Eighty-seven per cent of dealerships in Canada have seen their revenues decline by more than 30 per cent due to the impact of COVID-19, according to a national survey from the Canadian Automobile Dealers Association (CADA).
The findings in the survey, which focuses on the impact of the novel coronavirus on automotive retailers, points to the massive toll the pandemic is taking on the sector.
“Canada’s retail auto sector employs over 160,000 Canadians across the country and the impact of the COVID-19 health pandemic has been devastating,” said Tim Reuss, President and CEO of CADA. “Just as dealers across the country should be entering the peak season, where Canadians are most likely to be out shopping for new vehicles with the latest safety and environmentally advanced technology, the retail auto sector is reporting its most severe decline in history.”
Results from the survey reveal that 11 per cent of dealerships are completely closed, and 50 per cent have closed on-premise sales operations. The survey was conducted prior to Ontario’s latest update on essential services, which placed dealerships (with the exception of the service department) as non-essential.
According to CADA, the survey also reveals that 77 per cent of dealerships are able to continue essential repair and maintenance work during the crisis, as nearly 40 per cent have experienced a 50 per cent decline (or more) in service and parts revenue. And 96 per cent of dealerships have had to lay off employees, with 78 per cent having laid off 10 or more people.
“Most dealerships have had to partially or completely shut their doors,” said Reuss. “On top of that, they’ve implemented additional safety protocols that include increased cleaning and sanitizing, protective barriers and wearing protective gear — all while maintaining reduced hours of operation.”
It’s not all bad news, however — the survey also highlights how dealers are supporting their communities amid the crisis.
“Despite these difficult times, dealers continue to be a vital part of their local communities,” said Reuss. “They are supporting numerous local initiatives like delivering prescriptions and groceries, donating critical supplies like N-95 masks to local hospitals, and offering shuttle services or even donating entire vehicles to critical community support services.”
Furthermore, the survey identifies key areas where dealers need support from their provincial and federal government, and their OEM. These include: deferral of property taxes, waiving HST on sales for the next three months, and interest-free loan programs for small- and medium-size businesses (which includes those with a payroll that exceeds $1 million).
They also require clarity, transparency, and greater availability of the Canada Emergency Wage Subsidy (CEWS) program, which was originally announced by the federal government in March. Dealers need the payments immediately to pay employees, according to CADA. And they need to have the Secured Credit Facility reinstated, along with financial assistance or support from the government to maintain operational costs such as utilities, mortgage/rent, heating, property tax, insurance, and more.
“Dealers have made it clear they appreciate the numerous programs that have been announced so far to help support employees, but the survey results show how deeply the sector is struggling financially,” said Reuss. “We need additional business support — mainly liquidity — to help dealers remain viable and continue to play a pivotal role in their communities during this crisis.”
The survey included 862 respondents and was conducted from April 3-9, 2020.
