COVID-19: Dealers brace for impact

Posted by

As we write this, the Canadian government is shutting our borders to most foreign travellers, public gatherings are being banned or restricted, sports and entertainment events are postponed and cancelled, Ontario has declared a state of emergency, and no one knows how many Canadians will be infected or killed by the COVID-19 virus.

Canadian workers and businesses in a host of industries across the country — and across the world — are bracing for one of the fastest and most profound economic shocks they’ve ever experienced.

What this means exactly for car sales and for the auto retail business is anyone’s guess, but it won’t be good. Estimates are starting to come in from various analysts who predict steep declines in North American car sales.

Already the industry is adapting rapidly. Canadian auto dealer will continue to report on those changes and recovery plans during and after this crisis. Here’s what’s happening so far:

 

Looking after business interests of dealers

The Canadian Automobile Dealers Association is providing updates and information on its website: www.cada.ca to help dealerships stay informed and is busy fielding calls from dealers across the country.

“During this fast evolving COVID-19 crisis, CADA’s immediate focus for its dealer members is to ensure business continuity and employment through liquidity and credit support,” said Tim Reuss, President and CEO of the Canadian Automobile Dealers Association in a statement.

“This encompasses working with the federal and provincial governments on several initiatives including access to the emergency support programs already announced as well as ensuring the liquidity of the commercial banking and lending sector. Also, we will be closely coordinating with our dealer members and interacting with the different manufacturers they represent to ensure that supply chains and inventory levels are handled appropriately in this difficult time.”

In an interview with Canadian auto dealer, Reuss said he had been in constant contact with dealers and the association’s leaders across Canada to provide updates and hear what’s happening across the country.

“At CADA we can’t find a cure for COVID, but what we can hope to accomplish is working with the government and the OEMs when it comes to liquidity and credit support and to maintain dealership operations,” said Reuss.

“As things shut down, dealerships have running expenses. When you shut down you have zero revenues coming in, or almost zero, and you still have most — if not all of your expenses to support. You can shoulder it for a bit but not for that long.”

Reuss said CADA is asking for the government to reinstate the Canadian Secured Credit Facility that was put in place in 2009 during the financial crisis to pump liquidity into frozen credit markets.

CADA is also working to ensure dealers have access to the $10 billion federal support fund that was announced for small and medium-sized businesses.

CADA is also working with the governments and OEM captives so that dealers can defer mortgage and interest payments for the short-term, during the first 90 days of the crisis.

CADA is also working in areas like deferring GST payments, and waiving waiting times for EI payments for any dealership employees laid off during the crisis.

Reuss said CADA is also working on details of a financial stimulus program that can kick in after the crisis has subsided, including a federal scrappage program that encourages consumers to replace their used cars with newer models.

Apart from working with governments, Reuss said the association is also working with OEMs to ensure that the brands are not pushing excess inventory at the dealers that the market simply can’t bear right now. “The manufacturers need to adjust their supply chains and inventory levels accordingly to adapt to the new reality,” said Reuss.

Reuss said the association is preparing FAQs for dealers to help them stay connected during the COVID-19 crisis that will be available on the association’s website.

“It is a very serious crisis of unprecedented proportions that will, and is already creating tremendous upheaval in the industry. It is not insurmountable. It is of a temporary nature,” said Reuss. “There is a recovery afterwards.”

“Nobody is in this alone, we are all in this together as a society, and we will get through it,” said Reuss, when asked what message he would have for those working in car dealerships across Canada.

As for car dealers, Reuss said dealers are resilient, and are already working with one another, sharing ideas and approaches to get through this. “That’s exactly the sense of community and information sharing we will need to come out of this,” said Reuss.

“There’s not a sense of defeat,” said Reuss. “Everybody is searching and looking for answers. We are stronger together.”

In terms of other changes, here’s a summary of just some of what we have seen happen.

 

100th Anniversary Vancouver Auto Show

The 100th anniversary edition of the Vancouver Auto Show slated to open later this month was cancelled. “We are very grateful to all of our partners including the Vancouver Convention Centre, automakers, event sponsors and commercial exhibitors for their understanding and support for this decision,” NCDA President and CEO Blair Qualey said in a news release. No new date has yet been announced.

Planning for the 100th year celebration had been years in the making, and was going to feature Opening Day special guests Roger Penske and Jimmy Pattison, and a number of never  previously displayed private automotive vehicles and collections along with a number of regional, national and global auto unveils from the world’s top automotive brands.

 

TADA’s ACE Conference: postponed

The TADA’s annual Automotive Conference and Expo (ACE) that was slated for April in Niagara Falls has been rescheduled to Sept 24-25, 2020.

“We are taking this important step to help protect our attendees, exhibitors and all participants. We have already been in communication with many of our speakers and venue partners and are confident that the new dates will make for a successful event,” said Todd Bourgon, the TADA’s Executive Director in a news release.

 

Calgary auto show shuts down mid-show

The Calgary Auto Show closed in mid-show. “Due to the evolving COVID-19 Pandemic, and at the direction of the Alberta Health Services the Calgary International Auto Show has unfortunately been closed effective immediately until further notice,” reads a notice on the event’s website.

 

ADESA suspends live auctions

Until further notice, ADESA is suspending its live auctions across the U.S. and Canada.

“In accordance with national, regional and local health agencies across North America and Europe, and to help minimize the risk of exposure, KAR Global is immediately transitioning to Simulcast-only sales at all U.S. and Canada ADESA auction locations until further notice. Additionally, KAR Global is waiving all Simulcast Success Fees for sellers and buyers through April 3, 2020,” the company said in a news release.

 

Manheim suspends live auctions

Maria Soklis, President, Cox Automotive Canada issued a statement advising that Manheim’s live auctions would be suspended until further notice.

“Thanks to many proactive measures, along with staggered working hours and employees working from home, there have not been any confirmed cases of COVID-19 at any of our Cox Automotive Canada offices or operations, including our Manheim auction locations,” according to a statement from Maria Soklis.

“As we continue to closely monitor the progress of the Coronavirus (COVID – 19) and the actions being taken by our government and communities to prevent its spread through increased social distancing, we have decided to continue taking additional precautions in the best interest and health of our employees, partners, customers and communities,” said Soklis.

“As such, we will be temporarily hosting all in-lane auctions across Canada via Simulcast and also encouraging Canadians to leverage our online digital auction platform, MUVIT. These actions are grounded in our commitment to always do the right thing for our employees, company and communities and are effective immediately throughout the month of March.”

Some OEMs are also starting to announce special programs with deferred payments for new customers to help them stay afloat during the crisis and to keep them buying cars.

 

Canadian auto dealer will continue to monitor the developments in the days and weeks ahead.

Comments are closed.

Canadian auto dealer