What happened

Shares of BorgWarner (NYSE:BWA) were down on Thursday, as growing concerns about the virus pandemic drove a broad-based market sell-off.

As of 1:30 p.m. EDT, BorgWarner's shares were down about 6.8% from Wednesday's closing price.

So what

BorgWarner is a major auto-industry supplier: It provides manufacturers of cars and trucks with components for engines, transmissions, and other vehicle parts. For BorgWarner (and other automotive companies), the key questions right now are: How badly will the outbreak of COVID-19 hurt business, and for how long?

The front of BorgWarner's technical center in Warren, Michigan

Image source: BorgWarner.

How bad could it get? Here's a sobering data point: Auto sales in China -- the world's largest new-car market, where BorgWarner has a significant presence -- were down nearly 80% in February as the government told people to stay home to slow the spread of the virus.

While governments in North America and Europe are likely to take less authoritarian approaches, retail foot traffic has already begun to fall as consumers heed warnings to stay out of crowded public areas as much as possible. If and when the pandemic hits the U.S. and western Europe in a serious way -- which could be a matter of days -- it's likely that retail foot traffic (and auto sales) will fall drastically.

That in turn would lead automakers to cut production, reducing orders for BorgWarner.

Now what

For the moment, U.S. auto sales seem to be more or less on pace. But that could change quickly. For the time being, investors in BorgWarner should watch weekly light-vehicle sales numbers closely.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.