Editor’s note: An earlier version of this story understated the pay cut for executive vice presidents.
AutoNation Inc. is laying off 7,000 workers, slashing executive pay and postponing capital spending after vehicle sales fell by half in late March because of the coronavirus pandemic.
"Markets from which we derive approximately 95 percent of our total revenue are currently under extensive 'shelter in place' or 'stay at home' orders from federal, state and local governments, which significantly restrict our business operations, in particular our sales activities," the largest U.S. dealership group said in a regulatory filing.
In addition to putting the 7,000 workers on unpaid leave, the retailer has:
- Postponed more than $50 million of capital expenditures through the second quarter.
- Implemented a temporary 50 percent salary cut for Executive Chairman Mike Jackson and CEO Cheryl Miller. Executive vice presidents will get a 35 percent reduction and senior vice presidents 30 percent. Remaining corporate and regional staff will take a 20 percent hit. Board members waived their retainer fees.
- Reduced second-quarter advertising expenses by about 50 percent.
- Significantly trimmed discretionary spending.
- Frozen new hiring.
AutoNation said sales of new and used vehicles dropped by about 50 percent from year-earlier levels during the last two weeks of March.
“Our parts and service business is currently operating below full capacity, despite auto retailers having been deemed essential services in most of the markets in which we operate,” the filing said.
AutoNation said it has a $1.8 billion revolving credit line. As of March 31, it had borrowings of about $790 million and about $1.1 billion in available cash and credit lines.
AutoNation joins other publicly traded dealership companies in detailing a response to the COVID-19 crisis.
Last week, Group 1 Automotive Inc. said it will slash executive salaries, furlough 3,000 U.S. employees for at least 30 days and close stores in the U.K. and Brazil.
On Monday, Penske Automotive Group said it will cut executive pay and postpone $150 million in capital expenditures while furloughing an undisclosed number of employees. CEO Roger Penske and President Robert Kurnick agreed to accept no salary for the duration of the outbreak.
AutoNation shares closed Friday's trading down 2.5 percent to $24.59.
