Auto dealers here in New Jersey, following a sales drop of as much as 80% in the second half of March and early April, are recovering faster than many expected. 2020 was expected to see a dip in sales, and that will undoubtedly be the case, but it’s encouraging to see the economic recovery that our industry has been able to produce.
Flareups of the COVID-19 virus have impacted sales in parts of the country, but thankfully New Jersey has been spared so far. But many of us are faced with another obstacle slowing our sales recovery — low vehicle inventory.
Analysts say inventory is at the lowest level in nearly nine years. Manufacturers are fighting to get auto plants back to full production after COVID-19 shut them down for an extended period early this year, resulting in new-vehicle shortages. Dealerships that previously received a steady supply of new vehicles are, in some cases, seeing new inventory deliveries drop by as much as 70%.
One potential silver lining is the increase in used vehicle sales on many new dealership lots, with prices increasing as demand grows. This is positive news for many franchised dealerships because we net more profit on our used vehicle sales than we do on our new vehicle sales. But we ARE new car and truck dealerships and we need inventory to meet the needs and wants of our customers.
Manufacturers continue trying to get production fully restarted after 93% of all U.S. auto manufacturing was shutdown in late March and early April due to the pandemic, according to the Alliance for Automotive Innovation. And don’t forget the ripple affect it has all the way down the line to parts suppliers. That supply chain takes time to get back up to speed. Manufacturers are taking many of the same precautions we are to prevent the spread of the virus, but all it takes is a handful of positive diagnoses to cause concern among the rest of the workforce. People start to call in sick, which slows down vehicle production and deliveries. If positive COVID cases start to spike, calls begin coming for another shutdown and we start the whole process over again.
NJ CAR Clean Can Help Dealer Showrooms Stay Open
There is no magic bullet to solve this problem, but dealers are doing all they can to protect their employees and customers from the virus, implementing a wide variety of cleaning protocols and safety measures and our trade association is giving us the tools to succeed as well.
NJ CAR has taken CDC, OSHA and other guidance and applied it to the dealership environment, putting together a comprehensive set of essential guidelines called NJ CAR CLEAN. I encourage you to join your fellow dealers RIGHT NOW to help prevent another possible showroom shutdown by signing up for the free NJ CAR CLEAN training program and promotional effort. It is up to every single one of us, every day and with every customer interaction, to drive home the message that our businesses can be trusted to operate safely under these challenging circumstances.
Training our staff and implementing best practices are a great start, but it is just as important to publicize what we are doing. That’s why NJ CAR has branded the NJ CAR Clean program and created materials that participating dealers can use to showcase the protocols they’ve put in place to keep employees and customers safe. Dealerships that complete the training will be certified and receive a starter kit of collateral materials to highlight their commitment to public health and safety.
An industry wide effort NOW could help prevent another shutdown in the future. Do your part by signing up for the free NJ CAR CLEAN training program. For more information, visit www.njcar.org/safety or call NJ CAR headquarters at 609.883.5056.
What Lies Ahead?
There will be time for a full debrief of what happened, how we responded and what can be done better when a similar situation arises in the future. There will surely be some permanent changes to the way we do business with our manufacturers AND with our customers when all is said and done. But if the auto retail industry has shown anything, when faced with previous challenges, is that it is resilient and can quickly adapt to serve customers where, when and how they want.