The us auto industry is currently facing disruptions in the supply of parts and a broader evolution from a "supply crisis to a demand crisis" that could have broad economic consequences.

The new coronavirus has invaded the us car industry, with two confirmed cases in Michigan, where the industry is concentrated.

Michigan is home to Detroit's big three automakers (general motors, ford and fiat Chrysler), and many other automakers and parts suppliers operate in the state. According to the Detroit chamber of commerce economic development organization, as of 2017, Michigan had 1,600 auto-related manufacturers, including auto suppliers, and the state produces 17 percent of the nation's cars. According to the latest data from the bureau of economic analysis, manufacturing in Michigan accounted for 4.3% of the nation's manufacturing GDP in 2018.

Sales volume, epidemic, American auto production, epidemic, American auto companies

A growing crisis

As of Wednesday, more than 121,564 new cases of pneumonia have been confirmed worldwide, with at least 4,373 deaths, according to data compiled by Johns Hopkins university. There have been more than 1,000 cases in the United States and at least 32 deaths. The impact of the new coronavirus outbreak was felt on Wall Street on Wednesday, with the dow down 1,400 points, after the world health organization classified the outbreak as a global pandemic. U.S. auto stocks have been hit harder than others. As of Wednesday afternoon, gm, ford and tesla were down 17% to 18% from the start of the month.

For now, executives at the big three Detroit automakers say production at their us plants has not been disrupted, and Mary Barra, gm's chief executive, said last week that the company had enough parts to keep the plant running until the end of the month. Suppliers also said temporary production had not been affected. Dana chief executive James Kamsickas said in an emailed statement that the company has 149 plants around the world, but so far there has been no significant disruption. But that could soon change, says Dan Hearsch, general manager of the automotive business at consulting firm AlixPartners. "A car needs about 9,000 parts, and even if you have 8,998 and only two are missing, you still can't build a car."

While large U.S. auto plants have so far not been affected by the outbreak, the industry is facing a question of when, not if, production will be affected as more people are diagnosed at home and parts are in short supply.

Lower auto sales forecasts

U.S. auto sales fell 10 percent in the first week of march, but Tyson Jominy, vice President of research firm J.D. Power, said that was expected, not the impact of the outbreak. However, car sales in the worst-affected areas did suffer. Last week, car sales in the Seattle area fell 20 percent. Because of the outbreak and its spread, analysts are lowering their forecasts for U.S. auto sales in 2020.

Morgan Stanley analyst Adam Jonas said in a research note that U.S. auto sales are expected to fall 9% to 15.5 million units this year, from 17.1 million in 2019, as consumers delay commodity purchases and demand for vehicles takes a hit.

Jonas lowered his price targets for gm and ford, as well as for listed dealer groups AutoNation, Lithia Motors, Sonic Automotive and Group 1 Automotive, as well as for gm and ford's 2020 profit forecasts.

And research firm LMC Automotive cut its forecast for U.S. auto sales by 300,000 units to 16.5 million in 2020, which would be the industry's lowest level since 2014. "The impact of the new coronavirus outbreak on the automotive industry has gone well beyond the initial focus on China and will result in a reduction in sales forecasts for most major markets around the world," said Jonathon Poskitt, director of global sales forecasting. In addition, LMC's senior vice President of forecasting, Jeff Schuster, noted that market volatility will remain in place until there are signs of containment globally, and its lasting impact could extend into 2021.

No car company is immune

So far, auto makers and parts suppliers have been able to stave off U.S. shutdowns for now as they start flying parts and looking for multiple alternatives. Still, what we need to see is that the likes of gm, FCA, Toyota and tesla have been scrambling for weeks to get the parts they need for their manufacturing operations in North America and elsewhere after the outbreak disrupted production at parts suppliers in China.

In addition, automakers are preparing to respond to the spread of the virus in the United States by providing workers with work-at-home tools, increasing the availability and availability of hygiene products, and imposing travel bans or restrictions to keep production running. Companies such as gm, ford and the FCA have also imposed new visitor agreements or restrictions to try to prevent employees from contracting the virus.

"I don't think any car company is immune," said Kristin Dziczek, vice President of the center for automotive research. "almost all will be affected, but to different degrees, and their ability to mitigate risk will vary."

"Right now, we are still in the early stages, but there are some areas of the country that are severely affected, and if the impact spreads, the U.S. auto industry will come to a standstill. This could have an impact on consumer confidence and domestic car sales. "If people are uncertain about the economy, their income and their health, they will put off buying a new car." Dziczek said the current problems facing the U.S. auto industry are supply disruptions and the industry's broader evolution from a "supply crisis to a demand crisis," which could have broad economic consequences.