Michigan auto dealers eager to reopen showrooms Tuesday
Detroit — Michigan auto dealerships will be allowed to reopen their showroom doors Tuesday by appointment after shutting them nearly two months ago at the start of the state's battle with the coronavirus.
Gov. Gretchen Whitmer signed an executive order Thursday allowing dealerships and retail businesses to reopen to all customers by appointment only. The move comes after Whitmer allowed auto manufacturing to begin May 11. The Detroit Three restarted plants May 18 after a pandemic-induced eight-week shutdown.
"Manufacturing and car sales drive our state economy, and Michigan automobile dealers are honored to be involved in the early stages of moving our economy forward," Doug North, owner of North Brothers Ford in Westland, said at a morning press conference with the governor.
Jim Seavitt, owner of Village Ford in Dearborn, is ready to reopen his showroom. The dealership has been working with customers in the parking lot, which isn’t comfortable in the rain and the cold weather.
“If you follow the rules, it should help business in Detroit,” he said, noting that he’s installed plastic screens to separate sales people at their desks and has a supply of masks and disinfectant ready to go.
Seavitt got a federal Small Business Administration loan during the downtime to help with the payroll for his 188 employees. “We lost a lot of money,” he said. “We needed the money to get through. We had substantial losses in March and April.”
Seavitt has still able to sell 120 new vehicles so far in May, but most of those have been lease trade-ins. Last year, he had 195 new sales for the entire month, and he’s on track for that this year. The demand, he says, is there.
“A lot of people would have bought in March and April,” he said.
Mark Trudell, general manager of Extreme Dodge Chrysler Jeep Ram in Jackson, is similarly optimistic about the upcoming return of showroom sales. He said he has been able to sell about 35% of his normal volume during the period when only online sales were allowed in the state.
"The last six weeks, customers have been very good about it," he said online sales. "It's been very clunky to get the car out to do test drives, get them back and evaluate trade-ins and sign paperwork."
Trudell said his dealership is planning to follow all guidelines for preventing the spread of the coronavirus pandemic that have been issued by federal and state authorities.
"We've set up offices with dividers for our customers to sign paperwork," he said. "It's much easier to do it here than out in the parking lot or at someone's house."
Trudell anticipates that online sales will remain a part of his dealerships repertoire, but believes it will eventually only account for 10% to 15% of his total business. "I think people still want to come in a touch and feel a car and drive it around," he said.
Adam Thayer, general manager of Ralph Thayer Automotive in Livonia, which sells Volkswagens, Hyundais and Mazdas, is also looking forward to re-opening his showroom next week.
"I'm fired up," he said. "I'm excited we'll be able to have customers in our showroom. I think we're going to dig out of this."
Thayer said he went from selling about 100 to 120 vehicles per month to selling just 10 in April and 20 so far in May, with a big jump coming in the past two weeks. He anticipates having one or two customers in his showroom at a time to comply with social-distancing guidelines that will be still be in place after the dealership is allowed to re-open its doors.
"We're following all the CDC guidelines," he said. "Disinfecting cars after every test drive, socially distancing on the floor."
Thayer said he was able to call some employees back last week, and he is now operating with about about 60% of his normal sales staff. "If I can keep growing, I'll bring people back."
The auto retail industry, long surviving on the face-to-face interactions between dealers and customers, was forced to evolve to a more digital presence under the coronavirus pandemic — a change that could have lasting implications.
Newcomers such as Silicon Valley electric-car maker Tesla Inc. and online used-car retailer Carvana with its multi-story “car vending machines” have relied on the internet for sales. But with government stay-at-home orders closing dealer showrooms, even traditional automakers are having to rely on digital platforms and delivery options to make sales.
“I think what we have learned so much in such a short space of time, not just in terms of how people are buying but in terms of how we as an organization can work very effectively and efficiently,” Mike Manley, CEO of Fiat Chrysler Automobiles, said during an earnings call earlier this month. “We have to continue to develop our muscle in terms of online retailing, not because I expect us to be in this situation again in the future, but because I think it offers our consumers such a level of customer service."
Fiat Chrysler is providing a new online retail experience that helps dealers handle the entire purchase process from trade-in to final signatures to 1,000 U.S. dealers; 90% of its U.S. dealers have implemented web-based tools to sell vehicles.
General Motors Co. has advertised its Shop-Click-Drive program on TV and in newspapers. Since the outbreak, 750 dealers have enabled the e-commerce program that completes much of the vehicle purchase transaction online, GM CEO Mary Barra said during an earnings call earlier this month. The tool’s interactions are up 41%, and the company plans to add new features in the coming weeks.
The program has helped to keep a healthy flow of sales at Matthew Hargreaves Chevrolet in Royal Oak, said Walt Tutak, the dealership’s general manager. Normally he would sell 200 new vehicles and 125 used per month. Now, it’s about 125 new and up to 100 used, and that count is increasing as people return their leases and business begins trending toward normal again. He’s has called back three-quarters of his staff and hopes to have everyone returned by June 1.
“We’ve learned some things about how to do a lot more online business,” Tutak said, “and how to speed up the process.”
Michelle Krebs, senior analyst for Autotrader, said research shows that even before the pandemic, customers liked being able to do most of the buying process online.
"Dealers and manufacturers that offered online buying – as well as pickup and delivery of vehicles – fared far better than those that didn’t," she said.
With showrooms in Michigan now re-opening, Krebs said any uptick in sales could potentially be offset by inventory challenges. She noted that most automakers just recently restarted production at their U.S. plants.
"In markets that have opened up, we have definitely seen an uptick in both new and used vehicle sales," she said. "We would expect to see that in Michigan as well. The question is will sales continue to rise? Consumers may have difficulty finding the exact vehicle they want because inventories have run low and the plants have only restarted this week."