Former Ford Motor CEO Mark Fields told CNBC on Tuesday that the US auto industry was "in a sweet spot" after a better-than-expected recovery from the coronavirus pandemic heading into 2021.
"I think the industry will have a strong fourth quarter overall, and I think it will be a strong 2021," Fields told Closing Bell. "The industry has been incredibly resilient and actually quite healthy," added Fields, who led Ford from 2014 to 2017, despite a resurgence in Covid-19 cases and increased unemployment.
Fields, now senior advisor at private equity firm TPG Global, said one reason the auto market recovered from near stagnation in the early stages of the pandemic was that those buying new vehicles may have the " wealthier consumers ". And during this pandemic, they were fine. "
Another tailwind for car sales, Fields said, was a change in preference in transportation due to the health crisis. "Covid has changed the way consumers buy. They use less public transport." His comments are similar to what AutoNation CEO Mike Jackson told CNBC in October that stay-at-home orders during the pandemic have "long-term" changed the American psyche.
Robust demand for vehicles is also boosting the bottom line of auto companies, Fields said, as pandemic disruptions have limited the number of vehicles available. That helps to increase the income.
"I think the industry is in a sweet spot right now. The reason for this is that retail levels are nearing last year's levels at this point and there is also much less incentive due to low inventory levels," Fields said.
For investors looking forward to the fourth quarter reports from the auto companies, he said, "I think most of them will beat their earnings forecasts and I think that will fall by 2021, especially when more momentum hits the market come."