Alberta dealers battered by pandemic and plunging oil prices

CALGARY -- With the market price for Canadian oil plunging to less than US$8 per barrel and the COVID-19 virus continuing to spread, Alberta auto dealers are reeling.

Dealerships are cutting staff, shortening hours and instituting sterilization and “social distancing” measures as they struggle to keep the doors open. 

Jim McManes, president of the McManes Auto Group which has 16 dealerships — 12 in Alberta and the others spread across Manitoba and British Columbia — says the result is “devastating.”

“Obviously it’s difficult to determine which has had the greatest impact, but it’s way worse than 2008-2009 ever was,” he says. “The uncertainty of how long it will last makes it difficult to plan. It’s a day-to-day thing.”

He says dealerships in his group have reduced hours and each store has laid off “25 to 30” people, which means layoffs total more than 400.

“All we can do is support our people as best we can,” he says, adding “we’ve sold some cars, but it’s slow, and service departments are working although some appointments are no-shows.”

He sees no quick end to the situation. 

“This is going to last four to six weeks minimum and probably longer.”

Perry Itzcovitch of Calgary’s Hyatt Group which owns two stores in Calgary, says his dealerships have laid off 40 per cent of their staff and made arrangements for others to work from home.

Service business is down 40 to 50 per cent “but that is a moving target based on the situation of the day,” he says.

Alberta’s state of health emergency declared March 17, does not order dealerships to close, nor does it recognize that they should stay open. It only requires maintaining social distancing, frequent hand washing and sanitizing measures.

Itzcovitch says he believes service departments should stay open to support first response organizations who use their brands. Ontario, for example, has deemed dealerships and service providers as essential services.  

“Ambulances, tow trucks, and other response vehicles all need to have repair services available or they can’t be available to help the public.”

Itzcovitch, also past chairman of the Canadian Automobile Dealers Association, says sales in the second quarter of 2020 “will be a bust in Canada; Q2 is always the best quarter of any given year.” 

He expects the third quarter will see some improvement while the fourth quarter “is never great anyway.”

Both dealers say their stores are doing everything they can to keep staff and customers safe: Wiping down and sanitizing furniture surfaces frequently, sanitizing vehicles and maintaining longer working distances between staff and clients.

Statistics show unemployment is climbing in the province, although there are no figures specifically dealing with the auto industry. As of March 21, Employment Insurance applications had spiked to record levels although February figures from Statistics Canada pegged Alberta’s unemployment rate at 7.2 per cent, unchanged from 2019.