Former Ford Motor CEO Mark Fields informed CNBC on Tuesday that the U.S. auto industry was “in a sweet spot” heading into 2021, following a better-than-expected restoration from the coronavirus pandemic.
“I think overall the industry is going to have a strong fourth quarter, and I do believe it’s going to be a strong 2021,” Fields stated on “Closing Bell.” “The industry has been incredibly resilient, and it’s actually pretty healthy” regardless of a resurgence in Covid-19 circumstances and elevated unemployment ranges, added Fields, who led Ford from 2014 to 2017.
Fields, now a senior advisor at non-public fairness agency TPG Global, stated one motive the auto market has been capable of get better from a close to standstill in the early phases of the pandemic is that these searching for new automobiles will be the “more wealthy consumers. And they fared OK during this pandemic.”
Another tailwind for auto sales has been a shifting choice in transportation because of the well being disaster, Fields stated. “Covid has changed consumers’ buying behaviors. They’re taking less mass transit.” His feedback are much like remarks from AutoNation CEO Mike Jackson, who informed CNBC in October that stay-at-home orders through the pandemic modified the “American psyche in a long-term way.”
The strong demand for automobiles additionally is offering a lift to the underside line of auto corporations, Fields defined, as a result of pandemic-related provide disruptions have restricted the variety of automobiles obtainable. That is serving to carry earnings.
“I think the industry is in a sweet spot right now. The reason I say that is, retail levels are almost approaching last year’s levels at this time, and in addition, because of the low inventories, there’s much less incentives,” Fields stated.
For traders looking forward to auto corporations’ fourth-quarter experiences, he stated, “I think most of them will beat their profit forecasts, and I think that will fall over into 2021, particularly as more stimulus comes to the market.”