Auto dealer sales cease around Michigan, as outbreak upends business as usual
Detroit — The Motor City has come to a screeching halt with automakers suspending manufacturing and the state pausing auto sales. And changes brought about by the coronavirus outbreak may have lasting effects as dealerships around the nation moved to online sales before stay-at-home orders closed many of the doors to their sales departments.
Michigan dealerships had to shut down their sales departments Tuesday following Gov. Gretchen Whitmer's coronavirus stay-at-home order prohibiting auto sales through April 13.
"I don’t understand it fully," said Mark Trudell, general manager at Extreme Dodge Chrysler Jeep of Jackson. "I get the whole deal that we have to be at home as much as possible, but it was our own understanding that sales and service under the same rooftop would be open. It kind of hit you a little a hard. You weren’t ready for it."
His service department remains open, as they do at many dealerships around the state.
While the Detroit Automobile Dealers Association overall supports the order, it has asked the state for the ability to do remote sales and appointment sales. Meanwhile, the National Automobile Dealers Association, along with other auto groups, is asking the Trump administration to clarify that vehicle sales are essential services and can remain open during the pandemic.
"We just need some clarity on the language because we don’t want dealers to get themselves in trouble," NADA Chairman Rhett Ricart told The Detroit News Tuesday. "We have to be able to replace these vehicles, but we have to make sure they are clear."
The association's concern is the people who need a car won't be able to get one, especially the nation's essential workers, including first responders and medical personnel.
"What about a plumber, his van breaks down but I can’t sell him a van? They’re not thinking through this very well," Ricart said.
Other states that have instituted stay-at-home orders like Illinois are still allowing vehicle sales.
While Trudell doesn't see this as a "a time for us as an industry to be out flying balloons and having big car sales," he does see auto sales as essential because people need cars to get around.
Repair is allowed to continue at dealerships and Paul Zimmerman, partner and vice president for Matick Automotive, said they have "a tremendous amount of work" at the group's Toyota dealership in Macomb Township and Chevrolet dealership in Redford Township.
"We are open and we have actually had some briskness in terms of customers coming in to get their cars fixed," Zimmerman said.
Sales at the dealership had started to slide in the last few days before Michigan's shelter-in-place declaration, Zimmerman said. On Monday, Matick Chevrolet had between 13 or 14 sales — about half what they usually do.
At Village Ford in Dearborn, sales were down nearly a third last week. Owner Jim Seavitt watched as sales slipped from 16 last Monday to 10 on Wednesday, and two on Friday. Seavitt decided last Friday it was best to close down most operations except his parts department to keep employees safe. His service department is closed.
"I told them I was closing the dealership ... and that their safety and health meant more than a few sales," he said.
Dealerships across the country had adapted over the last week to adding pickup and delivery options for customers and telling them all the paperwork can be completed online or by phone.
At Trudell's dealership, they were offering pickup and delivery, and would come to the customer's house for test drives. Before Monday night's emergency declaration, sales staff offered customers the opportunity to keep vehicles overnight or for the evening.
Those changes could be lasting, even after the pandemic passes.
"It’s really forcing the issue of online sales and pickup and delivery," said Michelle Krebs, executive analyst for Autotrader. "Every year consumers tell us they want to spend less time in the dealership and do more of the processing online."
While the majority of vehicle buyers shop online before heading to dealer lots, dealers say online sales have been just a small percentage of their business.
"We all, without surmising too much in the future, know eventually it will get to be a larger percentage," Ricart said.
The coronavirus' impact has already pushed the movement forward: "I think within the next 60 to 90 days you will see about every dealer in the country right now, if not every single one, have a drastically improved online sales service," Ricart said.
Dealers right now say their customers still value that in-person meeting and connection with their potential new vehicle.
"They want to touch and feel that car and drive it," Trudell said.
For now, dealers here are more concerned about how their employees, and their businesses, will fare through the pandemic.
The impact of the virus on sales "will put pressure on them of course," Ricart said. "I have a faith in the automobile dealers in the country. We have been through wars, depressions, recessions, bankruptcies."
Seavitt, who's been selling cars for close to 40 years, believes well-capitalized dealerships like his will be OK, although it "won't be a real profitable year."
"I am more worried about my employees," he said. "This is probably the most critical thing I’ve been through. I’ve been through four recessions and the Great Recession, and I’ve never seen anything like this, not even close."