SHERIDAN — After decades in the automotive industry, Richard Hammer, CEO of Ed Hammer, Inc., thought he’d seen it all, but the global coronavirus pandemic of 2020 brought with it all new challenges.
“I’ve been in the car business 37 years, and I thought I’d seen everything,” said Hammer, who is on the board of directors for the National Automobile Dealers Association. “Believe me, I have never seen anything like this.”
Because of the COVID-19 crisis, the auto industry faces a volume drop of up to 36 million vehicles over the next three years, according to new research from global consulting firm AlixPartners, which completed a 2020 report called “Global Automotive Outlook: Mastering Uncertainty.”
In the report, the firm said because of lockdowns, slow restarts and “lingering blows to consumer confidence and employment,” the automotive industry faces $72 billion in new debt added since early March of this year and sales of 13.6 million vehicles in the United States this year, compared to 17.3 million in 2018.
Hammer said, though, that he saw some interesting trends in his business this year. First was a shift to online sales, which did happen pre-Covid but took off after March. He also said he saw some shoppers looking for unique vehicles during the shutdowns of March and April.
“I was astonished at the number of cars we sold way out of our market on the internet since the onset of COVID,” Hammer said. “We sold a really fancy Corvette Z06 to a guy in California, and we sold a hybrid Lexus to a couple in West Virginia. It is interesting, I don’t know if it was because people had time to sit and shop, but they really zeroed in on unique pieces and we were shipping them all over the country.”
Benton Johnson, sales manager at Sheridan Motors, said he saw a lull in foot traffic in the spring, which resulted in an overall dip in sales. That was followed, though, by a big upswing in online and digital leads.
“That’s something that we do anyway, but there was a marked difference in how we interacted with people through the sales process,” Johnson said. “It shifted from about half and half digital or phone leads versus in person to over 80 to 85% all digital or over the phone interactions.”
His staff completed contact-less paperwork transactions and delivered vehicles without any face-to-face interaction.
“We had the process in place to do it because we do enough business out of network,” Johnson said, “but it just became a lot more prevalent.”
Jim Ferris, general manager of Ford Fremont Motors, said that restocking inventory became challenging when sales picked up in the summer months.
“Sales for the summer and fall have been incredible, and people are shopping,” Ferris said. “But inventory has probably been a little bit of a struggle for us. … I think there has been more of a demand for used vehicles, because getting new inventory for Ford has been a little bit of a struggle. All the industries are having trouble with suppliers.”
Hammer said as a General Motors dealer, his business entered the COVID shutdowns already facing a lull in inventory.
“We had a big UAW strike last fall, and we went about four weeks with no production. We really hadn’t gotten our inventory back to where we wanted it when COVID struck, and then everything was shut down for another eight weeks,” Hammer said. “It was basically zero build, and only the stuff that was already built shipped.”
As a dealer in the West, Hammer said he has good trading partnerships with other dealerships.
“No one wanted to give inventory up, but if I had a specific pickup to give, another dealer may make a trade,” he said. “We got very creative about tradings.”
The lull in new inventory could have created a chance for the auto repair business to flourish, but that side of the industry faced the same challenge: access to parts.
“No one was manufacturing repair parts,” Hammer said. “We did the same thing there, we have a really good network, in the digital era, where we could find parts anywhere and trade back and forth with other dealers that had the inventory that we needed in parts.”
Hammer said he hopes the COVID-era partnerships will continue beyond the pandemic, adding that the National Auto Dealers Association has been a great advocate for the industry.
“They helped us get the designation of being an essential business — the auto repair business,” he said. “That was tremendous, and they lobbied for us for stimulus money, both the individual checks and the PPP money which we were able to take advantage of. We didn’t have to lay anyone off during those horrible dark times. We were able to give people time off and socially distance and still keep everyone on payroll, so that was one of the better programs that a non-partisan government has ever come up with.”
This week, Johnson said he was expecting a delivery of three GMC pickups, but all were spoken for.
“I only have one on the lot right now, but all three of those trucks are pre-sold,” he said. “It is almost like the toilet paper … If there is not very much supply, you will buy what is there. It is strange. I have never seen that in the car business, where supply can’t keep up with demand.”
Ferris said he doesn’t believe the industry will suffer from long-term inventory effects post-Covid, as he’s already seeing new inventory coming in from Ford Motor Company and Lincoln. Ferris said inside his facility, employees are following social distancing precautions, with masks available to employees and customers.
Johnson said things are slowly shifting back to normal, but expects it to be a year before things return to pre-Covid trends. And, within the industry, all said internet and digital sales will always remain an option.
“Our long-term adjustments are going to be how we interact with (more) customers (online), not whether we have inventory or whether people are willing to shop or not. I don’t think that will change,” Johnson said.