As the coronavirus pandemic deepens, the retail automotive industry is facing disruptions that haven’t been seen previously. News comes daily of closures, limited hours, and supply problems that affect every aspect of dealership operations.
At this point, it’s clear that no one will escape unscathed from the detriments on business and the economy. These are some of the issues dealers face with their supply chains in various areas.
Many dealers rely on rental vehicles for overnight loaners in the service department as well as in sales. Those rental cars may be available in large numbers since fewer vacationers and businesses are renting them out during the crisis. While product supply isn’t an issue, its availability to dealerships is.
Enterprise Car Rental’s update on their website identifies that some of their locations are closed and services will be consolidated for others. Of course, it’s understandable to properly care for their employees. All rental agencies are in the same position. It may take longer to procure a rental and it could be inconvenient to find a location open nearby.
Currently, dealerships aren’t experiencing any major disruptions in parts deliveries from OEMs. In large part, inventory levels have been able to meet demands. Parts manufacturers like Magna are releasing statements that indicate the supply could dwindle in the coming weeks and months. Magna has begun to reduce production in many divisions worldwide. Based on the threat to employee health, their news release states that they will re-evaluate production status week to week.
First Aid Supplies
Every dealership requires personal protective equipment (PPE) as well as first aid supplies, and equipment supply companies like Zee Medical take care of filling and refilling those cabinets. USA Today is reporting that a popular mask, the N95 respirator mask, is extremely difficult to find amid a shortage.
The same N95 respirator mask is used in emergency rooms and doctors’ offices around the world and is disposable. Millions are used and discarded daily among medical professionals. N95 masks aren’t the only products in short supply. Commercial hand sanitizer is another, and the increased use of latex glove, although misguided, has dipped into availability for dealerships.
Used Car Inventory
There are still thousands of wholesale units running through dealer auctions daily. The problem isn’t with supply for used cars but the ability to purchase them. Manheim has restricted its auctions during the coronavirus, keeping lots restricted to staff only – no buyers and sellers permitted. All sales must be completed via Manheim’s remote selling tool online. ADESA has also switched to a digital experience-only auction during the COVID-19 pandemic.
For dealers, that could mean lower selling prices on the block. That’s great for the buyer but sellers are less inclined to put their used cars through the auction if they won’t realize the price they’ve appraised the car at.
Every department has experienced disruption. The accounting department may be having trouble reaching a supplier to place an order for office supplies or to coordinate delivery. Collision repair departments are likely going to see a slowdown in traffic since physical road traffic is reduced.
With retail dealerships starting to feel the pinch, it’s all we can hope for that the coronavirus will be in the rearview mirror soon.
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