As coronavirus spreads, dealers stay open for business

With gatherings canceled and people told to work from home, car shoppers are wary.

So in the wake of the coronavirus outbreak, Jeff Wyler Automotive Family, a 15-store group in Milford, Ohio, is pushing its online shopping tools and home delivery service.

"If they don't want to come to us, we'll go to them," said Marketing Director Kevin Frye.

And it appears there are plenty of consumers who don't want to spend time at dealerships as the outbreak in the U.S. worsens. Some dealers last week reported declines in customer traffic and sales. Mass cancellations of public gatherings, from conventions to classrooms, and the advice from health officials to stay home are likely to only further compress shopping activity. The rocky financial markets — the stock market officially entered bear territory last week — also are expected to take a toll on consumers considering big-ticket vehicle purchases.

Some industry forecasters have cut new-vehicle sales predictions. Cox Automotive no longer forecasts sales topping 16 million vehicles in 2020 and says they could tumble as low as the mid-14 million range.

New-vehicle sales in the Seattle market, home to the first sizable outbreak in the U.S., already have taken a hit, said Tyson Jominy, vice president of Power Information Network operations for J.D. Power. Sales for the first eight days of March in the Seattle area, the 17th-largest U.S. market, are down an extra 10 percentage points compared with the rest of the country, he said.

Sales nationally dropped about 10 percent during that period, but that was in line with J.D. Power's previous prediction for March, Jominy said. Given last week's coronavirus news, Jominy expected a more dramatic drop in new-vehicle sales through Sunday, March 15.

A National Automobile Dealers Association survey in the middle of last week showed that sales and service traffic at dealerships in the Seattle area dropped by a "severe" degree, according to Rhett Ricart, NADA chairman and CEO of Ricart Automotive Group in Columbus, Ohio.

In the Seattle market, Toyota of Kirkland, east of the city, reopened Monday, March 9, after closing for several days for deep cleaning after a sales-side employee's March 3 diagnosis of coronavirus. At Honda of Kirkland, owned by a separate dealership group, foot traffic seemed lighter last week after the store had its best new-vehicle sales day of the year the prior Saturday, owner Jason Courter said.

Courter so far is not too concerned about fewer customers coming into the store, which is undergoing more frequent cleaning. "There's a lot of ways we can handle things like this," he said last week. "We can sell cars online, we can sell cars over the phone."

A Seattle-area dealer in the NADA survey said there's been a "severe reduction" in foot traffic but used-car Internet traffic was good. "This has been a daily change of events that will continue to change consumer confidence," the dealer said. "… We are prepared for continual customer decline in traffic."

Ricart said more dealerships are offering pickup and delivery service and communicating best practices such as cleaning and disinfecting vehicles.

Prime Automotive Group CEO Todd Skelton said the 50-plus-store group based in suburban Boston — where a number of coronavirus cases have been diagnosed — posted a message last week on its website and planned to send an email to customers letting them know of precautions the group is taking to keep stores and vehicles clean.

Prime's March sales traffic was down about 2 percent as of late last week, but gross profit rose, Skelton said. Fixed-operations traffic dropped 16 percent. Prime has started pickup and delivery of customer vehicles for service and sales.

Based on what has happened in China, where vehicle sales in February fell 80 percent, Skelton said he's forecasting a 90-day disruption. "I'm really focused on when this business does come back, and hopefully in pretty short order," he said. "It's going to come pretty fast and furious."

Several miles from a one-mile containment zone in New Rochelle, N.Y., New Rochelle Chevrolet saw sales drop off "a little bit," though service appointments remained steady, owner John LaSorsa said last week. A few customers have taken the store up on its offer to deliver vehicles pending sale, but it's too early to tell whether sales overall will be hurt, he said.
Tim Jackson, president of the Colorado Automobile Dealers Association, told Automotive News last Thursday that one dealership group in his state reported online vehicle inquiries dropped 30 to 50 percent from a month ago. Another store reported 40 to 50 percent fewer walk-in customers last week. "It is starting to compress traffic," Jackson said.

Share prices for the six public dealership groups, plus CarMax and Carvana, all dropped by double-digit percentages last week amid the overall stock market plunge.

Marc Cannon, chief marketing officer for AutoNation Inc., the largest new-vehicle retailer in the U.S., said in an email that customers continue to shop in the retailer's stores across the country. Its Jaguar Larchmont/New Rochelle dealership in New Rochelle, N.Y., was operating as normal, he said.

Penske Automotive Group in a February regulatory filing warned that a coronavirus-related supply disruption of vehicles or parts to the U.S. or Europe could adversely affect business. Penske said last week it is monitoring the situation daily and has established coronavirus task forces.

Penske, the nation's second-largest new-vehicle retailer, also is "developing certain contingency planning scenarios" and has implemented "reasonable business travel restrictions," Penske executive Anthony Pordon said in an email.

CarMax said in an email Thursday that it will support employees with up to two weeks of pay in the event locations are closed or associates are quarantined but not diagnosed with the virus. Like other retailers, it has put in place measures to reduce the risk of virus exposure, ceased employee business air and train travel until further notice and canceled all conference attendance through April.

Sonic Automotive Inc. also implemented travel restrictions and is requiring employees who travel on cruises or to a country with a Level 3 travel health notice to self-quarantine for 14 days upon returning, Sonic President Jeff Dyke said. He said Sonic has required a few employees who visited Italy or were on cruises to self-quarantine for 14 days.

Sonic has seen a "little bit" of service cancellations, Dyke said Friday. Sales Wednesday were a bit slower but rebounded with a good Thursday, he said.

Ricart stressed dealers' resilience. "We've been through oil embargoes, wars, financial global meltdowns," he said. "And the meltdown was just 10 years ago, so all of those things are in the back of our head. We survived. Actually, we thrived right after that immediately. So we understand."

Jackie Charniga contributed to this report.