General Motors (GM) - Get Report, Ford (F) - Get Report and Fiat Chrysler (FCAU) - Get Report and several auto dealers had their estimates cut Wednesday by a Morgan Stanley analyst due to "demand shock" sparked by the spreading coronavirus.
All three automakers saw their shares falling.
Analyst Adam Jonas said in a note to investors that he lowered his 2020 U.S. Seasonally Adjusted Annual Rate (SAAR) from 15.5 million from 16.5 million and cut his estimates on the three companies and auto dealers.
"This is driven by the potential demand shock that could stem from coronavirus fears," Jonas said. "Lower consumer sentiment will mean consumers may put off the purchase expensive consumer discretionary purchases such as a (roughly) $35,000 new car."
In addition, Jonas said, since about 90% of new carfare financed via a financing instrument such as a loan or a lease, "if lenders tighten credit standards on elevated recession risks, this could extenuate the SAAR decline."
Used car prices, which Jonas said have continued edge higher and break records, could face pricing pressure.
SAAR is often used by analysts in the automobile industry to account for car sales.
Jonas lowered his price target for GM to $42 from $46 a share and trimmed his Ford target estimate to $10 from $11.
The analyst also cut his targets on auto dealer Group 1 Automotive (GPI) - Get Report to $119 from $130; lowered his target for AutoNation (AN) - Get Report to $40 from $44; cut his target for Penske Automotive (PAG) - Get Report to $63 from $66; lowered his Lithia Motors (LAD) - Get Report target to $149 from $159; and cut his Sonic Automotive (SAH) - Get Report target to $27 from $29.
All of the companies were slipping into negative territory.
The coronavirus continues to wreak havoc upon the markets.
Stocks futures were falling Wednesday, despite solid gains in Europe after a surprise interest rate cut from the Bank of England, as a lack of specifics from the Trump administration on plans to fight the coronavirus outbreak and the resulting economic fallout punctured the solid sentiment gained from Tuesday's rally.