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7 considerations for dealerships in partial or full shutdown

Apr 01, 2020

COVID-19 is impacting all businesses, and dealerships are no exception. Business interruption can come in many forms, but this is unlike anything we’ve ever seen before. To properly strategize the best solutions for your dealership, you’ll need to understand the recent legislation passed in the CARES Act, and how the stimulus package may benefit you.

Here are seven things to consider as you navigate this changing environment over the coming months:

  • Through the CARES Act, there will be a significant amount of loans available through the Small Business Administration (SBA), and dealers will be eligible. Some of these loans may qualify for partial forgiveness.

    The SBA loans will be made through financial institutions — if you are interested in applying, contact your local lender to see if they are SBA approved. This is a fluid situation, so it may take some time to work through this process.

    Watch our webinar: COVID-19, qualified businesses, individuals and nonprofits: What’s next?

  • Work on your detailed cash-flow projections through the next several months, and make sure that you update them weekly.
  • If your cash-flow projections indicate that you will have a shortfall, consider flooring any new vehicles that you own outright.
  • Many dealerships that aren’t in strict lockdown zones are maintaining partial service and/or limited sales operations while still making efforts to comply with social distancing best practices. In these cases, dealers must evaluate these practices weekly to ensure it’s economically feasible to continue doing so. At some point, economic losses might eclipse the benefits of goodwill.
  • For dealerships maintaining service operations, consider cutting hourly service staff and technicians and pay on a flat rate basis.
  • You will need to run lean when you can resume normal operations. As you assess cash flow during the slow down, perform a cost benefit analysis on expenditures. This may highlight areas of expense that you can cut back on or eliminate to help you bounce back faster.
  • With the IRS extending the tax deadline to July 15, dealers might find some cash flow relief in not having to pay taxes until July. Many states have also followed suit.

No one knows for certain what the other side of this pandemic looks like, but making the best business decisions in the interim can help your dealership stay afloat and bounce back better when things return to normal.

Need more help with COVID-19 issues?

There are so many things to understand and so many decisions to be made. We’re here to help with information and resources to navigate the uncertainty of the business impact of COVID-19 on your business, your finances and your people. We have developed a library of resources in our COVID-19 Resource Center to help you stabilize your today and prepare for tomorrow. 


Steve Hewitt, CPA
Dealerships Practice Leader
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Kevin Cherney, CPA
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Mark W. Ayers, CPA
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