By on June 4, 2020

After furloughing staff in response to the coronavirus pandemic, AutoNation has gradually allowed employees to return back to work. Half of the 7,000 people asked to take it easy in April won’t be coming back at all, however.

The automotive retailer has decided to permanently cut 3,500 jobs so it can focus on its bottom line and what it has unsettlingly called “the new normal” — a term frequently used to rationalize unsavory actions taken during the health crisis.

With customers unable to leave their homes to purchase cars, it’s to be expected that America’s largest automotive retailer would need to engage in some light restructuring. It also happens to have the best excuse imaginable for nuking a large portion of its workforce. Back in April, when the AutoNation was furloughing employees, it received nearly $95 million in federal small-business funds via the Payment Protection Program (PPP). A subset of anonymous staff members were said to have leaked the details to the media after deciding the firm was taking cash allocated for smaller outfits.

Outrage ensued and the company sheepishly returned the money. 

Marc Cannon, AutoNation’s chief customer experience officer, explained the situation to Automotive News — noting that some employees may return once vehicle sales stage steady improvements.

“The business environment continues to change and AutoNation is adapting by restructuring and reducing the work force,” Cannon said. “At AutoNation we have adjusted to the new normal, which focuses on digital and store efficiencies. We have made strategic adjustments to capitalize on the digital marketing and website actions. As a result, we have made the difficult decision to eliminate approximately 3,500 positions in the field and at headquarters, most of which were associates on unpaid leave.”

From AN:

As part of its restructuring, AutoNation is combining its Tennessee and Virginia market with its Georgia and Northeast markets, resulting in some market-level employees being let go, Cannon said.

In early April, AutoNation also announced it had temporarily cut employee base pay, frozen hiring, trimmed advertising costs by about half for the second quarter and was postponing more than $50 million in capital expenditures.

It also said CEO Cheryl Miller, who was later granted leave for undisclosed health reasons, and Mike Jackson, the company’s chairman who has resumed CEO duties until Miller returns, each took 50 percent salary cuts, while other executives, corporate and regional staff took pay cuts of 20 to 35 percent.

The company said April 24 that it returned $77 million in federal Paycheck Protection Program loans for 83 stores.

Original reports claimed the company received around $95 million from PPP.

Worth a tidy $3.1 billion, AutoNation undoubtedly suffered from the extended lockdown, but it could have been much worse. Despite losing about half its stock value in March, the firm has since seen shares seesawing back to normal. Wall Street has actually proven pretty forgiving in general, not that that meshes with anything we’re seeing on the ground. Automotive entities have all taken financial hits and only Hertz seems incapable of rebounding.

We’re not sure if we should attribute the oddly healthy trading as a sign the public has faith in the economy turning a corner, or as more evidence that investors don’t live on the same planet as the rest of us.

Meanwhile, AutoNation is embracing online sales. Local governments forcing brands to close shop gave them little recourse but to find new ways of doing business. Economists suggested swapping to a more digital model would help entities endure the pandemic and help firms reduce overhead, as they’d need fewer employees. Some urged caution, noting that widespread shifts away from physical retail locations will likely exacerbate national unemployment rates and disproportionately benefit the biggest companies while smaller business continue to struggle, or simply whither and die.

Like many auto retailers, AutoNation was shifting toward indirect sales prior to 2020. The retailer claims the percentage of sales originating online grew 35-45 percent over a single month of the pandemic.

[Image: Image: Felix Mizioznikov/Shutterstock]

 

 

Get the latest TTAC e-Newsletter!

Recommended

16 Comments on “AutoNation Cutting Roughly 3,500 Jobs...”


  • avatar
    FreedMike

    Keep an eye out for headlines like “Massive Fraud In PPP Program,” folks.

  • avatar
    JMII

    Not PPP related but my company took a similar path: 1) Furlough “expendable” employees. 2) Realize business will be slow to return (if at all). 3) Permanently layoff many. 4) Put on a happy face. I’m just worried the cuts went too deep and some of that talent is gone for good and could be gobbled up by our competition.

    • 0 avatar
      FreedMike

      (Knocks on wood) So far, so good with my company – we do post-closing due diligence, mainly on newly-originated mortgage loans, and originations are definitely down. But they’ve been pretty creative about finding new sources of revenue; so far, the impact to me has been pretty minimal.

      (Side note: if you’re in a position to refinance, now would be a great time – rates are low and mortgage companies will go out of their way for your business.)

  • avatar
    SCE to AUX

    “We’re not sure if we should attribute the oddly healthy trading as a sign the public has faith in the economy turning a corner, or as more evidence that investors don’t live on the same planet as the rest of us.”

    Yeah, the 25% pounding I took in March has been cut to 8% already, and the quick rebound makes me nervous. I foresee another cliff once the government gravy runs out, or if COVID-19 2.0 begins in the fall.

    • 0 avatar
      gasser

      +1 to the above. The stock market seems oddly disconnected from reality. I, too, fear a Covid 2.0. However, even if it doesn’t materialize, there are over 30 million people out of work who were employed in February. Do you really see them spending money at the rate they did early in the year? We have a consumer based economy and the consumer is increasingly broke. A return to prior levels of business is more likely years, not months, away.

    • 0 avatar

      If you foresee W it is a good time to cash out and wait for the second dip.

  • avatar
    volvo

    “We’re not sure if we should attribute the oddly healthy trading as a sign the public has faith in the economy turning a corner, or as more evidence that investors don’t live on the same planet as the rest of us.”

    Not that difficult to explain. Recent stimulus money (2-4 trillion USD depending on whose numbers you follow) is US debt as treasury bonds. The Fed monetizes those bonds with “created” dollars.

    Now you have a lot more dollars chasing the other asset classes such as equities and properties. That combined with significant reduction in interest rates will enhance that effect. Lets say that as an individual or institution you have a bunch of cash. Loses value in the mattress and interest rates are less than inflation what are you going to do with it.

    The chickens will come home to roost if or when the USD is no longer the world’s reserve currency. At the current time the USD and US economy is problematic just not as many problems as most European and Asian economies.

  • avatar
    V16

    The “new normal” isn’t normal, if you’re one of 42 million unemployed.
    Stimulus payments are a temporary bandage on a gaping wound.
    The day will come when the bandage needs removed.

  • avatar

    Riots are good for economy. That’s what happened after 1992 riots – Clinton era dotcom boom. So I foresee Biden (or whoever replaces him later) era boom. May be another tech boom, AI/robotics boom to be precise.

  • avatar
    Goatshadow

    World’s tiniest violin for AutoNation, the worst dealership experience in town.

    • 0 avatar
      SCE to AUX

      I’m completely unfamiliar with them – please explain. The nearest one is over 2 hours away from me.

      • 0 avatar
        CKNSLS Sierra SLT

        SCE-
        “goatShawdow” up above apparently has some anger issues with AutoNation. Their financial performance has been pretty good up until this COVID thing.

        Their business model has been widely accepted buy those (especially) in the used car market. Their used car model is a fixed price situation-no negotiating. It an “upper tier” if you will – used car buying experience.

        They also have new car dealerships-I’m not sure of their business model with those-however it wouldn’t surprise me if they were “fixed price” as well.

        https://www.autonationusa.com/autonation-one-price.htm

    • 0 avatar
      FreedMike

      My daughter bought a new Hyundai at an Autonation store last fall. She got a good deal and the buying experience was pleasant.

  • avatar
    Avnut

    AutoNation informed me today (6/5), that my entry level tech position with one of their Ford dealers has been eliminated. Actually, all of the entry level tech positions have been eliminated at the dealership.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • blppt: Lease deals can be had on S3, and they actually have stock of them. Golf R is a rare bird to find on the lot,...
  • pveezy: People in these comments sections always seem to be in the early 2000s mindset. For one, gas mileage is not...
  • pveezy: I’ve owned like 8 automatic cars and never had a single one that had a transmission issue before I was ready...
  • pveezy: I dunno, I’ve been a sedan guy all my life, but when it comes to Ikea trips or big ticket purchases, that CUV...
  • pveezy: SUVs get the same or better fuel economy vs similar sized sedans now. We aren’t talking about 2005 Yukons...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Matthew Guy
  • Timothy Cain
  • Adam Tonge
  • Bozi Tatarevic
  • Chris Tonn
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber