U.S. Auto Dealerships Ask Trump If They Can Stay Open Amid Outbreak
Like every other business in the United States, auto dealers are attempting to implement changes that would allow them to operate safely amid the coronavirus outbreak. Undoubtedly petrified by the massive hit the Chinese car market took after COVID-19 reared its ugly head in Wuhan, they also hope to remain open while other business stay closed.
On Tuesday, the National Automobile Dealers Association (NADA) and Alliance for Automotive Innovation (AAI) issued a formal letter requesting that President Trump consider dealerships and service centers as “essential operations when federal, state, and local officials impose certain requirements due to the coronavirus outbreak.” While we’ve already seen dealerships embrace new tactics to comply with public health initiatives, it’s assumed they’ll be shutting down just, like most automakers plan to. However, retailers worry their diminutive cash reserves (in relation to manufacturers) won’t see them through a prolonged shutdown while the broader industry wonders who will repair automobiles during the pandemic.
These facilities perform needed safety recall repairs, manufacturer warranty work, and safety-critical maintenance, including brake repair, steering repair, and much more. And they provide replacement vehicles when necessary. We note that many local jurisdictions, when issuing closure orders for non-essential businesses, have included motor vehicle facilities on the list of those that are essential. For example, yesterday’s shelter-in-place order issued by the Health Officer of the City and County of San Francisco determined that “gas stations and auto-supply, auto-repair, and related facilities” were essential businesses outside the order’s reach.
Don’t get the idea that this is all about altruism. Plenty of dealerships are understandably preoccupied with survival; if they can help keep the United States driving, all the better. Trump has said he’ll assist the automotive sector, but it’s not clear what form that aid will take or which groups will take priority. Parts suppliers, automakers and dealerships are all asking for help — but so is every other business sector impacted by the coronavirus.
“We’re watching the auto industry very much,” Trump said on Thursday. “We’re going to be helping them out at least a little bit and they’ve sort of requested some help, and it wasn’t their fault what happened. So we’ll be taking care of the auto industry.”
Optimistic estimates see coronavirus-related shutdowns suppressing automotive sales by about 3-to-4 percent vs last year’s figures. That figure presumes the shutdowns are brief and the automotive sector enters recovery by the end of April. A prolonged shutdown would be much worse. Market analysts at ALG recently suggested that an extended national shutdown could have 2020 sales sinking almost 15 percent (vs 2019) — a shortfall of 2.4 million vehicles from the firm’s initial 2020 forecast.
Earlier in the month, LMC Automotive cut its 2020 global light-duty vehicle sales forecast by 4 percent, or 3.7 million units, as the “rippling impact of the COVID-19 outbreak creates significant uncertainty.” At the time, it was one of the worst estimates given, taking into account supply chain issues from China that hadn’t yet come into full effect. Days later, Morgan Stanley added its own research, predicting a 9-percent sales decline.
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