B4| Thursday, March 19, 2020 ** THE WALL STREET JOURNAL.
TECHNOLOGY WSJ.com/Tech
APPLEdenting sales and store traffic
at U.S. dealerships. With many
Americans staying at home, car
dealers say their showrooms
are quiet, and likely will remain
so for a while.
Several analysts have cut
their sales forecasts for 2020,
upending previous predictions
for another solid year in the
U.S. car business. Car compa-
nies this week began rolling out
promotions to soothe rattled
customers, including interest-
free loans and delayed monthly
payments.
For many U.S. dealers, the
recent drop-off in buyer traffic
was sharp and sudden, just as
the industry was gearing up for
the busy spring-selling season.
“It feels like there is a dark
cloud over the dealership,” said
Andre Woods, a 40-year-old
sales associate at Village Ford
in Dearborn, Mich. “It’s got me
unnerved, and I don’t shake
easily.”
Sales decelerated steeply
over last week, according to
transaction data collected by
analytics firm J.D. Power. Be-
tween Monday and Thursday,
sales were off 8% from their
pre-virus forecast. By Sunday,
they were down 36%.
The Detroit car companiesContinued from page B1
this fall and ultimately AR
glasses. It measures the dis-
tance to surrounding objects
up to 5 meters away, and
works indoors and outdoors,
Apple said.
Sales of the refreshed Mac-
Book Air and iPad Pro started
on its website Wednesday, the
company said.Book Pro 16-inch laptop intro-
duced in November.
The new iPad’s wider array
of features suggests that the
device is now a full-fledged
competitor to the MacBook
line, while its new scanner may
be a sign of more advanced
augmented-reality capabilities
to come to new iPhone modelshelped make its laptops thin-
ner but created reliability
problems such as missed key
presses or duplicate keys. Mul-
tiple lawsuits were filed over
the defects, and Apple ex-
tended repair programs.
The company first returned
to the scissor keyboard, an in-
dustry standard, with a Mac-The new laptop abandons the much-disliked butterfly keyboard. Apple also unveiled a new IPad Pro.
Irvine, Calif., distributor of in-
formation-technology products.
The same goes for mobile de-
vices and computing accesso-
ries such as docking stations,
cameras and displays, he said.
The shopping spree comes as
manufacturers are recovering
from the earliest effects of the
coronavirus outbreak in China,
which disrupted production for
some equipment makers and
their components suppliers in a
country that is central to the
global electronics supply chain.
HPInc., one of the world’s
largest PC makers, said its “fac-
tories are steadily coming on-
line.” The company previously
warned that those disruptions
would weigh on this quarter’s
earnings. HP wouldn’t address
its immediate ability to handleretailers’ short-term supply
needs but said it was “keeping
a pulse on customers and part-
ners to ensure their needs and
delivery requirements are sup-
ported.”
Dell TechnologiesInc. also
is looking for alternative supply
sources to deal with bottle-
necks, and has experienced in-
creased orders resulting from
working from home, said a per-
son close to the company. And
Lenovo GroupLtd. said it had
seen an uptick in requests for
equipment packages to ease
working from home, such as a
laptop bundled with a headset
and a separate monitor. Even
so, a spokeswoman said Len-
ovo’s operations in the U.S.
aren’t experiencing a shortage
of laptops.AppleInc. on Tuesday said it
would keep its world-wide
stores closed until further no-
tice. It previously said they
could reopen as soon as March- The company also on
Wednesday unveiled an up-
graded MacBook Air laptop and
updated iPad Pro tablet.
Even before the coronavirus
hit, PC makers were grappling
with supply headaches. Chip
makerIntelCorp. for more
than a year has been struggling
to produce enough micropro-
cessors for customers. The
company said it was boosting
production to alleviate the bot-
tleneck. Device makers also are
coming off a period of high de-
mand in recent months as cus-
tomers upgraded machines to
those running a newer version
ofMicrosoft’s Windows.
The supply hitches mean
that the current surge in de-
mand for laptops may well not
translate into a boon for PC
makers. Before the work-from-
home boom in the U.S., Micro-
soft last month lowered its ex-
pectation for sales in the
current quarter for the unit
making its Surface tablets. It
didn’t give a revised outlook.
And International Data Corp.
last month estimated that PC
shipments, including laptops
and tablets, will fall 9% this
year. In November it had al-
ready projected a 6.8% retreat
for 2020. The remote-work buy-
ing spree is unlikely to change
that forecast, according to IDC,
since much of the current buy-
ing will be of existing inventory.Brad Sutton, a pastor and
commercial photographer,
went shopping for a new lap-
top Friday after the one he
owned died. The model he was
looking for was sold out. His
backup was also gone, as was a
third option recommended by
a store employee.
“It was a little frustrating,”
he said after his outing to an
electronics store in the Dallas
area. Stores’ stocks of toilet
paper, he said, are the only
thing he has seen more de-
pleted by the Covid-19 out-
break.
The unprecedented surge in
people working from home be-
cause of the coronavirus pan-
demic has caused a spike in de-
mand for laptops and
computer notebooks—at a time
when personal-computer mak-
ers have been struggling with
disruptions to their supply
chains and shortages of a key
component. The upshot: Some
U.S. computer shoppers are
finding retailers with empty
shelves.
Mr. Sutton, who needs a de-
vice to write sermons and edit
photos, settled for a refur-
bished machine. The only up-
side, he says: He spent about
$200 to $300 less than he
planned.
Demand for laptops in the
U.S. is expected to continue to
rise as more businesses adopt
and require work-from-home
flexibility, said Paul Bay, presi-
dent of global technology solu-
tions for Ingram Micro Inc., an
BYSARAHE.NEEDLEMAN
ANDAARONTILLEY
Remote Work Fuels Laptop Boom
Computer makers,
already hit by supply
disruptions, can’t keep
up with the demand
Laptops were lined up for students to take for learning at home after West Bloomfield, Mich., schools closed because of the coronavirus.
RYAN GARZA/DETROIT FREE PRESS/ASSOCIATED PRESSbusinesses struggled to deliver
growth, Apple has moved to in-
crease prices on new products.
The all-screen iPad Pro, first
introduced in late 2018, helped
lift tablet sales 17% in the fiscal
year ended last September be-
hind its sleek new design and
25% price increase. The re-
freshed MacBook Air, intro-
duced at the same time, cost
20% more than its predecessor
and helped lift Mac sales 2%
last fiscal year. But at $999,
the device is also back at a
lower entry price that is $100
cheaper than the prior model.
Apple’s decision to release a
new MacBook that returns to
the traditional scissor-key-
board mechanism promises to
move it past a controversy that
dogged it for five years. In
2015, Apple began putting out
a butterfly keyboard thatApple is releasing the prod-
ucts into an uncertain con-
sumer market that has been
disrupted by the spread of cor-
onavirus. In a bid to curtail the
virus’s spread, many compa-
nies have asked staff to work
remotely, but others across the
retail, entertainment and hos-
pitality sectors have temporar-
ily closed.
On Tuesday, Apple said it
would keep its world-wide
stores closed until further no-
tice, an update from its previ-
ous plans to reopen as soon as
March 27. Apple, which has
more than 450 stores outside
Greater China, depends on
Western Europe and the U.S.
for about two-thirds of its
$206 billion in total sales.
Sales of Macs and iPads ac-
count for about a fifth of Ap-
ple’s annual revenue. As thoseAppleInc. introduced a new
keyboard for an upgraded Mac-
Book Air, another sign that it is
abandoning the problematic
butterfly keyboard it intro-
duced in 2015 that required ex-
tended repair programs.
The company on Wednesday
also unveiled an updated iPad
Pro with an ultrawide camera,
high-quality microphones, mo-
tion sensors and a scanner. But
it didn’t announce a refresh or
successor to its entry-level 13-
inch MacBook Pro, which
would be priced between the
Air and the expensive 16-inch
MacBook Pro. It also didn’t
mention any new iPhone mod-
els, though analysts expect a
small iPhone to be revealed in
the spring.
BYSARAHE.NEEDLEMAN
ANDTRIPPMICKLE
Apple Updates MacBook Air
With Traditional Keyboard
were already battling a number
of challenges even before the
outbreak hit, including falling
sales in China and tougher
auto-emissions requirements in
Europe.
GM began the year in recov-
ery mode following a 40-day
strike last fall that hit its oper-
ating profit by $3.6 billion. The
company was looking to re-
stock relatively low levels of
the large pickup trucks and
sport-utility vehicles that ac-
count for nearly all of its global
profit.
Ford entered 2020 looking
to accelerate a turnaround plan
that so far had failed to jump-
start profit growth, following
three consecutive years of de-
clining pretax earnings despite
a robust U.S. market. Like GM,
Ford counts on sales of large
pickup trucks and SUVs in the
U.S. market for nearly all of its
global profit.
Fiat Chrysler relies heavily
on the U.S. market to feed its
bottom line and offset weak-
nesses in Europe and Asia. The
company, which is trying to ex-
ecute a merger with France’s
PSA Group, had already halted
production in Europe, one of its
biggest markets, due to the
pandemic.
The production halt could
take time to affect dealers,
who typically keep two or
three months’ worth of vehi-
cles on their lots.
Ford dealers have enough
new-vehicle inventory to last
more than three months, while
Fiat Chrysler retailers have
about a 2½ months’ supply of
stock, according to data fromWards Intelligence. GM deal-
ers, still recovering the strike
last fall, have closer to two
months’ worth of inventory,
that data show.
Analysts warn that this year
could mark the first significant
drop in U.S. vehicle sales since
2009, potentially spelling an
end to an unprecedented
streak of good times for an in-
dustry accustomed to boom-
and-bust cycles.
José Muñoz, chief executive
of Hyundai’s North American
division, said he expects theauto maker’s U.S. sales to drop
in March by 15% to 20% over
the same month last year and
then further slide in April by
as much as 50%.
“I see the situation getting
worse for the next few weeks,”
Mr. Muñoz said, adding that he
didn’t expect a slow recovery
until summer at the earliest.
RBC Capital Markets this
week said auto sales could fall
to 13.5 million vehicles this
year, which would mark a 20%
decline from last year and the
lowest level since 2010. The
bank also doesn’t see a quick
snapback in car sales.
Matthew Welch, who owns
Auburn Volkswagen in the Se-
attle area, the site of the coun-try’s worst outbreak so far,
said sales are down around
30%. He worries about what
would happen if his store were
forced to temporarily close.
“If we have to pay people to
not come in, financially we
can’t do that for long,” he said.
Some dealerships, including
Auburn Volkswagen, are trying
to lure wary buyers by putting
a bigger emphasis on their on-
line-sales services, including
those that allow shoppers to
skip the showroom and take
delivery at home.
While such services have
been slow to catch on—the
overwhelming majority of car
buyers still prefer to make the
purchase in person—the virus
outbreak has sparked more in-
terest lately, said Rick Case,
who heads a chain of 16 auto
dealerships in Ohio, Florida
and Georgia. “People are afraid
to go out,” Mr. Case said.
Car companies also are
scrambling to offer ways to
quell the financial uncertainty
for customers. GM is offering
buyers with good credit no-in-
terest loans stretched over
seven years. Ford said its in-
house lender would allow cus-
tomers experiencing virus-re-
lated disruptions to delay
payments in some situations.
Hyundai Motor Co. has
dusted off a version of a deal
it first rolled out in the throes
of the last recession: It will
cover six months of payments
for any new-car buyer who
loses their job after their pur-
chase.
—Mike Colias
contributed to this article.Car Makers
Shut Plants
Over Virus
The halt may take
time to hit dealers,
who keep months
worth of inventory.Federal and state banking
regulators approved an applica-
tion from financial-tech com-
panySquareInc. to start its
own bank in Utah.
The bank, Square Financial
Services Inc., is expected to
launch in 2021 and will be su-
pervised by the Federal Deposit
Insurance Corp. and the Utah
Department of Financial Institu-
tions, the company said on
Wednesday.
Square Financial Services
will offer small-business loans
to merchants that use Square
devices to process their pay-
ments.
Square’s banking effort
started over 2½ years ago and
was marked by opposition from
some bank lobbyists and com-
munity groups, who objected to
Square’s decision to pursue a
charter for an industrial-loan
company.
Industrial-loan companies
enjoy many of the same privi-
leges as traditional banks—but
can be part of corporations that
do things other than banking,
making them exempt from over-
sight by the Federal Reserve. In
2007, a wave of similar opposi-
tion prompted Walmart Inc. to
abandon its effort to form an in-
dustrial-loan company. To se-
cure regulators’ approval,
Square Financial Services
agreed to several conditions, in-
cluding maintaining signifi-
cantly higher levels of capital
than other banks and consent-
ing to have its parent company,
Square, examined by the FDIC.
NelnetInc., a Nebraska ser-
vicer of student loans, also re-
ceived approval for an indus-
trial-loan company.BYPETERRUDEGEAIR
Square
Wins OK
For Bank
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