Having already pulverized the dead horse of waning auto sales into a fine paste, we’ll now turn our focus on how it’s impacting employment among automotive retailers — squashing another pony.
Much of the information up until this point has been anecdotal and conditional to the North American response to COVID-19. Furloughs were rampant as the pandemic progressed
and new safety rules seemed poised to cripple sales moving forward. There was an obvious general plight confronting automotive retailers, but we couldn’t nail down what that meant in terms of job losses.
We still don’t, frankly. But it is starting to become obvious that there isn’t much reason to be exceptionally optimistic. AutoNation recently announced that around half of the 7,000 workers it furloughed in April won’t be coming back. Despite some retailers claiming not to need such drastic cuts, plenty are following AutoNation’s model. With fewer customers and sweeping restrictions on how showrooms can be operated, there’s little reason for there to be all hands on deck. But just how many will be forced to abandon ship this year?
Enough to make you squirm, according to most analysts. We’ve begun hearing economists toss around the always unsettling term “unprecedented” when discussing the economic fallout of the coronavirus response.
This has hindered reliable predictions as everyone scrapes through history to cobble together the closest approximation of what’s going on using bits and pieces of other economic disasters. Employment data suggests the U.S. is sitting on a joblessness rate of 13.3 percent, however, and the information issued by automotive retail outlets is no more heartening.
Our team spoke with Alan Haig, president of Haig Partners, a dealer advisory firm in Fort Lauderdale, FL, this week to get a sense of what things are like on the ground. He said several dealers have told him they found themselves making permanent cuts — roughly 10 to 15 percent of their staff.
“Probably their weakest performers — and they’re finding that they’re able to do a lot of business with fewer people,” Haig explained.
While that bodes well for the commission rates of whoever’s staying behind to draw paychecks, there’s little reason to think this will be a temporary setback. Many retailers are attempting to shift to an increasingly digital business model that requires fewer staff to wait for walk-ins. Car sales are assumed to be uncharacteristically weak this year and new regulations have forced loads of dealerships to change the way they do business. A number of stores don’t even have a full complement of vehicles, thanks to production stops.
National Automobile Dealers Association (NADA) Chairman Rhett Ricart has said the Paycheck Protection Program (PPP) has been important in the retention of jobs. Yet PPP existed to help businesses maintain staff through the worst of COVID-19; state governments are now starting to talk about a second wave and extended lockdowns. It also doesn’t address the thousands of new jobs that have evaporated.