U.S. Auto Dealerships Ask Trump If They Can Stay Open Amid Outbreak

Matt Posky
by Matt Posky

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.

From NADA:

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.

[Image: Gretchen Gunda Enger/Shutterstock]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Namesakeone Namesakeone on Mar 23, 2020

    Just what we need: An atmosphere where close physical contact (sitting close together in a car for a test drive, sitting across a small desk, shaking hands) is considered an element (though in the latter case, not a necessary) part of the job.

  • Thelaine Thelaine on Mar 23, 2020

    I have always engaged you and anyone else civilly Freedmike, if given the same courtesy, and I continue to believe that the reason people are willing to burn down the economy in order to try to stop a virus which is less deadly than the average flu is because they are panicking and hysterical. Turn off the TV. Read this: https://www.statnews.com/2020/03/17/a-fiasco-in-the-making-as-the-coronavirus-pandemic-takes-hold-we-are-making-decisions-without-reliable-data/ https://science20.org/david-zaruk/20200320/coronavirus-shows-our-reliance-precautionary-principle-has-ruined-our-ability?utm_source=dlvr.it&utm_medium=facebook https://www.nytimes.com/2020/03/20/opinion/coronavirus-data.html Opening your mind to other opinions is the best way to stop the hysteria and panic.

    • See 1 previous
    • FreedMike FreedMike on Mar 23, 2020

      Hmmm...interesting stuff, but... If there is no "reliable data" on a disease, under-react to preventing it? OK...give me 100% reliable data on my expected lifespan if I smoke, eat out at McDonald's every day, and refuse to exercise. And good luck with that - it's impossible to predict reliably. Some people die in their 50s from that, but it's entirely possible that someone engages in that kind of behavior, lives to 90, and dies in a house fire, like someone's Uncle Joey did. It happens all the time. But what kind of idiot says, "well, it didn't kill Uncle Joey, so I'm gonna do it too"? And none of these articles, interesting as they are, explain how you prevent the spread of this virus - which is the reason behind all the draconian stuff you're talking about - without impacting the economy? Good luck with that one too. We have two choices: under-react or over-react. Clearly the over-under here is that under-reacting is going to cause more harm than over-reacting; if that was not the case, then we'd be under-reacting.

  • Slavuta Inflation creation act... 2 thoughts1, Are you saying Biden admin goes on the Trump's MAGA program?2, Protectionism rephrased: "Act incentivizes automakers to source materials from free-trade-compliant countries and build EVs in North America"Question: can non-free-trade country be a member of WTO?
  • EBFlex China can F right off.
  • MrIcky And tbh, this is why I don't mind a little subsidization of our battery industry. If the American or at least free trade companies don't get some sort of good start, they'll never be able to float long enough to become competitive.
  • SCE to AUX Does the WTO have any teeth? Seems like countries just flail it at each other like a soft rubber stick for internal political purposes.
  • Peter You know we’ve entered the age of self driving vehicles When KIAs go from being stolen to rolling away by themselves.
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