Former Ford Motor CEO Mark Fields told CNBC on Tuesday that the U.S. auto industry was “in a sweet spot” heading into 2021, following a better-than-expected recovery 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 said on “Closing Bell.” “The industry has been incredibly resilient, and it’s actually pretty healthy” despite a resurgence in Covid-19 cases and elevated unemployment levels, added Fields, who led Ford from 2014 to 2017.
Fields, now a senior advisor at private equity firm TPG Global, said one reason the auto market has been able to recover from a near standstill in the early stages of the pandemic is that those shopping for new vehicles may be the “more wealthy consumers. And they fared OK during this pandemic.”
Another tailwind for auto sales has been a shifting preference in transportation due to the health crisis, Fields said. “Covid has changed consumers’ buying behaviors. They’re taking less mass transit.” His comments are similar to remarks from AutoNation CEO Mike Jackson, who told CNBC in October that stay-at-home orders during the pandemic changed the “American psyche in a long-term way.”
The robust demand for vehicles also is providing a boost to the bottom line of auto companies, Fields explained, because pandemic-related supply disruptions have limited the number of vehicles available. That is helping lift 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 said.
For investors looking ahead to auto companies’ fourth-quarter reports, he said, “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.”
