Ford and GM Face Their Worst Year in a Decade

By Douglas A. McIntyre Published Mar 9, 6:12AM EDT

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Ford and GM Face Their Worst Year in a Decade — © trangiap / Getty Images

General Motors Co. (NYSE: GM) and Ford Motor Co. (NYSE: F) may face their worst year in a decade as coronavirus spreads around the world. While the U.S. market may be difficult for them, it is China that could erode their numbers at a frightful level.

GM stock is down 23% this year. Ford’s stock has plunged 31% to a five-year low. In early 2018, it was above $13 a share.

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U.S. sales of cars and light trucks were above 17 million a year beginning in 2015. The level is a recovery from the 10 million sold in 2010 at the depth of the recession. No one thinks sales will test that level in 2020. A serious spread of the disease could keep many people out of dealerships for a few weeks or longer. It is imaginable that 2020 industry sales in the United States could drop under 16 million. Given that the industry manufacturing capacity in the United States is to build more cars than that, the expense base of the two companies could be such that GM and Ford experience severe erosion of U.S. margins.

China’s market has been the holy grail for car companies since it overtook the U.S. market in 2009. It peaked in 2017 at 24.7 million but dropped to 21.4 million last year. Based on the drop-off in February, the number is likely to fall below 20 million in 2020. If the spread of coronavirus does not start up again. The 20 million is at the high end of estimates.

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Virtually no one believes auto sales in China will decline at the rate of 80% that they did in February. Yet, even as they recover, GM and Ford are already in deep trouble. Ford’s sales dropped 26.1% last year to 567,854. The figure includes joint venture partners.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.