Automotive Retail Jobs Are In Rough Shape

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Having already pulverized the dead horse of waning auto sales into a fine paste, we’ll now turn our focus on how it’s impacting employment among automotive retailers — squashing another pony.

Much of the information up until this point has been anecdotal and conditional to the North American response to COVID-19. Furloughs were rampant as the pandemic progressed and new safety rules seemed poised to cripple sales moving forward. There was an obvious general plight confronting automotive retailers, but we couldn’t nail down what that meant in terms of job losses.

We still don’t, frankly. But it is starting to become obvious that there isn’t much reason to be exceptionally optimistic. AutoNation recently announced that around half of the 7,000 workers it furloughed in April won’t be coming back. Despite some retailers claiming not to need such drastic cuts, plenty are following AutoNation’s model. With fewer customers and sweeping restrictions on how showrooms can be operated, there’s little reason for there to be all hands on deck. But just how many will be forced to abandon ship this year? 

Enough to make you squirm, according to most analysts. We’ve begun hearing economists toss around the always unsettling term “unprecedented” when discussing the economic fallout of the coronavirus response.

This has hindered reliable predictions as everyone scrapes through history to cobble together the closest approximation of what’s going on using bits and pieces of other economic disasters. Employment data suggests the U.S. is sitting on a joblessness rate of 13.3 percent, however, and the information issued by automotive retail outlets is no more heartening.

Automotive News spoke with Alan Haig, president of Haig Partners, a dealer advisory firm in Fort Lauderdale, FL, this week to get a sense of what things are like on the ground. He said several dealers have told him they found themselves making permanent cuts — roughly 10 to 15 percent of their staff.

“Probably their weakest performers — and they’re finding that they’re able to do a lot of business with fewer people,” Haig explained.

While that bodes well for the commission rates of whoever’s staying behind to draw paychecks, there’s little reason to think this will be a temporary setback. Many retailers are attempting to shift to an increasingly digital business model that requires fewer staff to wait for walk-ins. Car sales are assumed to be uncharacteristically weak this year and new regulations have forced loads of dealerships to change the way they do business. A number of stores don’t even have a full complement of vehicles, thanks to production stops.

National Automobile Dealers Association (NADA) Chairman Rhett Ricart has said the Paycheck Protection Program (PPP) has been important in the retention of jobs. Yet PPP existed to help businesses maintain staff through the worst of COVID-19; state governments are now starting to talk about a second wave and extended lockdowns. It also doesn’t address the thousands of new jobs that have evaporated.

From Automotive News:

Hireology CEO Adam Robinson predicts dealership jobs will shrink by 5 to 10 percent post-pandemic. That would translate to as many as 110,000 dealership jobs going away for good, based on the National Automobile Dealers Association’s count of 1.1 million people employed by franchised dealerships in 2019.

Dealers “are realizing that the staffing footprint they need can be less than it used to be,” Robinson said. “The number of employees per dealership is lagging the sales rebound. Dealers, by and large, have permanently re-architected the way they sell cars.”

Hireology claims it started seeing thousands of dealership job listings disappear in mid-March. It estimates over 25,000 open positions were eliminated across the franchised dealership landscape in the first months of the pandemic lockdowns, suggesting they represented about 20 percent of the total openings. Most of those were said to be direct sales jobs.

Lots of automotive retailers are making permanent cuts as they attempt to navigate 2020:

Lithia Motors Inc., the nation’s third-largest new- vehicle retailer as ranked by Automotive News, furloughed more than 5,100 employees in March. Lithia said in April it would bring back roughly half of them, thereby eliminating about 18 percent of its work force.

Asbury Automotive Group Inc., the nation’s seventh-largest new-vehicle retailer, furloughed 2,300 employees. Half of them, or 14 percent of Asbury’s work force, have returned, a company spokeswoman said, while the other half were terminated.

CarMax, the nation’s largest used- vehicle retailer, had recalled 85 percent of 15,500 furloughed employees, CEO Bill Nash said June 19.

Overall, it’s been a mixed bag, with some dealerships cutting well over half their staff as others manage to cling on to the majority of employees. It’s still a net loss, however, and the sizable uptick in sales we enjoyed last month isn’t expected to continue through the remainder of the year. We predict storefronts located in states in which secondary lockdowns are enacted or safety protocols are extreme will suffer the worst, though all will likely suffer, considering supply lines are likely to remain wonky for a prolonged period while customers remain cagey with their cash.

[Image: LM Photos/Shutterstock]

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