Why most auto dealers, service departments are open for business during coronavirus

Most auto dealers and service stations are keeping their doors open during the coronavirus pandemic, saying they should not be forced to close because they provide an essential service.

Dealers, who have been hit hard by the crisis already, say their businesses are essential to many Americans who need to buy or fix cars to get to their jobs or other critical destinations like hospitals.

"You have millions of workers who still have to get to their jobs in health care and all types of industries like that, and they need their vehicles,” said Marc Cannon, chief marketing officer of AutoNation, the country’s largest dealer network.

To make people comfortable, dealers are practicing social distancing in their showrooms, offering to deliver purchased vehicles, allowing solo test rides and eliminating certain in-person activities to make a purchase.

They’re also offering steep discounts in the form of incentives passed along by the auto manufacturers, which are scrambling to keep selling vehicles. Auto sales are expected to drop sharply due to the COVID-19 pandemic.

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In some states, like New Jersey and Michigan, dealerships have been forced to close their showrooms because of stay-at-home orders but can keep their service departments open. In others, like Ohio, they can keep both operating, according to trade journal Automotive News. Details of each state's so-called shelter-in-place directive vary.

Most of AutoNation’s 325 locations are still open – and recently received shipments of 10,000 hand sanitizers – but many customers are taking steps to schedule free delivery of vehicles they’ve purchased or want to test drive, Cannon said.

At Sonic Automotive, one of the country’s largest dealer networks, it’s a similar story. Most of Sonic’s stores are open, with the exception of certain locations in California, which has a shelter-in-place order.

“People don’t have to worry about coming into contact with our staff,” said David Smith, president of Sonic Automotive. “We’re disinfecting the cars before and after the test drives, we’re disinfecting all the areas in service and sales.”

And, “if somebody wants us to come to their home and deliver a car to them, we’ll do that. We can also come to their house and pick up their car for service.”

Smith said it’s vital for service departments to remain open to help customers who still need to get to their jobs. But he said it’s also important for showrooms to remain open so that customers who need to replace their vehicle can do so, instead of spending thousands on a car that shouldn’t be repaired.

“Can you imagine the panic that would be caused if the public could not get to the grocery store, If they couldn’t get to the hospital, if they couldn’t get to vital places?” Smith said.

Sonic is also practicing what Smith called “no-contact sales and service” and is encouraging customers to fill out most of their paperwork online.

“They can do about 90% of the transaction online on our website,” he said.

Used car retailer CarMax has temporarily closed at least 39 of its more than 210 locations, including all 27 in California. Like many other dealerships, CarMax is offering customers the option to test-drive vehicles alone if they're uncomfortable riding along with a dealership employee.

At Carvana, which advertises itself as a "car vending machine," "some" locations are closed but customers can arrange for a "contactless delivery" if they live nearby, the company said in a statement. Customers can take delivery of a vehicle without interacting with the person who arrives in the vehicle hauler.

Auto sales fall off during coronavirus

Auto sales are expected to drop because of COVID-19, as Americans hold off on major purchases, much like they did during the Great Recession, which triggered the bankruptcies of General Motors and Chrysler.

At the beginning of the year, forecasts called for 2020 U.S. auto sales of somewhere in the mid-16-million range. But the full-year figure could drop below 14 million in a “full-blown recession,” Autotrader.com analyst Michelle Krebs said in an email.

The number of people shopping for a new vehicle fell by 25% in the first half of March, compared with a year earlier, according to data source Comscore.

The National Automobile Dealers Association has asked federal, state and local governments to ensure that their members are not prevented from operating because of shelter-in-place orders. The group also wants Congress to include "short-term liquidity for dealerships" through loan guarantees and other measures in the next stimulus package.

“Just like every business, business has been off,” Smith said. "There’s certainly a slowdown but we believe that’s temporary.”

Coronavirus car deals

Automakers have offered a slew of incentives to customers. For example, Ford is offering to make three months of new-car payments on behalf of customers, Hyundai is offering to make payments for six months if customers lose their jobs due to the coronavirus and GM is offering 0% financing for 84 months for certain buyers.

“The manufacturers have been very supportive. They’ve come out with incredible offers,” Cannon said.

Autotrader’s Krebs said it could be a good time for some people to take the plunge.

“Great time to buy a vehicle if you dare to venture out,” she said. “Sales have fallen off, dealerships remain open and automakers are supporting dealers and consumers to purchase.”

While COVID-19 is a significant crisis for the auto industry, it’s also presenting an opportunity of sorts for certain services.

For example, AutoNation is fielding a surge of interest in its Clorox Total 360 sanitizing service, Cannon said.

The 30-minute, $29.99 service kills 99.9% of bacteria on hard and soft surfaces inside vehicles. AutoNation is offering the sanitizing service for free to first responders in certain markets.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.

This article originally appeared on USA TODAY: Are auto dealers open during coronavirus? They say they're 'essential'