Not a single dealership in Canada reported being completely closed, according to recent findings from the Canadian Automobile Dealers Association’s (CADA) national monthly survey.
It is one of many encouraging findings from the survey, which took place between May 1-8 and focuses on the impact of the pandemic on auto dealers.
“The difference in how dealerships are faring through this crisis is distinctly more positive from this time last month, and is a clear testament to the Government of Canada’s strong business support programs such as the CEWS,” said Tim Reuss, President and CEO of CADA. “The CEWS is working, it is helping support businesses through the COVID-19 crisis, and is keeping workers on payroll wherever possible.”
The report indicates that nearly 75 per cent of dealerships are hiring back employees due to the Canada Emergency Wage Subsidy (CEWS) program. Reuss said the program has been so successful that dealers have asked for it to be extended, which Prime Minister Justin Trudeau recently granted. According to CBC, it will be extended past June 6.
Other encouraging findings from CADA’s report include 90 per cent of dealerships reporting their service operations are open — up from 77 per cent in April’s survey. And 33 per cent of sales operations are open by appointment only. This is fully the case for Ontario dealerships at this time.
And while there are more dealers (80 per cent) reporting a decline in new vehicle sales revenue by more than 50 per cent, year-over-year, there are minor improvements on the service and parts side of the business — with 36 per cent having reported a decline of more than 50 per cent in this area versus 40 per cent in April’s survey.
“Vehicle sales had precipitously dropped by 75 per cent to reach a historic low in April,” said Oumar Dicko, Chief Economist at CADA. “This is clearly reflected in this month’s survey with 80 per cent of respondents reporting a drop in revenue of 50 per cent or more throughout the month of April.”
“While the federal government’s financial support in response to COVID-19 has helped to mitigate the impact on businesses and workers, the country is now starting to look at recovery,” he said. “The government must introduce a robust post-crisis stimulus plan to revive the Canadian economy.”
Automotive dealerships have been included in most announced provincial phase one reopening plans. But for the sector to successfully rebound, Dicko said the recovery plan needs to focus on “boosting demand” to jumpstart the industry. He said dealers are “overwhelmingly” in favour of a national scrappage plan that would help incentivize purchases for new vehicles that are more fuel efficient.
Dealers that responded to the survey also called for a GST/HST holiday for new vehicle purchases, along with a program to help increase lending capacity for vehicle and equipment purchases, such as a secured credit facility.
When it comes to financial relief, 46 per cent of dealers said they have not yet received any relief from their financial institutions. But for those that have, 54 per cent were very satisfied with the mortgage relief, and 57 per cent were very satisfied with new and used floor plan arrangements. However, only 32 per cent reported being very satisfied with the relief being provided on operating lines of credit.
Reuss said it was troubling that nearly half of respondents have not yet received any relief from their financial institutions, and of those that did a low percentage of dealers are satisfied with the relief. “We will definitely continue to monitor this situation, and work with the government to advocate on behalf of dealers for expanded support wherever possible,” said Reuss.
The survey included 579 respondents, representing over 1,304 dealership rooftops across Canada.
