Led by Tesla, US auto industry rebounds as car sales surge

(Biz Journal) – When the coronavirus pandemic forced businesses to close this spring, the auto industry was hit particularly hard. North American auto plants that typically churn out more than 1 million cars a month produced fewer than 5,000 in April.

While other industries continue to struggle, automakers are now enjoying a clear upswing. Last month, some large automakers reported that sales in the United States were up from the previous September. If this pace of sales continues for a year the industry would sell more than 16 million cars and trucks.

This recovery is being led by Tesla, the electric car pioneer. On Friday, the company reported record deliveries in the third quarter as steady growth in China and Europe more than offset weakness in the United States.

The automaker delivered 139,300 electric cars in the third quarter, an increase of more than 50% from the second quarter, when the pandemic forced Tesla and other automakers to close factories and many consumers stayed away from car dealerships.

The company said it produced 145,036 vehicles in the third quarter, an increase of about 76% from the second quarter. The automaker was forced to close its factory in Fremont, California, from mid-March to mid-May because of the pandemic. It was able to rely on a new factory in China that reopened after the country brought the outbreak there under control.

Compared with a year earlier, Tesla’s deliveries increased by more than 40% in the third quarter.

While Tesla clearly shone during the quarter, other automakers also did better than they had earlier in the year. Total sales of new cars and trucks fell about 11% in the third quarter, but manufacturers reported year-on-year sales increases in September.

Sales are rising in part because of the pandemic’s impact on families and businesses. Some people are spending money on cars that they are not spending on travel, restaurants and entertainment. Others are buying a new car because they are trying to avoid trains and buses.

But it is not clear how durable the industry’s recovery will be. Credit is tightening for some lower-income buyers, and a surge in coronavirus cases could set the industry back, said Michelle Krebs, executive editor at Cox Automotive, a market research firm. “The virus is not yet under control, and now the president and the first lady having it — it creates a lot of attention for consumers.”