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How Car Dealers Will be Feeling the Economic Brunt of the Coronavirus

As if the new car industry wasn’t already facing a tough time, with sales slumping year-on-year for each of the last 24 months, a new challenge is now confronting the industry. While the car industry is not alone in its struggles, it is in no sense an understatement to say that our day-to-day life we once knew has changed drastically before our eyes.

Even if only a ‘temporary’ affair, the profound impact that the Coronavirus is set to have on businesses, employees and the community at large is drastic. As we stare down the barrel of what is likely to be an economic downturn greater than many of us have seen in our lifetimes, it is hard not to imagine that the new car industry is likely to face an even more difficult period in the near-to-mid-term.


Are dealerships open for business?

While the situation is dynamic and changing day by day, at the moment, car dealers are holding onto one shred of hope – that they have been spared closure as part of the shutdowns taking hold across the country.

Whereas the likes of pubs, clubs, cinemas and restaurants have been told to close their doors, car yards, dealer networks and service centres have been given a lifeline. Speaking on the matter, Federal Chamber of Automotive Industries (FCAI) chief executive Tony Weber said: “The operation of motor vehicle dealerships, their service and repair centres, and key supply chain facilities play a critical part in supplying essential services to the community.”

As dealers take extra safety precautions, business continuity is set to be largely unaffected. At least from an operational perspective, it will be up to each dealer to decide whether they open their showrooms.


What sort of impact will dealers face?

It’s one thing for dealership doors to remain open, however, it is another thing for new car buyers to be incentivised to step into showrooms when the government is telling them to stay home. On top of that, the economic uncertainty hanging over the world, with thousands already out of work, is likely to weigh on new car demand even further.

Unfortunately, this is only going to translate into a situation where staff will need to take annual leave, face being stood down, or navigate the prospect of widespread job losses in an industry where there are as many as 60,000 employees across 3,500 showrooms.

Nonetheless, it is important that these services remain open as they are essential to our community. If more and more individuals in the community transition to cars in favour of public transport, and as recalls progress like the one involving Takata airbags, our dealerships and service centres will play a prominent role in helping us get through current events and addressing public safety.

In these unprecedented times, everyone should be mindful of the fact that car dealers play an integral role in our community. They will be feeling the effects as much as anyone, even if their doors remain open.

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