Another woe for dealers: Losing business to nearby states

Pennsylvania dealer Scott Brewer has lost vehicle sales to Ohio, Virginia and West Virginia — nearby states where sales are continuing during the coronavirus outbreak.
Brewer, president of Brewer Airport Toyota in Moon Township, near Pittsburgh, isn't allowed to sell any vehicles — even online — under Gov. Tom Wolf's public safety orders.
Brewer's store is a half-hour drive from the Ohio state line and 40 minutes from West Virginia. And dealerships in those states are advertising to Pennsylvanians, Brewer said.
"Forcing somebody to either drive out of state or have a car delivered to them — how that's safer for another state to do it than a Pennsylvania dealership is beyond me," Brewer said.

Dealers across the country, already feeling the huge falloff in vehicle sales in the coronavirus outbreak, say they are disheartened to have their customers drive into neighboring states to buy or lease a vehicle. And many like Brewer are frustrated.

Dealers, associations and legislative allies in states such as Pennsylvania, Washington and Michigan have been lobbying governors to allow vehicle sales by appointment or online during the pandemic.

In Michigan, it's worked. Others are still trying.

"Right across the border, 10 minutes across the border … we've got dealers in Oregon that are selling vehicles," said Monte Phillips, a partner and general manager in Vancouver Auto Group, which owns Ford and Hyundai-Genesis stores in Vancouver, Wash.

Phillips said while he had to lay off his sales staff, his business development center has been humming with Internet leads. While his group reserved some vehicles for people to buy once the stay-at-home order — now set to last through May 4 — is lifted, Phillips acknowledges some are "more interested in the here and now and therefore head south across the bridge to purchase their vehicles from competing dealers."

On March 31, Washington Gov. Jay Inslee updated guidance for auto dealerships that allows limited sales and leasing. Dealerships can close transactions that were pending before Inslee's March 23 "Stay Home, Stay Healthy" proclamation and can conduct sales to replace vehicles too damaged to repair, to extend an expiring lease or to provide transportation to essential workers.

Washington dealerships can have only one employee in the store during a sale, and visits must be scheduled remotely and by appointment.

Vicki Giles Fabré, executive vice president of the Washington State Auto Dealers Association, said it has shared stories and videos from dealers of limited sales as well as those missed. The association has asked Inslee to further expand sales.

Washington, home to nearly 300 dealers with more than 500 new-vehicle franchises, saw new-vehicle sales fall 57 percent in March, Fabré said. April sales are expected to be lower, while fewer than half of the state's dealership employees are believed to be working, she said.

Heidi Pehl, president of five-rooftop I-5 Cars in Chehalis, Wash., said her dealership group has sold a few vehicles under the limited-sales criteria, including a Toyota truck to a firefighter whose vehicle was totaled.

With 40 percent of her staff laid off, Pehl is hopeful the state will allow more auto sales.

"We absolutely would not jeopardize anyone's health, including myself and my people that work for me," she said.

"This is a need. And it goes beyond the dealer. It goes to the city and the counties and the state revenues."

In Pennsylvania, where there has been confusion among the state's 880 new-vehicle dealers since Wolf on March 19 ordered the closure of non-life-sustaining businesses, including showrooms, dealers have asked for exemptions to sell vehicles.

Rob Cochran, CEO of the #1 Cochran group with about two dozen rooftops in Pennsylvania, applied for one. He said the state indicated that dealerships could sell online, but sales paperwork requirements can't be completed online.

He's hopeful the state and local dealer associations and the legislature will come up with a solution to allow for online sales. Neighboring New York and New Jersey, while under stay-at-home orders, are allowing remote sales and deliveries.

"Online's a great step and at least gives us an opportunity to take care of the people who are most in need," Cochran said.

Legislation in the Pennsylvania Senate could allow dealers to finalize a transaction without a physical notary — which is now required — said Brewer, the Pittsburgh-area dealer, who has 22 employees laid off.

Eight members of the Pennsylvania House of Representatives on March 27 sent a letter to Wolf, asking that he consider allowing auto sales by telephone and online with delivery to customers. A message was left with Wolf's office seeking comment.

"We are still pushing for all new-car and -truck dealers to have the ability to sell by appointment with proper controls in place," John Devlin, CEO of the Pennsylvania Automotive Association, said in an email.
Michigan, which in a March 23 order said showrooms had to close, last week gave a small reprieve to dealerships as the state's stay-at-home order was extended through April. Dealership employees, in an order Thursday, April 9, were included among essential workers and now can conduct remote sales and leases and can deliver vehicles to customers.

Last week, Michigan state Sen. Dale Zorn sent a letter to Gov. Gretchen Whitmer asking that she allow dealerships to sell and lease vehicles online.

Zorn, a Republican from Ida, believes the governor's move will aid consumers and Michigan's economy.

"It's going to help our state dealers compete just a little bit with Ohio and Indiana," Zorn told Automotive News.

"Ohio … has allowed their dealers to remain open, person-to-person contact. And we're noticing people from Michigan, especially on the border counties, going to Ohio to purchase their vehicles."