➤ The auto industry might not yet understand the extent of the demand shock in the U.S. from disruptions caused by the ongoing coronavirus pandemic, according to the head of the Alliance for Automotive Innovation, a leading trade group that represents domestic and international automakers operating in the U.S.

➤ U.S. auto sales will be "substantially lower" in 2020 than previously forecast.

➤ Liquidity for automakers is a main focus for the industry as vehicle demand drops and production is temporarily halted around the globe.

John Bozzella, president and CEO of the Alliance for Automotive Innovation, spoke with S&P Global Market Intelligence on April 2 about the impact of the coronavirus pandemic on the auto industry. The following transcript of the conversation was edited for clarity.

S&P Global Market Intelligence: We're seeing March auto sales are down year over year. How long do you think the coronavirus-related disruption will have to continue for there to be a long-lasting effect on the industry and carmakers? Or are we already there?

John Bozzella: We're seeing a significant drop-off in retail sales. This is a COVID-19 driven demand shock. It's understandable and not surprising given the extent to which the stay-at-home orders and closure orders have been issued across the country. The challenge with understanding the impact of COVID-19 on the industry is there's just so much uncertainty. Production is down largely across North America. The real question is how long will that be, and we don't really know the answer to that because the public authorities are responding to the public health crisis, and we're having to manage in this incredibly uncertain environment.

The supply base across North America is very robust and integrated. We certainly could be challenged by a scenario where an assembly plant might be located in a state that is ready to open and yet supply chains supporting that plant might be in states where closure orders or stay-at-home orders are still in effect. We don't know what the market's going to look like post-crisis.

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Pre-outbreak, analysts had forecast U.S. auto sales in 2020 to be near 17 million units. How has that changed and how much cushion is there to sustain a healthy industry?

The consensus numbers for 2020 at the beginning of the year were probably about 16.8 million units. There's no question that the market will be substantially lower now. We've seen revised estimates in the low 14 million units. Again, assumptions about what that number ultimately is, is really going to be tested by the length and extent of the crisis.

There is no question that liquidity is going to be critically important, and that's why the industry worked together with policymakers and members of Congress, both parties, as well as the [Trump] administration to put in place credit facilities that were built into what is now known as stimulus three [bill], the third phase of stimulus that was signed by the president at the end of last week. … So those facilities are important for an industry that could use those tools to help itself through the crisis. With regard to individual companies, as an industry observer who was around during the financial crisis [in 2008], I would say, in general, balance sheets are stronger now than they were then.

The auto industry wasn't specifically named in the stimulus bill, right?

That is correct. We worked broadly as an industry, including dealer associations as well as associations representing suppliers and other industry-related groups, to focus broadly on economic measures in [the stimulus bill] as well as credit facilities that could be utilized by the industry. These are tools that will help the industry help itself.

Are you worried about consumer confidence, and what can the auto industry do to maintain it?

I am worried that we don't understand the extent of the demand shock and that we don't understand what it looks like on the other side. So that's why we'll have to continue to pay close attention to what's happening in the marketplace, but also just as importantly, or more importantly, what's happening with regard to stay-at-home orders and closure orders and the broader government response to the public health crisis because these things are tied together. So we have a lot of work to do not only as an industry to be prepared for an eventual restart, but also government agencies at the federal, state and local level have work to do to make sure that there is a level of clarity about an essential industry and how we can restore it when the time is appropriate.

Could the current changes brought on by the pandemic reshape how the industry looks in the future, including how customers shop for or purchase vehicles?

The opportunity for dealers to work with manufacturers to complete online purchases and then make deliveries, those types of innovations I do think are going to be important as the COVID-19 pandemic continues to unfold. How that will change the retail market going forward when we get back to normal, so to speak, is really hard to know at this point. I do think there will be some creativity and some new approaches that I do think we'll see in the dealer network going forward.

What are some examples of new approaches?

I do think some dealers are looking at how to more efficiently do online sales and deliveries in light of current public health restrictions. But we're still in early days. We don't really know what this is going to look like because we're in many ways absorbing the beginning of the demand hit.

Do you think automakers will change some of their strategies related to electric vehicles or mobility services because they might have to use their resources and capital elsewhere?

There's no question this is going to have a significant impact on the industry in the short term. What the impact is on the industry in the long term is yet to be seen. We as an industry have responded to challenges before. This is happening in the midst of a significant transformation in mobility, shifts to electric drive technologies, shifts to more highly automated vehicles. I would expect those shifts to continue over the long haul. What the pace of those developments are in the short term, we'll have to see.