With vehicle sales plummeting and thousands of dealership showrooms coast to coast ordered to shutter in the wake of the coronavirus outbreak, dealers are desperately slashing costs — including laying off employees en masse.
Stay-at-home mandates by governors and local leaders to curb the outbreak accelerated last week. The resulting restrictions on vehicle sales in those locations added to the rapid falloff in sales and showroom traffic across the U.S. and left one dealership hiring expert predicting that retailers will have to cut a third of their work forces by May.
That would equate to 360,000 or more dealership employees out of work in a matter of weeks. U.S. dealerships last year employed more than 1.1 million people, with an estimated 225,000 people working directly in vehicle sales, according to the National Automobile Dealers Association.
While it's unclear just how many employees have been affected thus far, many dealerships have started cutting staff. In some cases, dealers have opted to pay employees while showrooms are temporarily closed. But others just can't afford to.
Last week, Greg Rairdon, owner of the 10-store Rairdon Automotive Group in Kirkland, Wash., the first epicenter of the virus in the U.S., shut all showrooms and stopped selling vehicles following Gov. Jay Inslee's stay-at-home order, which doesn't list auto sales as essential. Rairdon put a "significant" number of employees on what he called standby unemployment.
"It was probably the most tragic day of my career in 30 years. In my opinion, this is much worse than 2008," Rairdon said, referring to the Great Recession. "I never had to lay off masses in 2008."
As of Friday, March 27, at least 33 states had issued executive orders that limited nonessential business activity and affected dealerships. About two dozen governors had issued stay-at-home orders.
The orders have triggered confusion in many places on whether and under what circumstances dealerships could still sell vehicles. In some states, initial rules were clarified or even reversed later in the week as dealer associations lobbied for vehicle sales to be declared essential business.