Illustration for article titled Many Car Dealers Probably Wont Come Back From This
Photo: AP

You can still buy a car at almost any dealership in America at the moment, even many in the Bay Area, where there is a shelter-in-place order. But not surprisingly fewer people are doing that amid the global coronavirus pandemic. Dealers who have inventory still to sell are very much in wait-and-see mode, but the worst is still to come.

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Take this quote from a general manager of a dealer in Fresno, California, where dealerships were ordered closed under the city’s shelter-in-place order, unlike the Bay Area where the shutdown order exempted “gas stations and auto-supply, auto-repair, and related facilities.”

“There’s going to be lot of independent dealers - not corporate people - but independent dealers that don’t survive this equation.”

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Or take this quote from a dealer in L.A.:

“I remember the ’94 [Northridge] earthquake and 9/11 and the recession, where we just had to press on and work hard,” said Beau Boeckmann, president of Galpin Motors in Los Angeles, which sells brands including Ford, Honda and Volkswagen. “This one, we really don’t know what to do. Right now, we’re just playing it minute by minute, and that’s something I’ve never had to do before.”

Or this one from a dealer in Amarillo, Texas:

“Sales are definitely falling,” said John Luciano, managing partner with Street Volkswagen in Amarillo, Texas, and chairman of Volkswagen’s national dealer council. “We’re waking up in a different world a little bit more every day.”

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Or, finally, this one from a dealer in Columbus, Ohio:

George Waikem II, general manager at Waikem Ford in Ohio, said the dealership had a solid sales weekend, but store traffic evaporated on Monday, a day after the state’s governor ordered bars and restaurants closed to limit the virus’ spread. Of the 12 sales appointments scheduled for the day, all but one canceled, he said.

The store already has scaled back some, moving its carwash operation to a skeleton crew and considering other measures if sales continue to slow, he said. His outlook for the week: “Probably a ghost town.”

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They all add up to the same familiar gloom. Up until recently, many dealers had been preparing for what has become a relied-upon ritual, the spring sales season. Instead, customers are holding on to their money and just avoiding showrooms altogether.

And while 2020 was already thought to be a down year for car sales, now it’s looking like a catastrophic year, and the numbers are staggering:

Here’s The Wall Street Journal:

José Muñoz, chief executive of Hyundai Motor Co. ’s North American division, said he expects the auto maker’s U.S. sales to drop in March by 15% to 20% over the same month last year and then further slide in April by as much as 50%.

“I see the situation getting worse for the next few weeks,” Mr. Muñoz said, adding that he did not expect a slow recovery until summer at the earliest.

RBC Capital Markets this week said auto sales could fall to 13.5 million vehicles this year, which would mark a 20% decline from last year and the lowest level since 2010.

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For automakers and dealers, 20 percent is massive because since the 2008 recession both groups could reliably expect annual upticks in car sales, to over 17 million in 2019.

What that also means is that there will be some casualties, since even what is normally a bright spot for dealers—the margins they make in the shop—are also going down, since if you’re not commuting to work anymore getting your car repaired is a bit less urgent.

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All of which is another gloomy footnote in this new world order, though the good news is that if you do have money to purchase a new car, well, it’s a buyer’s market.

News Editor at Jalopnik. 2008 Honda Fit Sport.

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