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Car Coach Reports: Could Coronavirus Stall Autos?

Written By | Jan 31, 2020
Car Coach Coronavirus

BUFFALO, NY — Auto sales in China have already fallen for 2 years in a row now, and even before the Coronavirus outbreak, we expected another decline in 2020. How are auto manufacturers weathering this storm and do they have any contingency plans for shifting manufacturing elsewhere? Could the Coronavirus stall auto sales? The impact is real and it’s going to impact the auto manufacturers but more so its impact auto suppliers is huge. The Coronavirus will negatively impact the bottom line to the travel and leisure industries.

In other automotive news, Japan, authorities issued arrest warrants for a former US special forces soldier, and two other men suspected of smuggling Carlos Ghosn out of Japan. Japan also issued an arrest warrant for Carlos, but since he’s in Lebanon, and Japan and Lebanon do not have an extradition treaty, it is unlikely that Lebanon will hand him over. However, Japan and the US do have an extradition treaty.

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Tesla is hitting a new high, up more than 10% this week on its second straight quarter of earnings beat, and essentially doubling its market cap in a few months. Why are we celebrating this accomplishment? It’s the second beat Tesla has ever had since they IPO’ed, which means, they failed for 39 consecutive quarters. So why are we rewarding them so much for essentially doing less bad and not failing this quarter? The results were very poor, especially when we combine them with the previous quarter, Q3, in order to get the full picture of the second half of 2019. Revenue fell from $14.1 billion in 2H 2018 to $13.7 billion in 2H 2019, down 3%. Net income fell from $450 million in 2H 2018 to $248 million in 2H 2019, down 45%. Earnings per share fell from $2.63 in 2H 2018 to $1.38 in 2H 2019, down 48%. Speculators are both strings stock and this could be dangerous to investors.

A lot of this ramp-up was based on Tesla opening up its Shanghai production factory. But they haven’t officially commenced production there yet. Now with the outbreak of Coronavirus and manufacturing shutting down in multiple regions, so are we getting ahead of ourselves? This could be a huge impact on the stock and to sales of Tesla in China. It looks like we’re looking at months of no production due to the Coronavirus and this is definitely going to impact the first quarter. With sales in China already being less than expected this is certainly not gonna help the Chinese economy.

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Lauren Fix

Lauren Fix, The Car Coach®, is a nationally recognized automotive expert, analyst, author, and television host. A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and aspects, energy, industry, consumer news and safety issues.