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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]
Keep an eye out for headlines like “Massive Fraud In PPP Program,” folks.
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.
(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.)
Do I need a job to qualify?
LOL…yes, unless you have spotless credit, plan to put down around 30%, and have like a year’s worth of reserves.
“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.
+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.
If you foresee W it is a good time to cash out and wait for the second dip.
“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.
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.
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.
World’s tiniest violin for AutoNation, the worst dealership experience in town.
I’m completely unfamiliar with them – please explain. The nearest one is over 2 hours away from me.
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
My daughter bought a new Hyundai at an Autonation store last fall. She got a good deal and the buying experience was pleasant.
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.