored the broader auto industry, cratering in March and April before creeping back close to nearly pre-pandemic levels in August and September.

Sales of the Japanese automaker’s San Antonio-assembled trucks, the Tundra and Tacoma, were up 12.5 percent in September, compared with the same month last year.

Car sales in San Antonio were down 14 percent through the first six months of 2020, compared with the first half of 2019, but truck sales have barely budged, according to the Federal Reserve Bank of Dallas.

In San Antonio, sales of all new trucks were down less than half a percent through the first six months of the year.

“The industry definitely has been more resilient than a lot of people, myself included, would’ve thought six months ago,” said Karl Brauer, an independent automotive industry analyst. “The initial shock of the pandemic effect was pretty scary because it shut down everything, including auto production.”

Analysts and researchers at the Dallas Fed said the industry’s rebound has been surprising. Still, automakers are grappling with a major downturn this year, even factoring in the recent resurgence.

Despite positive numbers last month, Toyota’s U.S. sales the beginning of the year through September were down 19 percent compared with the same period last year.

And Navistar, the heavy-truck maker with a South Side manufacturing plant under construction, reported a loss of $37 million between May and July. The company earned $167 million in the same period in 2019.

Automotive companies faced supply shortages after the virus that causes COVID-19 forced overseas factories that build parts for U.S.-made cars to close.

In March, production plants across the U.S. temporarily shut down, putting a crimp in vehicle production that automakers and dealerships are still trying to overcome. After reopening its U.S. plants in May, Toyota struggled to produce enough vehicles for dealerships to meet demand.

Since then, however, auto production has nearly returned to pre-pandemic levels, pushed by strong consumer demand, said Wenhua Di, a senior research economist at the Dallas Fed.

A wave of first-time car buyers seeking to avoid public transit — out of fear of catching the coronavirus — has boosted demand for cars, Brauer said. They also are taking advantage of low interest rates.

The springtime halt in vehicle production reduced the supply of cars available at the same time that consumer demand has risen. That’s pushed up car prices — welcome news for automakers.

The average amount financed for new vehicles increased to more than $35,000 in June, up from $32,000 per new vehicle a year earlier, according to the Dallas Fed. Even with lower interest rates, consumers are still paying more each month on their auto loans.

Beefed-up unemployment benefits and $1,200 stimulus checks have helped U.S. car buyers keep up with their auto loans. The number of subprime consumers who are 60 or more days past due on their auto loans fell below 3.5 percent in August, according to Fitch Ratings.

That’s the lowest delinquency rate in more than five years, though warning signs suggest the rate could go up in the coming months.

“It could be a combination of factors, like stimulus money that households received that helped them with paying down the debt and prevent delinquencies. It could be also some accommodation of lenders and servicers, because they got some stimulus help,” Di said. “And all these at different points are going to come to an end.”

With the spending jolt powered by federal stimulus wearing off, lenders expect they’ll have a hard time recouping the loan amounts moving forward as payment deferrals end and stimulus money runs out, the Dallas Fed reported.

And the delinquency rates may appear better than they actually are, Di said. Creditors can grant borrowers forbearance or deferrals, meaning they’ve paused loan payment requirements. To credit bureaus, a borrower whose payments are in forbearance isn’t considered delinquent.

“We know credit bureaus are also having some challenges in terms of getting accurate reports on payment,” Di said. “So it’s difficult to know what is reflecting reality.”

Fleet sales, the large vehicle purchases that businesses make, are still down compared with the retail sales figures. To Brauer, that indicates the U.S. economy is not yet back on track.

“How long is it going to take for businesses to be happy and confident enough again to buy cars?” he said. “Fleet purchases and employment kind of go parallel.”

A lot hinges on the outcome of talks between federal lawmakers on an additional stimulus package. Unless Congress passes another stimulus bill, the election could determine how the auto industry emerges next year, Brauer said.

“It’s going to take months, if not a year or more (for a full recovery) — and that’s kind of optimistic. It could take a couple of years,” Brauer said. “It’s all going to depend on how quick and how nimble government can be in terms of understanding where the economy needs help, and getting help out as efficiently and quickly as possible.”

diego.mendoza-moyers@express-news.net

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