Dealer Conversations

 

How dealers are faring in the wake of COVID-19

Oct 13, 2020
By: Steve Hewitt, John Lloyd
Dealerships

By and large, dealers have fared better than expected in the wake of COVID-19. Working with dealer groups around the country, we’ve observed that many lost profits in March and April. Most have made steady gains since then, and the past few months have been strong.

Lessons learned

As municipalities and health officials asked businesses across the country to shut down to slow the spread of the virus, dealers analyzed their expenses and made necessary cuts and adjustments. Staffing levels were reduced, and it provided an opportunity to let go of employees who weren’t performing well. Many are finding that they’re productive and efficient with fewer staff and don’t plan to increase staffing levels in the near term.

Low inventory remains a problem

Gross profits have increased and doubled in many cases. Dealers with stronger sales departments, strong websites and social media presence have been selling more vehicles. Overall, most are finding sales are better than expected. Low or no interest rate loans are helping to increase sales. After automakers shut down in response to the pandemic, it has taken some time to ramp up production again. With new vehicles hard to come by, the sale of used cars went through the roof. Sales continue to outpace production. 

Parts and service

Service departments were extremely slow during the lockdown as cars stayed parked at home but have recovered nicely. Body shops are still seeing the impact of the slowdown as accident rates remain down with people driving less.

What lies ahead?

Only time will tell whether certain areas (or all) of the country will be shut down again as some have predicted. What we’ve seen so far tells us that most dealers are well prepared if we have to do that again – like you, we hope that won’t be the case.

We’re here to help you navigate the uncertainty of the pandemic and its impact on your people, finances and business. We have developed a library of resources in our COVID-19 resource center to help you stabilize today and prepare for tomorrow. We also have solutions that can help you manage your people strategy, operations, business finances and technology. We’re here to help. Contact us today.

Author(s)

Steve Hewitt, CPA
Dealerships Practice Leader
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John Lloyd, CPA
Manager
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