Dealerships are powerful economic engines for America, and cash flow is the fuel that runs the motor. But right now, the gauge is nearing empty.
Here’s how to start filling up.
Last month, U.S. unemployment increased by 4.4%, and new-vehicle sales declined by 37.9% according to NADA’s first-quarter economic analysis. Many dealerships were forced to shut their showrooms by lockdown orders from state governments, while others have seen a sharp dive in foot traffic due to social distancing practices brought on by the pandemic. Timothy Gavin, NADA 20 Group consultant, tackled hard questions—and provided good answers—in NADA’s webinar, The Best Ideas from NADA 20 Groups: In Times of COVID-19 Pandemic.
From the outset of the economic downturn, NADA has made a concerted effort to find solutions for dealers and help navigate the turmoil caused by COVID-19. Gavin recommended three key words at the outset of the webinar: Protect Your Cash. Some activities—such as selling a car—eat cash, while others, such as managing contracts in transit and freeing up frozen working capital, can immediately improve cash. Other tips from Gavin include reviewing accounts receivable; looking for vendor discounts; or re-examining overtime pay.
Gavin reminded webinar attendees to protect their inventories, including arranging security and conducting hourly inventory checks. Dealership staff are advised to also retrieve loaner and rental vehicles before closing. The proactive steps that dealers can take also include communications efforts: install an “ask me anything” button on your website; advertise pick-up and delivery services online so customers don’t have to leave their homes to get service; and update social media pages frequently. (NADA encourages all dealers to work with their attorneys to ensure social media posts and advertising comply with state and federal consumer protection laws.)
Sales at dealerships are taking a huge hit. Gavin advised dealers to keep store hours updated online so consumers are not confused if the hours change. Some dealerships have opted for online transactions, but 20 Group notes that the ability to complete a transaction online and deliver the vehicle remotely depends on state and local regulations. NADA cautions that before attempting to sell cars online, dealers must consult with their attorneys or state/metro dealer associations or licensing authority to understand the requirements of the state.
We can’t completely halt the COVID-19 virus, but together we can mitigate the damage it’s causing to 1.1 million people employed by America’s dealerships. NADA’s 20 Group is behind dealers throughout the pandemic and with time, resilience and good decisions, this industry will soon be running on all cylinders again.