Trucks move America. If trucks stop, the nation stops… leading to chilling scenarios in a time when goods must be stocked on grocery shelves, pick-ups and deliveries must be made to homes and medical equipment must get to the front lines. The role truck dealers play during a pandemic is critical. Ray Grapsy, ATD 20 Group consultant, presented the best ideas from 20 Group truck dealers in the lifeline series webinar The Best Ideas from ATD 20 Groups: In Times of COVID-19 Pandemic.
Class 8 truck orders were down 52% in March, and the downward trend is expected to continue throughout the pandemic. The good news is that dealer inventories across the country—and across most brands—were at a high level before COVID-19 ravaged the country. There are plenty of trucks available for immediate purchase, and there are actionable steps dealers can take right now to keep their dealerships solvent for the foreseeable future, starting with protecting cash. Grapsy advised that truck dealers should take stock of their current situation by reviewing truck purchases and excess truck orders and monitoring contracts in transit and accounts receivable.
There are several actionable items that would benefit all dealers:
- Create a plan for collecting doubtful accounts
- Print the accounts receivable schedule and review daily
- Identify and resolve problems daily
- Work with captive finance sources to give customers an extended payment option
- Request early surplus parts returns
- Create a virtual auction for obsolete parts inventories
- Establish credit policies and consider worst-case scenarios with customers
Grapsy also pointed out strategies that dealers must use to keep cash flowing: consider floor-planning used inventory to generate cash; use telematics programs to identify trucks needing repair and maintenance; and decide which trucks need priority service immediately. Similarly, it’s important to get a handle on expense control even if it’s as simple as securing goods like office supplies and cleaning equipment. It doesn’t hurt to look for deferred payment opportunities like delayed billing and delayed OEM open account payment.
Finally, Grapsy reminded webinar attendees to protect their inventories, including arranging security and conducting inventory checks. This includes arranging for security, performing a physical inventory count, and keeping parts inventory and warehouses off limits to the public. Dealers can also update security cameras, change locks, and update facility security codes where necessary.
It’s a stressful and difficult time for dealers and their employees. But truck dealers are resilient entrepreneurs who have endured past crises. With resilience, patience and best practices in place, the truck dealerships of today can survive into tomorrow…and they must. Because America must keep moving.
For a full briefing on this topic and details for additional resources, access the webinar recording at the NADA Coronavirus Hub.
Note: This webinar is a compilation of ideas and best practices from ATD 20 Group. It is offered for general informational purposes only and is not intended as, and does not constitute, legal advice. Each dealer must seek their own legal counsel and make independent business decisions suited to their own needs.