The auto sector reported earnings, and the group as a whole reported "generally better" results against "low expectations," according to BofA Securities' John Murphy.

The Auto Sector Recap

The auto sector kicked off 2020 on a difficult note with extended COVID-19-related production downtime in China from the end of January through March, Murphy said in a Thursday note. Outside of China, production shutdowns started in Europe and North America from mid-March and are only now restarting.

In terms of auto sales, the segment suffered from a "significant" drop in sales and production volumes across all major regions which resulted in notable declines in revenue and pressure on margins, the analyst said. 

But compared against the Street's estimates, most companies reported earnings beats, although it was still "a bit messy," he said. 

The Auto Sector In Q2

Third-party estimates point to a 44% year-over-year decline in global light vehicle production in the second quarter, with North America down the most at 68%, Murphy said.

The final figures could come in lower, as current production ramps "appear relatively slow," the analyst said. 

The main takeaway from first-quarter reports is broad commentary from management teams that second-quarter results will be the toughest of the year, he said, adding that this is due to production and sales stoppages that will result in "significant" EBIT losses and cash burns.

Company, Industry Highlights

The analyst noted the following company-specific highlights from first-quarter earnings season:

• General Motors Company GM reported "much stronger" results versus "fairly low" expectations.
• Ford Motor Company F preannounced results "well below" estimates.
• Fiat Chrysler Automobiles NV FCAU reported "relatively weaker" results versus already lowered estimates.
• Most suppliers beat lowered estimates.
• Dealers were the clear "standout" in the quarter, with beats mostly across the board from strong same-store sales growth.